2024-01-12 10:20
US consumer prices rose by 0.3% for the month and registered an annual growth of 3.4%. Traders believe that the BoE’s benchmark rate will decline rapidly this year. Recent data indicated a contraction in the British economy in October. The GBP/USD price analysis hinted at a subtle bearish tilt amid a strong dollar as investors assessed the impact of an upbeat US inflation report. However, there are still expectations that the Federal Reserve could cut rates as early as March. Notably, US consumer prices rose by 0.3% in December and registered an annual growth of 3.4%. This beat economists’ expectations of a 0.2% gain and a 3.2% annual rise, respectively. Meanwhile, Bank of England Governor Andrew Bailey refrained from discussing the UK’s economic outlook on Wednesday. However, he highlighted the decrease in mortgage rates. At the same time, the market perception has shifted towards the belief that the BoE’s benchmark rate will decline rapidly this year. Moreover, futures markets indicate that traders expect about four rate cuts in 2024, possibly as early as May but certainly by June. Elsewhere, recent data indicated a contraction in the British economy in October, increasing the risk of a recession. The CEO of Tesco, the UK’s largest retailer, expressed “cautious optimism” about the UK consumer in 2024. Meanwhile, Sainsbury’s reported robust Christmas food sales but noted weakness in demand for other essential products. Notably, the pound emerged as one of the best-performing currencies against the dollar in 2023, recording a gain of 5.2%, the most in six years. It was supported by some of the highest interest rates among developed economies. GBP/USD key events today The US PPI report The US core PPI report GBP/USD technical price analysis: Bulls approach strong resistance at 1.2800 On the technical side, GBP/USD is bullish as the price trades above and respects the 30-SMA support line. At the same time, the RSI respects the pivotal 50 level as support, staying in bullish territory. However, on a larger scale, the pound trades in a range with support at 1.2600 and resistance at 1.2800. Consequently, the current bullish move might pause at the 1.2800 range resistance. The bullish move can only continue if the price breaks out of consolidation. Otherwise, bears will take over at 1.2800 and target the 1.2600 support level. https://www.forexcrunch.com/blog/2024/01/12/gbp-usd-price-analysis-investors-digest-us-cpi-data/
2024-01-12 09:10
Oil rose after the US and the UK announced air and sea strikes on Houthi military targets in Yemen. US consumer prices rose in December, coming in 0.3% higher for the month. Traders estimate a 73.2% likelihood of the Fed initiating its first 25 bps cut in March. The USD/CAD outlook took a bearish turn on Friday in the wake of a dynamic shift. The Canadian dollar rose with oil prices after the announcement of air and sea strikes by the US and UK on Houthi military targets in Yemen. The strikes were in retaliation for the group’s attacks on ships in the Red Sea. Meanwhile, investors continued digesting the US inflation report. It will shape market expectations on Fed rate cuts. Consumer prices in the US rose in December, coming in 0.3% higher for the month and marking an annual increase of 3.4%. Still, traders estimate a 73.2% likelihood of the Fed starting its first 25 basis point (bps) cut in March. Moreover, they expect additional cuts after that. However, Fed officials are less optimistic. Austan Goolsbee, President of the Chicago Fed Bank, indicated uncertainty about whether there was enough progress for the Fed to start rate cuts. Moreover, investors had lost confidence in an early rate cut in the previous session. On Thursday, the Canadian dollar dropped to a four-week low against the stronger US dollar due to the higher-than-anticipated US inflation data. Initially, it raised doubts about the likelihood of an early start to Fed rate cuts. Tony Valente, a senior FX dealer at AscendantFX, commented: “With little domestic economic news, the CAD responded to the US inflation report.” USD/CAD key events today US Producer Price Index m/m US Core Producer Price Index m/m USD/CAD technical outlook: Bulls ride the channel as the 30-SMA levels out On the technical side, USD/CAD has remained in its bullish channel as the 30-SMA flattens. The bullish bias remains as the price is making higher highs and lows. Moreover, it is staying mainly above the 30-SMA. However, bullish momentum continues to weaken with each new high as the RSI is descending. Therefore, bears might soon get stronger than bulls, leading to a breakout below the channel support and a reversal in the trend. However, if bulls regain momentum at the channel support, the bullish move might continue higher to the 1.3501 resistance level. https://www.forexcrunch.com/blog/2024/01/12/usd-cad-outlook-loonie-gains-traction-as-oil-rallies/
2024-01-11 12:25
The bias remains bullish as long as it stays above the median line (ml). Higher inflation should lift the greenback. A new higher high activates further growth. The USD/CAD price is trading in the green at 1.3374 at the time of writing. The pair is struggling to stay higher despite temporary retreats. The US dollar dropped a little in the short term. On Tuesday, the US data came in better than expected, while yesterday, the Final Wholesale Inventories matched expectations. Today, the US inflation figures should have a major impact. The volatility should be high, leading to consolidation amid uncertainty. The FED is expected to deliver a 75-bps rate cut during the year as inflation decreased. Still, the Consumer Price Index m/m is expected to report a 0.2% growth in December versus a 0.1% growth in November; the CPI y/y could be reported at 3.2% above 3.1% in the previous reporting period, and the Core CPI may announce a 0.3% growth for the second consecutive month. Higher inflation should force the Federal Reserve to maintain its monetary policy. This scenario could lift the greenback. In addition, the Unemployment Claims data will be released as well. Tomorrow, the US publishes the PPI and Core PPI figures, so the volatility could remain high. The USD/CAD price found strong resistance at the ascending pitchfork’s upper median line (uml). It has also failed to take out the 50% (1.3397) retracement level. Now, it has dropped below the median line (ml) but it has failed to stay below it, signaling exhausted sellers already. The bias remains bullish as long as it stays above this dynamic support. The current retreat could represent a flag pattern. This could announce an upside continuation. Though, only a new higher high activates more gains ahead. https://www.forexcrunch.com/blog/2024/01/11/usd-cad-price-picks-momentum-near-1-3375-eying-us-cpi/
2024-01-11 10:17
Economists believe inflation will slow down in December. The Fed might start rate cuts as early as March. The Eurozone might have experienced a recession in the last quarter. Thursday’s EUR/USD outlook supports a bullish trend as the dollar dips ahead of the US inflation report. Traders are on the edge, awaiting US inflation data, a crucial report that could support up to five Fed rate cuts next year. Economists believe inflation will slow down in December. Recently, the dollar has experienced a slide as investors have grown increasingly convinced that the Fed might start rate cuts as early as March. However, some believe this is too optimistic. In a note to clients, Jane Foley, a senior FX strategist at Rabobank, said that investors are still excessively optimistic about the prospects of Fed rate cuts. Meanwhile, ECB policymakers confirmed the bank’s policy stance on Wednesday. Moreover, they stated that the Eurozone might have experienced a recession in the last quarter, and the short-term outlook is poor. Eurozone growth has remained near zero throughout 2023, and a modest pickup is anticipated this year, contributing to a moderation in inflation. Notably, Board member Isabel Schnabel acknowledged the weak near-term economic outlook. Similarly, Vice President Luis de Guindos suggested that the bloc may have entered a recession in the second half of last year. Moreover, there might be risks of future growth downturns. Investors have priced at least five rate cuts in 2024, with the first expected in March or April. However, several policymakers find this timeline excessive because price pressures remain. ECB projections anticipate inflation to return to 2% next year. However, some private forecasters disagree, suggesting that the ECB may be underestimating disinflation, the same way it missed inflation on the way up. EUR/USD key events today US consumer inflation report US initial jobless claims EUR/USD technical outlook: Buyers assume control in the consolidation area The pair is still within its recent range, with support at 1.0900 and resistance at 1.1000. However, buyers are now in the lead within the consolidation area as the price is above the 30-SMA. At the same time, the RSI is above 50, supporting bullish momentum. The price is climbing and will soon retest the range resistance. A bullish trend will emerge if buyers are strong enough to break out of consolidation. Moreover, the price would take out the 1.1101 resistance level. On the other hand, if the range resistance remains firm, sellers will resurface to retest the range support. https://www.forexcrunch.com/blog/2024/01/11/eur-usd-outlook-us-inflation-data-to-hint-potential-fed-cut/
2024-01-11 08:30
Futures indicate the market anticipates 140 basis points (bps) of cuts this year. Japanese workers’ real wages fell again in November. Tokyo’s consumer inflation fell further. The USD/JPY forecast turns slightly bearish on Thursday as traders await US inflation data to shape their expectations on Fed rate cuts this year. Meanwhile, futures indicate the market anticipates 140 basis points (bps) of cuts this year. Moreover, they may begin as early as March. This means that markets are sensitive to unexpected data. Notably, the pair increased significantly after data on Wednesday revealed a 20th consecutive monthly contraction in Japanese workers’ real wages in November. BoJ policymakers had’ hoped for wage gains before policy tightening. Japan’s wage trend attracts a lot of attention globally. This is because the Bank of Japan considers pay and inflation outlooks crucial when debating removing its negative interest rate policy. In November, inflation-adjusted real wages, a crucial factor in determining consumer purchasing power, declined by 3.0% compared to last year. Moreover, it exceeded October’s 2.3% decrease. Meanwhile, the government’s consumer inflation rate, used to calculate real wages, dropped to 3.3%. This value was the lowest level since July 2022. Additionally, the decline came from decreasing fuel costs and food price hikes. However, data on Tuesday revealed that Tokyo’s consumer inflation, a key indicator of nationwide price trends, fell further. Consequently, there is still optimism that real wages will eventually rebound. This would provide a foundation for normalizing the Bank of Japan’s monetary policy. USD/JPY key events today US Core Consumer Price Index m/m US Consumer Price Index m/m US Consumer Price Index y/y US unemployment claims USD/JPY technical forecast: Price tests 145.74 barrier once again On the charts, the USD/JPY price has risen to retest the 145.74 key resistance level after pulling back to retest the 30-SMA and the 143.51 support level. This is the second time bulls have attempted to push above 145.74 and might fail again. The first time, the price made a wick at the level before making a bearish engulfing candle and retreating. This time, bears have again made an engulfing candle that might lead to a collapse below the 30-SMA. Moreover, a bearish divergence in the RSI shows the second attempt at 145.74 is weaker. Consequently, USD/JPY might retest the 143.51 support level. https://www.forexcrunch.com/blog/2024/01/11/usd-jpy-forecast-dollar-pares-gains-ahead-of-us-inflation/
2024-01-10 11:06
XAU/USD seems determined to return higher as long as it stays above the lower median line. The US inflation data should bring sharp movements tomorrow. Only a new lower low invalidates a larger growth. The gold price is trading in the green at $2,034 at the time of writing. The metal seems determined to hit new highs as the US dollar turned downside. The dollar’s sell-off should help the XAU/USD to come back higher and to erase some of the latest drops. Yesterday, the US Trade Balance and RCM/TIPP Economic Optimism came in better than expected, while the Canadian Trade Balance and Building Permits indicators reported poor data. Today, the Australian CPI reported 4.3% growth, less compared to the 4.4% growth estimated and far below the 4.9% growth in the previous reporting period. Later, the BOE Gov Bailey Speaks, and the US Final Wholesale Inventories could bring some action. Still, the traders are waiting for the US inflation data. The Consumer Price Index, CPI y/y, and the Core CPI data will be released tomorrow. Higher inflation could punish the price of gold and lift the USD in the short term. Furthermore, the US PPI, Core PPI, the UK GPD, and the Chinese inflation figures could move the rate on Friday. Technically, the yellow metal challenges the former channel’s downside line. The price has found strong support on the lower median line (LML) of the ascending pitchfork, and now it is trying to jump higher again. Its failure to take out the lower median line (LML) revealed sellers’ exhaustion and that the corrective phase could be over. The downtrend line, $2,050, and the median line (ml) of the ascending pitchfork represent potential upside targets. XAU/USD could develop a broader rebound as long as it stays above the lower median line (LML). https://www.forexcrunch.com/blog/2024/01/10/gold-price-struggling-to-rebound-eyes-on-us-inflation/
