2024-10-04 11:54
US service PMI data came in at 54.9, well above the forecast of 51.7. Market participants are pricing a 65% chance of a 25-bps rate cut in November. Canada’s services PMI fell from 47.8 to 46.4 in August. The USD/CAD price analysis shows bulls charging ahead as the dollar firms after upbeat US business activity data and ahead of the nonfarm payrolls. At the same time, a shift in the Fed’s policy outlook and Middle East tensions supported the greenback. Meanwhile, the loonie was weak after downbeat business activity data. On Thursday, the dollar got a boost from service PMI data, which came in at 54.9, well above the forecast of 51.7. Strong business activity in the services sector indicates a robust economy. Consequently, the Fed might prefer a gradual pace for rate cuts. As a result, market participants are pricing a 65% chance of a 25-bps rate cut in November. Moreover, Powell recently confirmed that the Fed would move at a slower pace with two small cuts before the year ends. However, as more data comes in, this outlook could change. The next report will show job growth and unemployment in the US in September. Analysts believe the economy will add 148,000 workers while the unemployment rate holds at 4.2%. An unexpected outcome could cause volatility, impacting Fed rate cut expectations. Elsewhere, Middle East tensions kept demand for the dollar high. Meanwhile, although oil also rose, the Canadian dollar fell due to poor economic data. Canada’s services PMI fell from 47.8 to 46.4 in August. A poor economy means more rate cuts that will hurt the loonie. USD/CAD key events today US average hourly earnings m/m US nonfarm employment change US unemployment rate USD/CAD technical price analysis: Aiming for 1.3580 On the technical side, the USD/CAD price is rallying after bouncing off the 1.3475 key support level. The price is climbing above the 30-SMA, supporting a bullish bias. At the same time, the RSI trades on the upper side of the bullish territory. Therefore, it might soon reach the overbought region, which happens when the price is in a solid uptrend. If this move continues, it might pause at the 1.3580 key resistance level. Here, it might pull back to retest the 30-SMA before the uptrend continues. A break above 1.3580 would strengthen the bullish bias. https://www.forexcrunch.com/blog/2024/10/04/usd-cad-price-analysis-dollar-gains-momentum-ahead-of-nfp/
2024-10-04 09:47
The yen strengthened slightly on Friday but was heading for an over 2.5% weekly loss. Consensus estimates indicate a 148,000 increase in US employment for September. Japan’s Prime Minister Ishiba has dashed hopes for a near-term rate hike. The USD/JPY outlook shows a pause near recent peaks ahead of crucial US monthly employment figures. The dollar hovers near a six-week high due to support from a slightly hawkish Fed, upbeat data and Middle East tensions. On the other hand, the yen strengthened slightly on Friday but was heading for an over 2.5% weekly loss. Market participants are preparing to receive the US nonfarm payrolls that will give clues on Fed policy. Consensus estimates indicate a 148,000 increase in employment for September. Meanwhile, the unemployment rate will likely remain at 4.2%. Recent US data has shown unexpected resilience in the economy. If this trend continues, the NFP could beat expectations. An upbeat report would lower bets for a 50-bps rate cut. However, if employment falls sharply, the Fed would be forced to consider another massive cut in November. Notably, Powell recently noted that the Fed might cut twice this year by 25-bps each. The employment figures could change this outlook. Meanwhile, data on Thursday showed better-than-expected business activity in the services sector, indicating a strong economy. Meanwhile, the dollar remained near its week-highs as Middle East tensions spooked traders. The war in the Middle East has widened to involve Iran and Lebanon. Iran made a bold attack on Israel, which could lead to retaliation. In Japan, the new Prime Minister Ishiba has dashed hopes for a near-term rate hike. He said the economy was not ready for more rate hikes. Still, economists forecast at least one such move this year. USD/JPY key events today US average hourly earnings m/m US nonfarm employment change US unemployment rate USD/JPY technical outlook: Rally halts near 147.01 resistance On the technical side, the USD/JPY price has retreated after finding solid resistance at the 147.01 level. However, the bullish bias is still strong, with the price far above the 30-SMA and the RSI in bullish territory. Furthermore, the price trades within a bullish channel with clear support and resistance lines. Bulls recently touched the channel resistance, where bears were waiting to take over. Still, if bulls remain strong, the price will keep climbing to break above 147.01. Otherwise, it will drop to revisit the channel support. https://www.forexcrunch.com/blog/2024/10/04/usd-jpy-outlook-market-awaits-key-us-employment-figures/
2024-10-03 10:51
Bank of Japan policymakers have shifted their tone to a less hawkish one. Most economists expect the central bank to cut borrowing costs before the year ends. The dollar surged Wednesday after the ADP employment figures came in higher than expected. The USD/JPY outlook shows a shift in sentiment regarding Bank of Japan rate hikes after slightly dovish remarks that weakened the yen. At the same time, the US dollar firmed after private employment figures showed a resilient labor market. Bank of Japan policymakers have shifted their tone to a less hawkish one. Notably, board member Asahi Noguchi said the central bank should implement a cautious approach to hikes to avoid hurting the economy. Meanwhile, Prime Minister Shigeru Ishiba said the economy was unprepared for higher borrowing costs. Initially, policymakers were enthusiastic about higher consumption and inflation. As a result, most of them, including Ueda, voiced support for more rate hikes, which supported the yen. The recent change will likely keep downward pressure on Japan’s currency. However, economists expect the central bank to cut borrowing costs before the year ends. Meanwhile, the dollar surged Wednesday after the ADP employment figures came in higher than expected, indicating a tight labor market. Private firms employed 143,000 more workers in September. Economists had expected 124,000 new jobs. This report came after job openings which increased more than expected. Resilience in the labor market supports a slow Fed easing cycle. Therefore, the likelihood of a 50-bps rate cut in November fell. The next report on monthly employment change might reshape the outlook for rate cuts. Another upbeat report will solidify bets for a smaller rate cut in November. USD/JPY key events today US unemployment claims US ISM services PMI USD/JPY technical outlook: Channel resistance On the technical side, the USD/JPY price has paused near its bullish channel resistance line. It trades far above the 30-SMA, a sign that bulls have firm control. At the same time, the RSI is in the overbought region, showing solid bullish momentum. USD/JPY has made a series of higher highs and lows that have formed a strong uptrend. However, after a solid run, bulls might pause at the channel resistance, allowing bears to return. In such a case, the price will likely collapse to revisit the channel support before bouncing higher or breaking below. https://www.forexcrunch.com/blog/2024/10/03/usd-jpy-outlook-boj-signals-caution-on-rate-hikes/
2024-10-03 09:11
BoE governor Bailey said the central bank could become aggressive on cuts if inflation falls. The US ADP non-farm employment increased by 143,000 in September. Economists expect the US economy to add 148,000 jobs in September. The GBP/USD forecast shows a sudden spike in bearish momentum after Bank of England governor Bailey’s dovish comments. At the same time, the dollar was firm after private employment figures beat estimates. The pound plunged to a two-week low after BoE governor Bailey said the central bank could become aggressive on cuts if inflation behaves well. A more dovish outlook means more rate cuts. Consequently, market participants raised the likelihood of a November rate cut to 90%. However, Bailey noted the risk of higher oil prices due to the escalating Middle East tensions. An increase in fuel prices could lead to a spike in inflation that would cause most major central banks to pause. Still, at the moment, it remains only a risk. On the other hand, the US dollar strengthened on Wednesday after US private employment rose more than expected. The ADP non-farm employment increased by 143,000 in September, above expectations of 124,000. The report suggested a slow approach to rate cuts by the Fed. In a recent speech, Fed Chair Powell noted that the central bank might implement two more cuts this year, each 25-bps. However, all eyes are on the nonfarm payrolls report, which could change this outlook. Economists expect the US economy to add 148,000 jobs in September, slightly above the previous month’s increase. On the other hand, the unemployment rate might hold steady at 4.2%. Before this, traders will watch unemployment claims to see the state of the labor market. GBP/USD key events US unemployment claims US ISM Services PMI GBP/USD technical forecast: Bearish channel breakout On the technical side, the GBP/USD price has plummeted below the 1.3200 support level. The bearish bias is strong since the price has fallen well below the 30-SMA, At the same time, the RSI trades in the oversold region, indicating massive bearish momentum. The decline came after the RSI made a bearish divergence with the price. Initially, bulls kept the price in a bullish channel. However, after the RSI showed weakness, bears took over by breaching the SMA and the channel support. If the downtrend continues, the price will soon reach the 1.3051 support level. https://www.forexcrunch.com/blog/2024/10/03/gbp-usd-forecast-bailey-hints-at-aggressive-rate-cuts/
2024-10-02 05:33
Iran attacked Israel with missiles, increasing the conflict in the Middle East. Data from the US on job openings revealed better-than-expected demand for labor. UK data revealed a decline in factory activity that weighed on the pound. The GBP/USD forecast points south as the US dollar finds its shine amid escalating Middle East tensions. At the same time, the pound fell after weaker-than-expected UK manufacturing data raised the likelihood of a BoE rate cut. On Tuesday, Iran attacked Israel with missiles, increasing the conflict in the Middle East. For weeks, Israel has fought Hezbollah in Lebanon. Market participants worried about a wider war that could impact the global economy. As a result, risk appetite fell, and the dollar rose on safe-haven demand. Furthermore, data from the US on job openings revealed better than expected demand for labor. Notably, vacancies rose to 8.04 million, beating forecasts of 7.64 million. A resilient labor market will allow the Fed to achieve a soft landing, with inflation reaching 2% and growth remaining steady. More support for the dollar came from Powell’s speech on Monday. The Fed Chair said the central bank would likely cut twice more this year by a total of 50-bps. Therefore, he pushed back expectations for a massive November rate cut. Meanwhile, in the UK, data revealed a decline in factory activity that weighed on the pound. The manufacturing PMI fell to 51.5 in September but stayed in expansion territory. Meanwhile, traders continued to speculate on the upcoming October 30 budget. The new finance minister will announce new tax measures and spending plans that might impact the UK economy and the outlook for monetary policy. Consequently, it might cause a lot of volatility in the GBP/USD pair. GBP/USD key events today US ADP Non-Farm Employment Change GBP/USD technical forecast: 1.3400 resistance triggers trend reversal On the technical side, the GBP/USD price is steeply declining after breaking below the 30-SMA and its bullish channel. The previous bullish trend failed to continue beyond the 1.3400 resistance level, where bears took control. Moreover, the RSI made a strong bearish divergence, indicating fading bullish momentum. The price recently breached the 1.3301 support and has paused to retest the level. It trades well below the 30-SMA, and the RSI is nearer the oversold region. Consequently, the bearish bias is strong and could lead to a retest of the 1.3200 support level. https://www.forexcrunch.com/blog/2024/10/02/gbp-usd-forecast-dollar-gains-after-irans-attack/
2024-10-02 04:03
Oil prices rallied on Tuesday after Iran fired missiles at Israel. Canada’s manufacturing business activity rose for the first time in seventeen months. The US dollar rallied against most of its peers due to safe-haven inflows. The USD/CAD price analysis shows a return of bearish momentum as the Canadian dollar gains with oil due to Middle East tensions. At the same time, the dollar was firm as investors bought safe-haven assets amid geopolitical tensions. Oil prices rallied on Tuesday after Iran fired missiles at Israel, escalating the war in the Middle East. The Israel-Gaza war has slowly widened to include Iran and Lebanon, threatening to be a bigger war that will likely disrupt the oil supply. Supply disruptions will tighten the market, boosting prices. Meanwhile, the Canadian dollar surged because Canada is a net oil exporter. Consequently, oil price increases result in more revenues for the country, strengthening its currency. At the same time, upbeat domestic data supported the loonie. Notably, manufacturing business activity rose for the first time in seventeen months. Canada’s PMI increased from 49.5 to 50.4 in September, recording an expansion. Meanwhile, the US dollar rallied against most of its peers due to safe-haven inflows. The conflict between Iran and Israel dampened risk appetite, resulting in a rush to safer assets. However, since the loonie was also surging, USD/CAD fell. Elsewhere, data in the previous session revealed steady manufacturing business activity in the US. Moreover, job openings rose, indicating high demand for labor. The US ISM manufacturing PMI missed forecasts but held steady at 47.2. Meanwhile, there were 8.04 million job vacancies compared to forecasts of 7.64 million. Market participants are now awaiting the all-important nonfarm payrolls report for more clues on the outlook for Fed rate cuts. USD/CAD key events today US ADP Non-Farm Employment Change USD/CAD technical price analysis: Bears aim for the 1.3425 support On the technical side, the USD/CAD price has broken below the 30-SMA after finding resistance at the 0.5 Fib level. Bulls had taken over but failed to keep the price above the SMA. The price recently broke out of a bullish channel with an impulsive move that paused at the 1.3425 support level. If the subsequent bullish move was corrective, bears might make another impulsive leg lower. Therefore, the price might break below the 1.3425 level to make lower lows. https://www.forexcrunch.com/blog/2024/10/02/usd-cad-price-analysis-cad-rises-with-oil-supply-concerns/
