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Japanese Yen Nears Multi-Month

Japanese Yen Recovery from Multi-Month Low Against USD Shows Limited Bullish Commitment

Japanese Yen Recovery from Multi-Month Low Against USD Shows Limited Bullish Commitment

The Japanese Yen (JPY) has gained ground for a second consecutive day, rebounding from a recent multi-month low near 153.20 against the US Dollar (USD) reached earlier this week. This recovery follows verbal interventions by Japanese authorities, which have been instrumental in supporting the Yen. Meanwhile, US Dollar bulls have turned cautious amid a modest dip in US Treasury bond yields, adding a downward bias to the USD/JPY pair.

However, doubts about further interest rate hikes by the Bank of Japan (BoJ) in 2024, compounded by uncertainty around upcoming elections in Japan and a drop in Tokyo’s core inflation rate below the 2% target, may limit further JPY appreciation. Additionally, a generally positive risk sentiment tempers aggressive bets on the Yen as a safe-haven asset. Concurrently, expectations of smaller rate cuts by the Federal Reserve (Fed) may continue to support the USD and curb losses for the USD/JPY pair.

Market Movers: Yen Supported by Intervention, Economic Concerns Persist

Friday’s data from the Statistics Bureau of Japan showed the headline Tokyo Consumer Price Index (CPI) rose by 1.8% year-over-year in October, down from 2.2% in the previous month. Core CPI, excluding fresh food prices, matched market expectations at 1.8% but remained below the BoJ’s 2% target, signaling persistent economic challenges. A private-sector survey released Thursday revealed that Japan’s manufacturing and services sectors contracted in October, pointing to weak economic conditions and raising doubts about the BoJ’s potential for further rate hikes in the near term.

Japan’s Economy Minister Ryosei Akazawa stressed the need for stable currency movements reflecting economic fundamentals, acknowledging the varied effects of a weaker Yen on the economy. Japan’s vice finance minister for international affairs, Atsushi Mimura, reiterated that the government closely monitors FX volatility, aiming to mitigate excess fluctuations.

The US Dollar, meanwhile, paused its recent pullback from a three-month high amid expectations of less aggressive policy easing by the Fed, lending some support to the USD/JPY pair. Traders will be watching Friday’s US macro data, including Durable Goods Orders and the revised Michigan Consumer Sentiment Index, as Japan’s Sunday election approaches.

Technical Outlook: Key Levels for USD/JPY

Technically, a break below the 151.60-151.55 support zone could accelerate the USD/JPY’s slide to the 151.00 level. Further declines may find support near 150.65, a confluence of the 200-day Simple Moving Average (SMA) and the 50% Fibonacci retracement level of the July-September pullback. If this level breaks, it may signal the end of the recent rally, shifting bias toward bearish traders.

Alternatively, a move beyond 152.00 could see USD/JPY testing the 152.60-152.65 region. Continued upward momentum could allow the pair to approach the 153.00 mark and, if surpassed, the 61.8% Fibonacci level at 153.20. Clearing this point would likely open the path toward further gains around the 154.00 level and the 154.30 resistance zone.

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Australian Dollar Drops on Weak GDP Data and RBA Rate Cut Bets

Australian Dollar Holds Steady as US Dollar Softens Ahead of PMI Data

Australian Dollar Holds Steady as US Dollar Softens Ahead of PMI Data

The Australian Dollar (AUD) strengthened against the US Dollar (USD) on Thursday, supported by the release of domestic Purchasing Managers Index (PMI) data. The AUD/USD pair moved higher as the USD experienced a slight dip, driven by a modest pullback in US Treasury yields, with the 2-year and 10-year yields standing at 4.07% and 4.23%, respectively, at the time of writing.

The Australian Dollar’s performance is further bolstered by hawkish sentiment surrounding the Reserve Bank of Australia (RBA), underpinned by strong employment figures. Earlier in the week, RBA Deputy Governor Andrew Hauser highlighted the high labor participation rate, emphasizing that the central bank remains data-driven but not overly fixated on any single data point.

The USD, meanwhile, came under pressure following the release of the Federal Reserve’s (Fed) Beige Book on Wednesday. The report noted that economic activity across the US was “little changed in nearly all Districts,” contrasting with August’s report, which had indicated growth in three Districts and stable activity in nine.

Market participants are now closely watching the release of the S&P Global Purchasing Managers Index (PMI), a key indicator of US private sector activity in both the manufacturing and services sectors, which is scheduled for Thursday.

Market Movers: Australian Dollar Gains on RBA Hawkish Sentiment

According to the CME FedWatch Tool, there is an 88.9% chance of a 25-basis-point rate cut from the Federal Reserve, with no expectation of a larger 50-basis-point reduction.

Australia’s Judo Bank Composite PMI slightly rose to 49.8 in October from 49.6 in September, marking the second consecutive month of contraction in private sector output. The Services PMI edged up to 50.6 from 50.5, marking its ninth consecutive month of expansion, while the Manufacturing PMI slipped to 46.6 from 46.7, continuing its decline.

In a social media post, Federal Reserve Bank of San Francisco President Mary Daly noted that the US economy is in a better position, with inflation significantly lower and the labor market stabilizing. Meanwhile, Minneapolis Fed President Neel Kashkari indicated that the Fed is monitoring the labor market for signs of instability and suggested that any rate cuts will likely be gradual rather than aggressive.

China’s central bank, the People’s Bank of China (PBoC), lowered its 1-year Loan Prime Rate (LPR) to 3.10% from 3.35% and its 5-year LPR to 3.60% from 3.85%, as expected. These cuts aim to stimulate domestic economic activity in China, which could, in turn, boost demand for Australian exports.

National Australia Bank recently revised its projection for the RBA, now expecting the first rate cut in February 2025, earlier than the previously anticipated May timeline. The bank foresees gradual cuts, with rates expected to reach 3.10% by early 2026.

Technical Analysis: Australian Dollar Remains Below 0.6650

The AUD/USD pair is trading around 0.6640 on Thursday, maintaining a bearish outlook in the short term. The pair remains below the nine-day Exponential Moving Average (EMA), and the 14-day Relative Strength Index (RSI) is below 50, reinforcing the negative sentiment.

On the downside, the AUD/USD pair may retest its two-month low of 0.6614, last seen on Wednesday. The next key support lies at the psychological level of 0.6600.

On the upside, resistance is expected at the nine-day EMA at 0.6680, followed by the 50-day EMA at 0.6728. A break above these levels could pave the way for a potential move toward the psychological resistance at 0.6800.

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Japanese Yen Weakens Below 152.00 Against USD, Hits Fresh Three-Month Low

Japanese Yen Weakens Below 152.00 Against USD, Hits Fresh Three-Month Low

Japanese Yen Weakens Below 152.00 Against USD, Hits Fresh Three-Month Low

The Japanese Yen (JPY) extended its losing streak against the US Dollar (USD) for a third consecutive day, pushing the USD/JPY pair above the 152.00 level for the first time since late July during Wednesday’s Asian session. This recent weakness is driven by uncertainty over the Bank of Japan’s (BoJ) ability to raise interest rates further in 2024, a key factor in the Yen’s decline since early October.

The drop below the psychological 150.00 level earlier this month sparked verbal interventions from Japanese officials, though these efforts have done little to bolster the JPY. Even the prevailing risk-off sentiment, fueled by ongoing geopolitical tensions in the Middle East, has not provided the usual support for the safe-haven currency.

Meanwhile, expectations that the Federal Reserve (Fed) will ease its pace of rate cuts have driven US Treasury yields to a three-month high, boosting the USD. This further reinforces the outlook for continued JPY depreciation and more gains for the USD/JPY pair.

Market Movers: JPY Weakness Persists Despite Intervention Warnings

  • The Japanese Yen has fallen to its weakest level in nearly three months as doubts grow over the BoJ’s rate-hike plans.
  • Verbal interventions from Japanese authorities after the JPY fell below the key 150.00 mark have failed to reverse its downward trend.
  • Slower expected rate cuts by the Fed and concerns over increased US fiscal deficits after the upcoming presidential election have triggered a bond market selloff.
  • Yields on the 10-year US Treasury bond have reached levels not seen since July, pushing the US Dollar to its highest point since early August.
  • San Francisco Fed President Mary Daly highlighted that inflation has eased and the labor market is on a more sustainable path, supporting the Fed’s cautious approach.
  • Former President Donald Trump’s rising odds in the US election have led to speculation about inflation-inducing tariffs.
  • Geopolitical risks remain high as markets eye a potential Israeli strike on Iran. Hezbollah fired rockets at two bases near Tel Aviv and a naval base near Haifa on Tuesday.
  • Diplomatic efforts to resolve the year-long Middle East conflict have thus far failed, reducing investor appetite for riskier assets.
  • Traders await the US Existing Home Sales report, while the focus remains on BoJ Governor Kazuo Ueda’s upcoming speech at the IMF-hosted “Governors Talk.”
  • Tokyo consumer inflation data, due Friday, will also be a key factor ahead of Japan’s general election on October 27 and the BoJ meeting on October 31.

Technical Outlook: USD/JPY Breakout Above 152.00 Signals Bullish Momentum

From a technical standpoint, the recent breakout above the 100-day Simple Moving Average (SMA) signals further bullish potential for the USD/JPY pair. Oscillators on the daily chart remain in positive territory, suggesting the possibility of additional gains beyond the 152.00 mark. Follow-through buying could continue to drive the pair upward in line with the ongoing uptrend seen over the past month.

However, the Relative Strength Index (RSI) is nearing overbought levels, prompting caution among aggressive bulls. A period of near-term consolidation or a modest pullback may be prudent before positioning for further appreciation.

On the downside, support is likely to be found near the 151.20-151.15 region, with a break below the 151.00 mark seen as a buying opportunity. The 150.60 level could act as a key support point, below which the pair may accelerate its decline toward the 150.00 psychological level.

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Australian Dollar Supported by Hawkish RBA Outlook

Australian Dollar Supported by Hawkish RBA Outlook, But Faces Pressure from Rising US Treasury Yields

Australian Dollar Supported by Hawkish RBA Outlook, But Faces Pressure from Rising US Treasury Yields

The Australian Dollar (AUD) regained some of its recent losses against the US Dollar (USD) on Tuesday, buoyed by a hawkish stance from the Reserve Bank of Australia (RBA) and strong domestic employment data. However, the AUD/USD pair continues to face resistance due to surging US Treasury yields, which rose by over 2% on Monday amid concerns about inflation and economic strength in the US.

The Aussie Dollar’s resilience is supported by market expectations that the RBA may maintain a tighter monetary policy in the near term, given positive labor market conditions in Australia. Additionally, China’s recent interest rate cuts have provided a boost, as the nation remains Australia’s largest trading partner, and lower borrowing costs in China could stimulate demand for Australian exports.

In contrast, the US Dollar has gained strength following economic data that suggests the Federal Reserve (Fed) is unlikely to implement a large rate cut in November. The likelihood of a modest 25-basis-point cut stands at 89.1%, with no significant expectations for a more aggressive 50-basis-point reduction. Rising US bond yields, driven by stronger retail sales and a drop in initial jobless claims, further support the greenback, creating headwinds for AUD/USD.

Traders are now awaiting the release of Purchasing Managers Index (PMI) reports from both the US and Australia on Thursday, which could shed light on the health of their respective economies and influence future monetary policy decisions.

Market Movers: Australian Dollar Declines Amid Risk Aversion

  • US 2-year and 10-year Treasury yields are at 4.02% and 4.19%, respectively, reflecting rising demand for US debt.
  • Minneapolis Fed President Neel Kashkari noted that the Fed is closely monitoring the labor market, signaling that rate cuts will be gradual and moderate.
  • San Francisco Fed President Mary Daly emphasized the central bank’s data-driven approach to interest rate adjustments.
  • RBA Deputy Governor Andrew Hauser, speaking at the CBA 2024 Global Markets Conference, expressed surprise at Australia’s strong employment growth, highlighting the country’s high labor participation rate.
  • The People’s Bank of China (PBoC) lowered its 1-year Loan Prime Rate (LPR) to 3.10% and the 5-year LPR to 3.60%, which could boost China’s domestic economy and demand for Australian exports.
  • National Australia Bank revised its forecast, expecting the RBA’s first rate cut in February 2025, earlier than previously projected.

Technical Outlook: AUD/USD Faces Bearish Pressure

The AUD/USD pair is trading around 0.6660, close to eight-week lows. On the daily chart, the pair remains below the nine-day Exponential Moving Average (EMA), signaling a bearish short-term trend. The 14-day Relative Strength Index (RSI) is also below 50, further reinforcing this sentiment.

On the downside, the pair may test support at its eight-week low of 0.6622, with the psychological level of 0.6600 providing further support. Resistance is expected at the nine-day EMA around 0.6700, followed by the 50-day EMA at 0.6734. A break above these levels could pave the way for a move toward 0.6800.

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Gold Price Overbought, Bulls Should Exercise Caution Amid Renewed

Gold Price Overbought, Bulls Should Exercise Caution Amid Renewed USD Strength

Gold Price Overbought, Bulls Should Exercise Caution Amid Renewed USD Strength

Gold (XAU/USD) remains near its intraday highs through early European trading, hovering close to its all-time peak of around $2,730. The continued accommodative monetary policy environment and persistent geopolitical tensions, especially from the Middle East conflicts, support the precious metal’s upward momentum. Additionally, political uncertainty in the US has contributed to gold’s rally over the past two weeks.

Despite this, expectations of modest rate cuts by the Federal Reserve (Fed) are helping keep US Treasury yields elevated, which in turn strengthens the US Dollar (USD) and invites some dip-buying interest. The USD Index (DXY) is back near its recent high, the highest since early August. Combined with slightly overbought conditions in the daily gold chart, further gains for the metal could be limited.

Daily Market Movers: Gold Holds Up Despite USD Strength

  • Geopolitical risks: The situation in the Middle East remains volatile, with rising tensions between Israel and Iran adding to concerns. Israel has intensified attacks on Lebanon and Gaza, raising fears of a broader regional conflict, which supports safe-haven demand for gold.
  • US political uncertainty: Polls show a tight race between Donald Trump and Vice President Kamala Harris, adding further risk and boosting demand for gold as a safe-haven asset.
  • Central bank actions: The European Central Bank has recently cut interest rates for the third time this year, while the Fed and the Bank of England are expected to lower borrowing costs further, adding to the support for gold’s bullish trend.

Technical Outlook: Bulls Remain Strong, But Caution Advised

Technically, gold’s sustained strength above $2,700 signals continued bullish momentum. However, with the Relative Strength Index (RSI) surpassing 70, signaling overbought conditions, traders may want to wait for consolidation or a pullback before positioning for further gains. Immediate support lies at the $2,700 level, with potential downside targets around the $2,662-2,660 range and further support near $2,647-2,646. A break below these levels could accelerate selling toward $2,600.

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Japanese Yen Gains Strength Against USD Amid BoJ Policy Uncertainty

Japanese Yen Gains Traction Against USD Amid BoJ Uncertainty

Japanese Yen Gains Traction Against USD Amid BoJ Uncertainty

The Japanese Yen (JPY) is seeing an upward trend during Friday’s Asian session, partially recovering from the previous day’s losses against the US Dollar (USD), reaching its strongest level since early August. Several factors are driving the JPY’s gains, including verbal intervention from Japanese officials and stronger domestic inflation data, which could potentially prompt the Bank of Japan (BoJ) to consider rate hikes.

Contributing to the JPY’s strength is a modest pullback in the USD from its two-and-a-half-month high. However, expectations that the BoJ will refrain from raising interest rates, given signs of easing inflation and the upcoming general election on October 27, may limit the Yen’s potential gains. Additionally, the market is anticipating smaller interest rate cuts by the US Federal Reserve (Fed), which could further cap losses in the USD/JPY pair.

Key Market Movers: Verbal Intervention and Inflation Data Boost Yen

Japan’s Vice Finance Minister for International Affairs, Atsushi Mimura, expressed concern over the rapid and one-sided moves in the Yen, stating that excessive volatility in the currency market is undesirable. Furthermore, a government spokesperson emphasized the importance of stable currency movements that reflect economic fundamentals, signaling that authorities are closely monitoring the situation, particularly speculative moves in the market.

In addition to the intervention, government data showed a deceleration in Japan’s headline Consumer Price Index (CPI) to 2.5% YoY in September, while the Core CPI, excluding fresh food, eased from a 10-month high. These signs of easing inflation, coupled with opposition to rate hikes from Prime Minister Shigeru Ishiba, raise questions about how much room the BoJ has to pursue further tightening.

Meanwhile, the Chinese economy’s 0.9% growth in the third quarter of 2024, coupled with stronger-than-expected Retail Sales and Industrial Production, had little impact on market sentiment.

On the US side, strong economic data continues to support the Greenback. Thursday’s positive US data reaffirmed market bets for a less aggressive Fed rate-cutting cycle, keeping US Treasury yields elevated, which serves as a tailwind for the USD. The USD Index (DXY) remains near its highest level since August, which could limit the USD/JPY pair’s downside potential.

USD/JPY Technical Outlook: Dips Toward 149.20 Present Buying Opportunities

From a technical standpoint, the breakout above the psychological 150.00 level signals renewed bullish momentum. Indicators on the daily chart remain comfortably in positive territory, with no immediate signs of being overbought, suggesting that the USD/JPY pair could continue to climb.

Any pullbacks toward the 149.20 level may be viewed as buying opportunities, with further support at the 149.00 level. Below this, the pair could see a corrective fall toward the 148.60-148.55 region and eventually test the 148.00 mark, with a key support zone around 147.35-147.30. A break below this area could shift the market bias toward bearish traders.

On the upside, a sustained move above the overnight high of 150.30 could push the pair toward the August peak at 150.85-150.90, with potential further gains beyond the 151.00 level, opening the door to a near-term rally toward 152.00.

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Crude Oil Steadies as Markets Monitor Middle East Tensions

Crude Oil Steadies as Markets Monitor Middle East Tensions and China’s Economic Outlook

Crude Oil Steadies as Markets Monitor Middle East Tensions and China’s Economic Outlook

Crude oil prices stabilized on Thursday after a four-day losing streak that resulted in a nearly 7% weekly drop. The market has found a temporary floor, with traders weighing geopolitical risks, particularly doubts over whether Israeli Prime Minister Benjamin Netanyahu will honor his pledge to the U.S. not to strike Iranian oil facilities. Further support for oil came from a surprise drawdown in U.S. stock piles, with the American Petroleum Institute (API) reporting a decrease of 1.58 million barrels for the week ending October 11, compared to expectations of a 2.3 million barrel increase.

Meanwhile, the U.S. Dollar Index (DXY), which tracks the Greenback against six major currencies, is bracing for a volatile session. In addition to a slew of U.S. economic data, markets are watching the European Central Bank (ECB), which is expected to announce a 25 basis point rate cut. With core Eurozone economies facing significant challenges, ECB President Christine Lagarde’s response to prevent further Euro weakness will be closely scrutinized.

As of this writing, West Texas Intermediate (WTI) crude oil is trading at $70.00, while Brent crude is at $74.09.

Key Market Drivers

  1. China’s Economic Stimulus: China has unveiled a plan to inject 4 trillion yuan (CNY) into its housing market, although markets reacted poorly to the lower-than-expected figure, down from an earlier 6 trillion yuan estimate. The announcement has had limited impact on oil prices so far.
  2. Middle East Tensions: Pressure continues to mount on Israeli Prime Minister Netanyahu, with growing calls within his cabinet to disregard U.S. advice and strike Iranian oil facilities. An article from an opposition leader in the Jerusalem Post urging an immediate attack has heightened tensions, according to Reuters.
  3. S. Oil Stockpiles: Later today, the Energy Information Administration (EIA) will release its weekly oil inventory data for the week ending October 11. Analysts expect a modest build of 2.3 million barrels, following a larger-than-anticipated increase of 5.81 million barrels the previous week.

Oil Price Technical Outlook: Struggle at $70.00

Crude oil is battling to hold the $70.00 level, but the path ahead remains uncertain. Geopolitical events could cause prices to spike, but absent any major developments, oil could see further declines. As markets hedge against a potential presidential win by former U.S. President Donald Trump in the November 5 elections, crude oil appears uncertain on how to factor this into pricing.

For crude oil to regain momentum, it must first close above the critical resistance at $71.46, a level that provided support earlier in the week. Beyond this, the next significant challenge lies at $75.28, where the 100-day Simple Moving Average (SMA) aligns with other key technical indicators.

On the downside, $71.46 has now flipped to resistance. If oil falls further, traders will look to the $67.11 level, which provided support in May-June 2023. A break below this could send prices toward the 2024 year-to-date low of $64.75, followed by the 2023 low of $64.38.

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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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WTI Trades with Modest Losses Below $77.00, Downside Potential Limited

WTI Trades with Modest Losses Below $77.00, Downside Potential Limited

WTI Trades with Modest Losses Below $77.00, Downside Potential Limited

West Texas Intermediate (WTI) crude oil prices are struggling to build on the previous day’s rebound from weekly lows, trading with a slight negative bias during the Asian session on Friday. The commodity is currently around the $76.70 mark, down 0.25% for the day, but remains poised for modest gains for the second consecutive week.
The risk of supply disruptions remains high due to escalating tensions in the Middle East. Additionally, strong US macroeconomic data released on Thursday has eased concerns about a downturn in the world’s largest economy. This, coupled with expectations that potential rate cuts by the Federal Reserve (Fed) could stimulate economic activity and increase fuel consumption, may continue to support crude oil prices.

Meanwhile, the US Dollar (USD) is struggling to maintain the positive momentum it gained after the previous day’s data, amid speculation that the Fed might begin its rate-cutting cycle in September. The prevailing risk-on sentiment is also weighing on the safe-haven Greenback, which typically boosts demand for USD-denominated commodities like crude oil.

However, investor concerns about an economic slowdown in China, the world’s largest oil importer, persist. This is compounded by recent downgrades in oil demand growth forecasts for 2024 from both OPEC and the IEA. Additionally, an unexpected build in US oil inventories, indicating a potential cooling in demand, is acting as a headwind for crude oil prices, exerting downward pressure as the week comes to a close.

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Oil Retreats as Markets Shift Focus

Oil Retreats as Markets Shift Focus to Demand Concerns

Oil Retreats as Markets Shift Focus to Demand Concerns

Oil prices declined on Tuesday, ending a five-day rally as the market shifted its focus back to concerns over demand, following OPEC’s recent downward revision of its 2024 demand growth forecast due to weaker expectations in China.

Global benchmark Brent crude futures dropped by 57 cents, or 0.7%, to $81.73 a barrel at 0630 GMT. Similarly, U.S. West Texas Intermediate (WTI) crude futures fell 48 cents, or 0.6%, to $79.58 a barrel.

On Monday, Brent crude had surged by more than 3%, while U.S. crude futures had risen over 4%.
The Organization of the Petroleum Exporting Countries (OPEC) revised its global demand forecast for 2024 downward for the first time since July 2023, citing weaker demand indicators from China, including declining diesel consumption and a slowing property sector in the world’s second-largest economy. This revision poses a challenge for the broader OPEC+ group, which is set to increase production starting in October.

“Demand concerns for crude oil remain a significant factor,” said Yeap Jun Rong, a market strategist at IG. He noted that apprehensions persist ahead of upcoming U.S. inflation data, adding that any indication of rising economic risks could further pressure oil prices. With OPEC+ scaling back production cuts and reducing their demand forecast for 2024, there may be signs of a less constrained oil market in the near future.

Geopolitical tensions, however, continue to keep investors on edge. The situation in the Middle East has intensified, with the U.S. warning of potential significant attacks by Iran or its proxies in the region as early as this week. White House national security spokesperson John Kirby highlighted the possibility of such events on Monday. Any escalation could disrupt global crude supplies and drive prices higher. Analysts also pointed out that an attack could prompt the U.S. to impose embargoes on Iranian crude exports, potentially impacting 1.5 million barrels per day of supply.

Markets are also bracing for the release of the U.S. consumer price index (CPI) report on Wednesday, which is expected to provide crucial insights into inflation trends. Investors are concerned that a significantly lower CPI reading could amplify fears of an economic downturn. According to the CME’s FedWatch Tool, money markets are currently evenly split on the likelihood of a 25 or 50 basis point rate cut by the U.S. Federal Reserve in September, with expectations of a total easing of 100 basis points by the end of 2024. Rate cuts typically boost economic activity, leading to increased demand for energy sources like oil.

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Gold Price Near Two-Week High Amid Upbeat Market Mood

Gold Price Near Two-Week High Amid Upbeat Market Mood

Gold Price Near Two-Week High Amid Upbeat Market Mood

During the Asian session on Thursday, the gold price (XAU/USD) maintained a positive bias and remained just below the nearly two-week high reached the previous day. However, the strong bullish sentiment across global equity markets acted as a headwind for the safe-haven precious metal, particularly amid the relatively thin liquidity caused by the Independence Day holiday in the US. Traders appeared cautious and preferred to wait for the release of the closely-watched US Nonfarm Payrolls (NFP) report on Friday before making new directional bets.

Despite this, the near-term outlook for gold seems favorable for bullish traders. There is a growing consensus that the Federal Reserve (Fed) will begin cutting interest rates this year, which should support the non-yielding gold price. This sentiment is reinforced by softer US macroeconomic data published on Wednesday and the minutes from the last Federal Open Market Committee (FOMC) meeting. The minutes revealed that most policymakers believe US economic growth is gradually cooling. This has strengthened the expectation that the Fed will lower borrowing costs in September and December, keeping the US Dollar (USD) bulls on the defensive and lending support to gold.

In addition to these factors, persistent geopolitical risks continue to validate the positive outlook for gold. Ongoing conflicts in the Middle East, the prolonged Russia-Ukraine war, and political uncertainty in the US and Europe all contribute to the demand for safe-haven assets like gold. Furthermore, the overnight breakout through the 50-day Simple Moving Average (SMA) indicates that the path of least resistance for XAU/USD is to the upside.

The anticipation of the NFP report has made traders cautious, but the broader market sentiment leans towards a bullish trend for gold. Should the US employment data support the view of a slowing economy, it could further solidify expectations of Fed rate cuts, providing additional upward momentum for gold.

In summary, while global equity market strength and cautious trading ahead of the NFP report may limit immediate gains, the overall outlook for gold remains positive. The combination of anticipated Fed rate cuts, ongoing geopolitical tensions, and technical indicators suggests that the gold price is likely to continue its upward trajectory in the near term.

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Gold Holds Steady Below 50-Day SMA, Awaits Fed Chair Powell's Speech

Gold Holds Steady Below 50-Day SMA, Awaits Fed Chair Powell’s Speech

Gold Holds Steady Below 50-Day SMA, Awaits Fed Chair Powell’s Speech

Gold prices (XAU/USD) faced fresh selling pressure during the Asian session on Tuesday, reversing the previous day’s gains and approaching the 50-day Simple Moving Average (SMA), a significant resistance level. The US Dollar (USD) gained traction as investors awaited more clarity on the Federal Reserve’s (Fed) rate-cut path, contributing to the downward pressure on gold. Additionally, a generally positive tone in the equity markets diverted flows away from the safe-haven precious metal.

Markets are increasingly pricing in the possibility of the Fed lowering borrowing costs in September and again in December. This expectation was bolstered by the US ISM PMI report released on Monday, which indicated that the manufacturing sector contracted for the third consecutive month in June. Prices paid by factories for inputs also dropped to a six-month low. Despite this, retreating US Treasury bond yields might limit the USD’s gains, potentially offering some support to gold prices. Furthermore, China’s economic challenges, geopolitical risks, and political uncertainty could also lend support to the precious metal.

Traders are likely to adopt a cautious stance ahead of Fed Chair Jerome Powell’s speech later on Tuesday and the release of the FOMC meeting minutes on Wednesday. These events are expected to provide further insights into the Fed’s future policy direction. Additionally, the closely-watched US Nonfarm Payrolls (NFP) report, due on Friday, will be critical in shaping expectations about the Fed’s next moves. The outcome of these key events will significantly influence market sentiment towards the USD and help determine the next directional move for gold prices.

In summary, gold prices are currently under pressure due to a stronger USD and positive equity market sentiment. However, the potential for future Fed rate cuts, economic uncertainties in China, and geopolitical risks could provide some support. Traders are closely monitoring upcoming speeches and reports for further guidance on the Fed’s policy, which will play a crucial role in the near-term outlook for gold prices.

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WTI Drops Toward

WTI Falls Below $80 on Unexpected US Crude Stockpile Increase

WTI Falls Below $80 on Unexpected US Crude Stockpile Increase

West Texas Intermediate (WTI) crude oil prices edged lower to around $80.30 during the Asian session on Thursday, retreating further from a two-month high of $81.65. This decline was primarily driven by a surprise increase in US crude stockpiles, which raised concerns about weakening demand in the world’s top oil consumer.

On Wednesday, data from the US Energy Information Administration revealed that US crude oil stockpiles rose by 3.591 million barrels for the week ending June 21. This increase was contrary to market expectations, which had anticipated a 3.000 million-barrel decline. The unexpected build in inventories has put downward pressure on oil prices, signaling potential issues with demand.

Adding to the complexity, ongoing geopolitical tensions in the Middle East and Ukraine have the potential to influence oil prices further. Israeli Prime Minister Benjamin Netanyahu announced that the most “intense” phase of the attack against Hamas in Gaza is nearing its end. Meanwhile, Russia condemned the US for a “barbaric” strike in Crimea, which utilized US-provided missiles. This attack resulted in the deaths of at least four people, including children, and injured 151 others. Such geopolitical conflicts can lead to supply disruptions, which typically drive oil prices higher, but current market conditions are dominated by the inventory build.

In a contrasting development, US crude oil imports surged last month to their highest level in nearly two years. Refiners have been acquiring heavy crudes from Canada and Latin America to produce fuels for the summer driving season. In May, US crude oil imports reached 3.1 million barrels per day (bpd), the highest since July 2022, according to ship tracking service Kpler. This trend has continued into June, with imports averaging around 2.9 million bpd, as reported by Reuters.

Despite the geopolitical tensions and increased imports, the immediate focus remains on the unexpected rise in US crude stockpiles, which suggests potential softness in demand. This scenario has led to a cautious outlook in the market, with traders and analysts closely monitoring inventory levels and geopolitical developments for future price movements.

In summary, WTI crude oil prices have softened due to an unexpected build in US crude inventories, overshadowing geopolitical tensions and robust import levels. The market remains vigilant, assessing how these factors will balance out in the coming weeks.

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Gold Price Dips Amid Cautious Federal Reserve Comments

Gold Price Dips Amid Cautious Federal Reserve Comments

Gold Price Dips Amid Cautious Federal Reserve Comments

Gold prices (XAU/USD) are seeing a rise in Tuesday’s trading, maintaining a positive trajectory despite a downtrend in the U.S. dollar. This uplift in gold is somewhat constrained by recent remarks from Federal Reserve (Fed) officials. After last week’s stronger-than-expected U.S. Purchasing Managers Index (PMI), Fed policymakers have indicated a delay in anticipated interest rate cuts for the year, putting pressure on gold’s potential gains. However, the precious metal may find support from increased safe-haven demand amid escalating geopolitical tensions in the Middle East and Ukraine, which could drive its value up in the near term.

Investor attention is set to focus on upcoming speeches by Fed members. Both Lisa Cook and Michelle Bowman are slated to address the public on Tuesday, and their comments are eagerly awaited for indications of the Fed’s future monetary policy direction. This week is also significant for U.S. economic data, with the final reading of the U.S. Gross Domestic Product (GDP) for the first quarter (Q1) due on Thursday, followed by the Personal Consumption Expenditure (PCE) Price Index for May, scheduled for release on Friday. These data points are crucial as they provide insights into the economic health of the nation.

Any signs from these economic releases that suggest a slowing of inflation could alter market expectations, potentially leading to predictions of Fed rate cuts later in 2024. Such developments would likely weaken the U.S. dollar, subsequently providing a boost to USD-denominated gold. As markets digest these economic indicators and Fed communications, the trajectory of gold prices will depend heavily on the interplay between U.S. monetary policy expectations and global geopolitical dynamics. Investors will need to stay tuned to these key economic events and policy signals to gauge the future direction of gold prices effectively.

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Australian Dollar Dips Amid Renewed

Australian Dollar Dips Amid Renewed US Dollar Demand

Australian Dollar Dips Amid Renewed US Dollar Demand

On Thursday, the Australian Dollar (AUD) experienced losses, trading in negative territory. Despite this, the currency’s downside may be limited due to the hawkish stance taken by the Reserve Bank of Australia (RBA) during its June meeting earlier this week. The RBA’s firm approach suggests that they are not ready to ease monetary policy soon, which could provide some support for the AUD.

Contributing to the dynamics between the AUD and USD is the recent weaker-than-expected US Retail Sales data. This data has fueled speculation that the US Federal Reserve (Fed) might consider rate cuts later this year, potentially weakening the Greenback and benefiting the AUD/USD pair. The anticipation of lower US interest rates could create a supportive environment for the Australian Dollar, as investors might seek higher returns elsewhere.

However, the RBA’s statement also highlighted the uncertainties in the economic outlook. The central bank acknowledged that the journey to bring inflation down to its target would not be straightforward. This acknowledgment of economic challenges suggests that the RBA remains cautious about the future, which might temper some of the positive impacts on the AUD.

Traders are also closely watching the upcoming preliminary data for Australia’s Judo Bank Purchasing Managers Index (PMI) for May, set to be released on Friday. This PMI data will provide insights into the health of the Australian economy. Any indications of recovery or improvement in the PMI could influence the RBA’s decisions regarding future rate cuts. A stronger-than-expected PMI might prompt the RBA to hold off on reducing rates, which could, in turn, bolster the Australian Dollar against the US Dollar.

In summary, while the Australian Dollar faces some pressure, the RBA’s hawkish stance and the potential for US Fed rate cuts provide a mixed outlook. The upcoming PMI data will be crucial for traders, as it will offer further direction on the economic trajectory and the RBA’s monetary policy decisions. The interplay of these factors will continue to shape the AUD/USD pair’s performance in the near term.

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Ex-Chief Economist Predicts BOJ Rate Hike as Early as June

Ex-Chief Economist Predicts BOJ Rate Hike as Early as June

Ex-Chief Economist Predicts BOJ Rate Hike as Early as June

The Bank of Japan (BOJ) might implement up to three additional benchmark interest rate hikes this year, with the first potential increase occurring as early as June. This move would be a response to what a former BOJ chief economist describes as the excessive ease of the current monetary settings.

The economist, Toshitaka Sekine, expressed his view in a Bloomberg interview, suggesting that the central bank could adopt a more aggressive approach to monetary tightening. According to Sekine, there are no rigid constraints like a 0.25% limit that should prevent further rate increases if the economic conditions are favorable. He emphasized that gradual rate adjustments are feasible as long as the economic environment supports such actions.

Sekine, who now serves as an economics professor at Hitotsubashi University in Tokyo, believes that the BOJ has the opportunity to roll back its easy monetary policies gradually, particularly since real interest rates remain significantly negative.

In anticipation of the BOJ’s April policy meeting, a Bloomberg survey of economists indicated a median year-end benchmark rate prediction of 0.25%, suggesting expectations of only one more hike this year following the BOJ’s initial increase since 2007 in March.

However, Sekine’s stance is notably more hawkish compared to the general market consensus. Investment firms like Vanguard Group Inc. and Pacific Investment Management Co. also forecast a steeper increase in the key rate, with predictions of it reaching up to 0.75% by the end of the year.

The April summary from the BOJ’s policy meeting hinted at a possible hawkish shift within the nine-member board, with suggestions that the future rate path could surpass current market expectations. This was further supported by the BOJ’s recent decision to reduce its bond purchasing, which has fueled speculation about an impending rate hike.

Sekine also touched on the potential necessity of a higher rate if the yen’s value begins to adversely affect pricing trends, a situation made more likely as Japanese businesses adjust their pricing strategies in response to inflation.

Despite Japan’s fragile economic recovery, evidenced by a contraction in the first quarter of the year and stagnant growth at the end of 2023, Sekine argues that these economic conditions are unlikely to significantly impact the BOJ’s plans for rate hikes. He pointed out that the output gap is roughly zero, suggesting that even a contraction wouldn’t substantially alter the scope of monetary easing required.

The BOJ’s recent forecast projected that consumer prices, excluding fresh food and energy, would increase by 2.1% in the fiscal year starting April 2026, signaling that higher rates might be necessary. Sekine concluded by emphasizing that while the rate increases are not predetermined, they are likely to proceed incrementally as long as they align with common sense and favorable conditions.

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Japan's Economy Falters, Impacting BOJ Rate Hike Plans

Japan’s Economy Falters, Impacting BOJ Rate Hike Plans

Japan’s Economy Falters, Impacting BOJ Rate Hike Plans

Japan’s economy contracted more sharply than anticipated in the first quarter, exacerbated by the ongoing weakness of the yen, which has put significant pressure on consumers. This presents a fresh challenge for the Bank of Japan (BOJ) as it attempts to move interest rates further from near-zero levels.

Preliminary gross domestic product (GDP) data from the Cabinet Office revealed a 2.0% annualized decline in Japan’s economy for January-March, exceeding the 1.5% drop forecasted by economists in a Reuters poll. This follows a barely perceptible growth in the fourth quarter of 2023, primarily due to downgraded capital expenditure estimates.

Despite the potential for heavy revisions in the final release of capital spending data, the across-the-board declines in all GDP components indicate a lack of major growth drivers in Japan’s economy during the first quarter. This scenario could cause the BOJ to reconsider the timing of future rate hikes, especially given its recent move in March to raise interest rates for the first time since 2007, with intentions to continue tightening policy.

Economist Yoshimasa Maruyama from SMBC Nikko Securities noted that the timing of rate hikes could be delayed depending on how the GDP rebounds in the current quarter. While rising wages are expected to spur economic recovery, uncertainty remains around consumption in the service sector.

The latest GDP data translates to a quarterly contraction of 0.5%, slightly worse than the 0.4% decline predicted by economists. Revised figures for the first quarter will be released on June 10.

The weak yen has created a dual-speed economy in Japan. While the export and tourism sectors benefit from a more competitive exchange rate, households and small businesses are burdened by inflated costs of imported goods. This situation complicates the BOJ’s decision on whether to maintain or unwind its monetary stimulus.

Daiwa Securities’ chief economist Toru Suehiro pointed out that the adverse effects of a weaker yen are becoming a significant concern. While real wages are expected to turn slightly positive in the latter half of the year, they are not projected to rise sharply due to the continued depreciation of the yen.

This year, Japan’s large businesses implemented the biggest wage hikes in three decades, which the BOJ sees as a necessary condition to end decades of radical monetary stimulus. However, households have been tightening their spending as price increases outpace wage gains, reducing their real incomes and purchasing power.

Private consumption, which makes up more than half of the Japanese economy, fell by 0.7%, more than the anticipated 0.2% drop, marking the fourth consecutive quarter of decline—the longest streak since 2009.

Economists remain hopeful that the first quarter’s weakness is temporary and expect that the drag on growth from factors like the Noto earthquake and the suspension of operations at Toyota’s Daihatsu unit will dissipate. However, persistent yen declines and potential spikes in crude oil prices due to the Middle East crisis remain threats to the recovery.

Capital spending, a crucial driver of private demand, fell by 0.8% in the first quarter, against an expected 0.7% decline, despite robust corporate earnings. External demand, defined as exports minus imports, subtracted 0.3 percentage points from the first-quarter GDP estimates.

Policymakers are currently relying on significant pay hikes and planned income tax cuts to boost consumption and avoid a return to deflation. Maruyama suggests that rate hikes or cuts in bond purchases could mitigate the negative impacts of yen weakening, potentially leading to income gains that could fuel consumption. However, if consumption remains weak, raising rates would be challenging.

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Traders Anticipate Post-CPI Surge, Eyeing US 10-Year Yield at 4.3%

Traders Anticipate Post-CPI Surge, Eyeing US 10-Year Yield at 4.3%

Traders Anticipate Post-CPI Surge, Eyeing US 10-Year Yield at 4.3%

Traders in US Treasury options are positioning for a bond rally and a sharp drop in yields following the release of crucial inflation data on Wednesday. Over the past week, there has been significant buying activity centered on options that would benefit from US 10-year yields dropping to around 4.3%, which is about 15 basis points lower than current levels and the lowest in more than a month. One particularly high-risk trade stood out, with the potential to generate a $15 million windfall on a wager of just $150,000 if the 10-year benchmark yield falls further to 4.25% by May 24.

This bet on a bond rally comes as bonds have regained some ground following a challenging April, when prices slumped and yields soared to their highest levels of the year due to diminishing expectations for interest-rate cuts. Since then, Federal Reserve Chair Jerome Powell has alleviated market concerns by downplaying the need for additional rate hikes. Further gains were made after a report on Friday indicated a cooling labor market, which might pave the way for rate cuts despite persistent inflation.

Investors are now focused on the latest data on US consumer prices in April, which will be critical in determining the direction of the rally. On Tuesday, Treasuries advanced after a report provided what Powell described as a “mixed” reading on wholesale prices last month.

Open interest, or the amount of new positioning, has surged recently in options tied to the so-called 110.00 call strike, which corresponds to a roughly 4.3% 10-year yield level, according to CME data. Buying has been concentrated in the June tenor expiring on May 24, capturing this week’s significant economic news, including reports on producer and consumer prices.

Meanwhile, asset managers have continued to add to long bets in futures, increasing bullish positions for the fourth consecutive week, as indicated by data from the Commodity Futures Trading Commission. However, caution is still evident in some parts of the market. For instance, a recent JPMorgan Chase & Co. client survey showed a slight increase in short positions in the cash market for Treasuries, marking a shift from a neutral stance. Notably, the past three consumer price index reports have surprised to the upside, challenging bullish expectations.

Despite this, the futures market has turned less bearish since last week’s jobs report. Traders have unwound bearish futures positions linked to the Fed-sensitive Secured Overnight Financing Rate, removing hedges against potential rate hikes and reviving bets on easing. New long positions have also emerged across various tenors of the futures strip. This has resulted in a pullback from the severe bearishness observed in late April, although short positions remain.

Significant options flows include a large bullish “screen” trade, executed electronically at a cost of $4 million, which appeared as new risk. The same dovish protection was purchased again during Tuesday’s early Asia session. Similarly, there has been heavy buying of risky option strategies known as risk-reversals, where calls are funded by selling puts.

Overall, traders are setting up for a potential bond rally and a sharp drop in yields, with a close eye on the upcoming inflation data to determine the market’s next move.

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US Foreign Exchange Deposits

US Foreign Exchange Deposits Increase for Fourth Consecutive Month, Reaching $549 Million

US Foreign Exchange Deposits Increase for Fourth Consecutive Month, Reaching $549 Million

Retail forex deposits in the United States have seen a continuous rise for the fourth month, according to March 2024 data from the Commodity Futures Trading Commission (CFTC). In this period, the total value of client deposits in the forex market increased to over $549 million, marking a 1.3% growth from February’s figures. This represents a significant recovery, reaching the highest value recorded in over a year and maintaining a growth trajectory since a low in December.

The increase comes after a period of stagnation where, following a downturn, deposits hit a low of $516 million in September 2023. Since then, there has been a consistent upward trend in the volume of funds retail investors are parking in forex trading accounts in the U.S., suggesting a revitalized interest in forex trading among U.S. retail investors.

The CFTC report highlights that the leading broker, Gain Capital, holds deposits of $208.4 million, despite a slight decrease of 0.5% from February’s $209.4 million. Charles Schwab also saw a minor reduction in forex deposits, dropping by less than $300,000 to $62.4 million. On the other hand, other brokers showed positive growth in their deposit figures. Trading.com enjoyed the most substantial percentage increase, with an 8.9% rise bringing their total to $1.8 million. OANDA experienced the largest nominal increase, with a boost of $4.2 million (2.3%), raising its total forex deposits to $183.9 million and securing its position as the second-largest broker after Gain Capital in terms of retail forex obligations.

The CFTC enforces strict regulatory reporting requirements for Retail Foreign Exchange Dealers (RFEDs) and Futures Commission Merchants (FCMs). These entities are required to submit monthly financial reports which include crucial financial metrics like adjusted net capital, client assets, and total retail forex obligations. Retail forex obligations represent all the assets held by FCMs or RFEDs on behalf of their clients, factoring in any gains or losses.

This reporting framework ensures transparency and regular public disclosure of financial commitments by major players in the forex market such as Charles Schwab, Gain Capital, IG, Interactive Brokers, OANDA, and Trading.com, among the 62 registered RFEDs and FCMs. This oversight is crucial for maintaining market integrity and providing investors with the confidence that their interests are being safeguarded by regulatory standards.Overall, the increasing trend in forex deposits reflects a growing confidence and a renewed interest in forex trading among U.S. retail investors, signaling a potentially robust period for the forex market in the United States.

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China Schedules Meeting to Discuss $138 Billion Ultra-Long Debt Offering

China Schedules Meeting to Discuss $138 Billion Ultra-Long Debt Offering

China Schedules Meeting to Discuss $138 Billion Ultra-Long Debt Offering

China is set to launch the initial phase of its ambitious 1 trillion yuan ($138 billion) ultra-long special sovereign bond issuance this Friday, aiming to bolster the world’s second-largest economy. This announcement was made by the Ministry of Finance, which plans to issue various tranches of these bonds, beginning with 30-year bonds this week.

Subsequent offerings are scheduled with 20-year bonds to be issued from May 24 and 50-year bonds from June 14. A final batch of 30-year notes is slated for release in November, though the specific amounts for each issuance have not been disclosed.

Details from Bloomberg earlier on Monday suggest that the bond issuance will be divided as follows: 300 billion yuan in 20-year bonds, 600 billion yuan in 30-year bonds, and 100 billion yuan in 50-year bonds. This information was provided by sources who preferred to remain anonymous due to the sensitivity of the details.

The decision to sell these bonds was first revealed during the National People’s Congress in March, where policymakers expressed their commitment to increasing fiscal support to mitigate the economic strain caused by high debt levels among local governments. This strategy marks only the fourth occurrence of such a sale in the last 26 years, with the previous instance in 2020, intended to finance measures against the pandemic.

This bond sale emerges amidst signs of a contracting credit landscape in April, notable for being the first such contraction as the pace of government bond sales decelerated. The amount of new bonds issued by Chinese authorities and policy banks in the first quarter dropped to half of last year’s figures. This reduction was influenced by borrowing restrictions on highly indebted regions and the ongoing allocation of funds from last year’s sales.

Recently, however, there has been a noticeable acceleration in bond sales. Just last week, provincial governments issued a record amount of new notes since February, heeding the central government’s directive to expedite local bond issuances. The Politburo, in April, also emphasized the urgency of commencing the special sovereign debt sale.

According to Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered Plc, this central bond sale is crucial for expediting fiscal expenditure, which has been sluggish. He predicts that the People’s Bank of China (PBOC) might lower the banks’ reserve requirement ratio by 25 basis points alongside the bond sale to maintain liquidity, potentially paving the way for a reduction in the loan prime rate.

Despite robust performance in the first quarter, challenges persist with consumer demand weakening amid an ongoing property crisis and a tepid job market. Additionally, exports, which have been a highlight this year, face uncertainties due to escalating tensions with key trading partners and concerns over China’s excess manufacturing capacity. Nonetheless, the government is focusing on infrastructure spending as a pivotal strategy to achieve its ambitious growth target of around 5% for the year.

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Mexican Peso Rises as Banxico Holds Key Rate Steady

Mexican Peso Rises as Banxico Holds Key Rate Steady

Mexican Peso Rises as Banxico Holds Key Rate Steady

The Mexican Peso (MXN) experienced significant gains against its major trading counterparts following the Bank of Mexico’s (Banxico) latest policy meeting on Thursday. During the meeting, Banxico’s board unanimously decided to maintain the benchmark interest rate at 11.00%, leading to a robust appreciation of the Peso. This decision was accompanied by a significant upward revision of inflation forecasts, acknowledging ongoing high price pressures. 

Banxico now indicates that interest rate cuts are unlikely in the near future, a stance that tends to strengthen the currency as higher interest rates are attractive to foreign capital looking for better returns.

As a result, major currency pairs such as USD/MXN, EUR/MXN, and GBP/MXN were trading at 16.80, 18.12, and 21.08 respectively at the time of publication. The Peso’s appreciation was evident between roughly a quarter and three-quarters of a percent across these pairs, maintaining its strength well into Friday’s European trading session, with only a slight pullback from Thursday’s peak levels.

The upward revision in the inflation outlook by Banxico is particularly notable. The central bank now expects inflation to decline more gradually towards its target of 3.0%, which it does not anticipate achieving until the fourth quarter of 2025. This represents a delay from earlier projections, which had inflation nearing 3.1% by the second quarter of 2025 and stabilizing around that figure for the remainder of the year. Core inflation forecasts were similarly adjusted.

In its official statement, Banxico highlighted prolonged inflationary pressures, stating, “Considering that inflationary shocks are foreseen to take longer to dissipate, the forecasts for headline and core inflation have been revised upwards for the next six quarters. In particular, services inflation is foreseen to show more persistence compared to what had been previously anticipated.”

These revised forecasts and the decision to hold interest rates steady reflect Banxico’s cautious approach in the face of persistent inflation, which continues to influence the economic landscape. The central bank’s updates underscore the challenges of managing inflation within the targeted range, while also acknowledging the impacts of external economic factors and domestic fiscal policies on the broader economy. This careful balance aims to sustain economic stability while mitigating inflationary impacts, supporting the Peso’s strength in the international currency markets.

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China's Exports and ImportsRebound

China’s Exports and Imports Rebound, Indicating Demand Recovery

China’s Exports and Imports Rebound, Indicating Demand Recovery

China’s exports and imports exhibited growth in April, rebounding from previous contractions and signaling a positive shift in domestic and international demand, which could bolster the nation’s unsteady economic revival.

According to recent customs data, this improvement is largely attributed to a series of policy support measures implemented over the past months, aimed at stabilizing fragile investor and consumer confidence.

Data revealed that shipments from China increased by 1.5% year-on-year in April, aligning with economic forecasts and marking a recovery from a 7.5% decline in March—the first drop since November. 

April’s imports surged by 8.4%, significantly surpassing expectations of a 4.8% increase and reversing a decrease of 1.9% from March. This resurgence in trade figures suggests that policy interventions are starting to positively impact the economy.

Zhang Zhiwei, chief economist at Pinpoint Asset Management, highlighted that despite weak domestic demand contributing to deflationary pressures, it has inadvertently enhanced China’s export competitiveness, making exports a key driver of economic stability this year. However, broader economic indicators such as consumer inflation, producer prices, and bank lending from March indicate potential volatility in maintaining this momentum. Additionally, the ongoing property crisis continues to pressurize the economy, sparking debates on the necessity for further policy stimulus.

In response to these challenges, the Politburo of the Communist Party announced last month its commitment to fortifying economic support through prudent monetary measures and proactive fiscal policies. These include adjustments to interest rates and bank reserve requirement ratios to foster growth. Despite these efforts, and a set economic growth target of around 5% for 2024, analysts remain skeptical about achieving this goal without substantial additional stimulus.

The past year has been challenging for Chinese exporters, as rising global interest rates dampened international demand. With central banks in developed nations like the Federal Reserve showing little intention to reduce borrowing costs soon, Chinese manufacturers could face ongoing difficulties in securing international market share. To mitigate these pressures, exporters are reportedly reducing prices to sustain sales, particularly in industries plagued by overcapacity, which is expected to continue suppressing export prices in the months ahead.

Furthermore, as Chinese firms increasingly invest overseas to circumvent potential U.S. sanctions, exports of industrial inputs such as chemicals, fabric, auto parts, and electrical machinery are expected to rise, according to Dan Wang, chief economist at Hang Seng Bank China.

Concluding the analysis, China’s trade surplus expanded to $72.35 billion in April, up from $58.55 billion in March, although slightly below the projected $77.50 billion. This indicates a robust recovery in trade dynamics, reflecting the complex interplay of global economic conditions and domestic policy effectiveness in shaping China’s economic 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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