2024-08-16 10:06
US retail sales data showed an unexpected increase of 1.0% in July. The chances of a 50 bps Fed rate cut in September eased to 25%. Canadian wholesale trade dipped by 0.6% in June. The USD/CAD price analysis is slightly bearish as the Canadian dollar recovers from recent lows. Meanwhile, the dollar remained steady after data in the previous session revealed better-than-expected retail sales figures. On Thursday, the dollar surged as US retail sales data showed an increase of 1.0% in July. It was a big surprise since analysts had expected a 0.3% increase. At the same time, the market view was that the US economy was slowing down rapidly. The sales showed a different picture of resilience, leading to declining Fed rate cut expectations. The chances of a 50 bps rate cut in September eased to 25%. Furthermore, the outlook of a looming recession shifted as investors cheered a likely soft landing by the Fed. Meanwhile, another report revealed jobless claims fell, indicating a resilient labor market. At first, these reports strengthened the US dollar and weakened the Canadian dollar. However, the loonie strengthened after markets priced in the new rate-cut bets. A strong US economy is bullish for the Canadian currency because Canada exports most of its oil products to the US. Therefore, high demand boosts Canada’s economy. Meanwhile, data from Canada showed a dim picture. Canadian wholesale trade dipped by 0.6% in June after a 1.2% drop the previous month. Meanwhile, home sales in the country fell 0.7% in July. USD/CAD key events today Neither Canada nor the US will release high-impact economic data today. Therefore, the USD/CAD pair might consolidate. USD/CAD technical price analysis: Bearish enthusiasm fades near 1.3700 support On the technical side, the USD/CAD price has stalled near the 1.3700 support level. Although it is below the 30-SMA, the downtrend has weakened. Notably, the RSI has made a bullish divergence, indicating fading bearish momentum. Price action changed when USD/CAD neared the 1.3700 level. The pair made small-bodied candles and remained near the SMA. Bears were showing exhaustion. Therefore, there is a high chance the trend will reverse with a break above the SMA. On the other hand, if bearish momentum resurges, the price will break below 1.3700 to make a new low. https://www.forexcrunch.com/blog/2024/08/16/usd-cad-price-analysis-canadian-dollar-recovers-from-slump/
2024-08-16 08:45
US retail sales rose 1.0% in July. The likelihood of a 50 bps Fed rate cut in September dropped to 25%. US jobless claims fell last week to 227,000. The USD/JPY outlook paints a bullish picture as the dollar trades near a two-week high against the yen after positive US sales data. Meanwhile, the rate-sensitive yen was weak as US Treasury yields rose amid a decline in Fed rate cut expectations. At the same time, the outlook for Bank of Japan rate hikes remained clouded due to political uncertainty. The US dollar made a solid bullish move on Thursday after US retail sales rose 1.0% in July. This increase was much bigger than the forecast of a 0.3% gain. Moreover, it showed that the US consumer was resilient. As a result, the likelihood of a 50 bps Fed rate cut in September dropped to 25%. Meanwhile, US Treasury yields rose, weighing on the yen. Another report revealed that US jobless claims fell last week to 227,000, below forecasts for 235,000. The report reduced fears that the labor market was deteriorating. Low unemployment points to high demand and a tight market. The upbeat US economic reports followed inflation data showing a moderate increase. As a result, the market is optimistic that the Fed might achieve a soft landing. On the other hand, the yen was fragile on Friday amid political uncertainty in Japan. Prime Minister Fumio Kishida recently decided to step down, leaving a big gap. He greatly supported the Bank of Japan’s recent hiking cycle. Consequently, analysts believe the BoJ might pause until there is more political certainty before hiking interest rates. USD/JPY key events today There will be no key economic reports from the US or Japan, so investors will continue absorbing yesterday’s reports. USD/JPY technical outlook: Bulls approach 0.618 Fib retracement level On the technical side, the USD/JPY price has made a sharp, bullish move, detaching from the 30-SMA and the 0.382 Fib level. At the same time, the RSI moved nearer the overbought territory, indicating solid bullish momentum. The price is approaching a solid barrier comprising the 150.03 resistance and the 0.618 Fib level. Since the bullish bias is strong, the price might soon breach this barrier to make new highs. Such a move would clear the path for bulls to revisit the 155.01 resistance. https://www.forexcrunch.com/blog/2024/08/16/usd-jpy-outlook-dollar-pushes-to-2-week-high-on-solid-sales/
2024-08-15 10:32
Data showed that the UK economy expanded by 0.6% in Q2. Markets are now pricing in a 25 bps Fed September rate cut as more likely. Investors are awaiting the US retail sales report. The GBP/USD outlook is bullish after data revealed that the UK economy expanded in line with economists’ expectations. At the same time, investors are more confident the Fed will cut interest rates in September after US inflation eased slightly from the previous month. The pound rose on Thursday after data showed that the UK economy expanded by 0.6% in the second quarter. Britain’s economy has struggled to recover since the COVID-19 pandemic but has remained steady. In the previous session, the pound fell as data revealed cooler-than-expected consumer inflation figures. Moreover, service inflation eased, raising the chances of a Bank of England rate cut in September. Meanwhile, the Fed will likely cut rates in September. However, markets are now pricing in a 25 bps rate cut as more likely. Inflation figures on Wednesday showed further easing, with the annual figure dropping below 3% for the first time. Meanwhile, the monthly figure increased by 0.2% but aligned with expectations. After the report, the chances of a 25 bps rate cut in September increased to 64%. Initially, panic after the US jobs report had increased expectations for a 50 bps rate cut. However, that changed as recession fears declined. Currently, the chance of such a cut is at 36%. Inflation in the US has behaved well since the second quarter. The decline has been consistent, giving policymakers confidence. Investors will now watch the retail sales report for more clues on the state of the economy. GBP/USD key events today US core retail sales m/m US retail sales m/m US unemployment claims GBP/USD technical outlook: Bulls set their sights on the 1.2900 resistance On the technical side, the GBP/USD price is looking up after a brief pullback. The bullish bias is strong as the 30-SMA points up and the RSI trades near the overbought region. Therefore, there is a high chance the price will make a higher high. The next strong barrier is at the 1.2900 psychological resistance. If the price reaches this level, it will have retraced over 61.8% of the previous swing. A break above this retracement level will strengthen the bullish bias. However, GBP/USD might pause here before breaking above. https://www.forexcrunch.com/blog/2024/08/15/gbp-usd-outlook-pound-climbs-as-uk-gdp-meets-forecast/
2024-08-15 09:14
Australia’s employment increased by 58,200 in July. The likelihood of an RBA rate cut in November dropped from 55% to 45%. The US dollar was on the back foot after US consumer inflation figures. The AUD/USD forecast points North as the Australian dollar rises after a surprise jump in Australia’s jobs. However, the unemployment rate also increased, showing a mixed picture. Meanwhile, the US dollar remained frail after data showed US consumer inflation increasing moderately in July. On Thursday, Australia released its monthly employment report, showing a bigger-than-expected job increase. Employment increased by 58,200 when economists had expected a 20,000 gain. The jump shows a resilient labor market that will likely keep the Reserve Bank of Australia cautious about rate cuts. However, the report also showed that the unemployment rate increased to 4.2%, above expectations of 4.1%. Nevertheless, rate cut expectations fell. Notably, the likelihood of an RBA rate cut in November dropped from 55% to 45%. Australia’s labor market has remained strong, keeping underlying inflation high. If this trend continues, the RBA will keep delaying rate cuts. The central bank has paused at 4.35% and might keep holding this rate until next year. Meanwhile, the US dollar was on the back foot after US consumer inflation figures. The CPI showed a moderate annual increase of 2.9%. Meanwhile, on a monthly basis, it rose by 0.2%. As a result, it solidified expectations for a Fed rate cut in September. However, markets are now expecting a smaller 25 bps rate cut. Notably, the likelihood of a 25 bps cut rose to 64%, while that of a 50 bps cut fell to 36%. The next high-impact report is on retail sales. AUD/USD key events today US core retail Sales m/m US retail sales m/m US unemployment claims AUD/USD technical forecast: Bulls manage to stay above 30-SMA On the technical side, the AUD/USD price is pushing off the 30-SMA support, indicating a bullish trend. At the same time, the RSI has stayed above 50 in bullish territory. Initially, the price pulled back to retest the SMA. If bears were strong enough, they would have reversed the trend. However, bulls resurfaced with a strong engulfing candlestick that could lead to higher prices. The next target for this uptrend is at the 0.6700 resistance level. This trend will continue as long as the price trades above the 30-SMA. https://www.forexcrunch.com/blog/2024/08/15/aud-usd-forecast-surprising-job-growth-triggers-rally/
2024-08-14 10:16
The UK consumer price index rose by a smaller-than-expected 2.2% in July. UK service inflation increased by 5.2% in July after a 5.7% increase in the previous month. The US PPI increased by 0.1% in July, missing forecasts. The GBP/USD forecast leans slightly bearish as easing UK consumer inflation data boosts expectations for Bank of England rate cuts. Nevertheless, the larger bullish trend remains intact as the dollar weakens after downbeat US wholesale inflation data. Data on Wednesday revealed that the UK consumer price index rose by 2.2% in July. The value rose above the Bank of England’s 2% target for the first time in two months. Nevertheless, it was a more minor increase than the forecast of 2.3%. Meanwhile, service inflation increased by 5.2% in July after a 5.7% increase in the previous month. This decline is a significant relief for the BoE. Notably, policymakers have remained cautious due to high service inflation. Although headline inflation reached the central bank’s target, few were ready to lower borrowing costs because service inflation was a concern. Therefore, July’s figures might give more policymakers the confidence to continue cutting interest rates. After the CPI report, traders raised the chances of a BoE cut in September to 48%. Meanwhile, they expect 46 bps in total of rate cuts this year. On the other hand, the dollar remained fragile after softer-than-expected US wholesale inflation figures. The PPI increased by 0.1% in July, missing forecasts of a 0.2% increase. As a result, investors are pricing a higher chance of a super-sized 50 bps Fed rate cut in September. Later today, the CPI report will further shape the outlook for Fed monetary policy. GBP/USD key events today US Core Consumer Price Index m/m US Consumer Price Index m/m US Consumer Price Index y/y GBP/USD technical forecast: Bullish momentum surges with 0.618 Fib in sight On the technical side, the GBP/USD price has broken above a strong barrier comprising the 0.382 Fib and the 1.2800 key resistance level. As a result, the price has risen far above the 30-SMA to make a new high. Meanwhile, the RSI trades near the overbought region. Furthermore, after the rally, bears resurfaced and pushed the price to retest the recently broken barrier. Since the bullish bias remains strong, the next target might be at the 1.2900 level near the 0.618 Fib. https://www.forexcrunch.com/blog/2024/08/14/gbp-usd-forecast-boe-to-cut-further-amid-easing-uk-cpi/
2024-08-14 08:34
The dollar eased after data revealed that the PPI increased by a smaller 0.1% in July. The likelihood of a 50 bps Fed rate cut in September rose from 50% to 53.5%. Economists expect an ECB rate cut in September and December. The EUR/USD price analysis supports a bullish bias as the euro climbs against a weak dollar after soft US wholesale inflation numbers. Meanwhile, a Reuters poll revealed that economists predict two more European Central Bank cuts this year, fewer than markets expect. The dollar eased after data revealed that the US PPI increased by 0.1% in July. Meanwhile, analysts had expected a 0.2% increase. The more minor increase indicates weakening price pressures at the producer level. After the report, markets raised the likelihood of a 50 bps Fed rate cut in September from 50% to 53.5%. The move was little because the focus is now on the upcoming consumer inflation report. The CPI will likely increase by 0.2% in July. Meanwhile, the annual rate could stay unchanged at 3.0%. However, since the recent trend is weaker-than-expected numbers, the dollar might fall further. Moreover, if consumer inflation misses forecasts, the likelihood of a 50 bps rate cut in September will increase. Meanwhile, a weak dollar will allow the euro to continue climbing. Elsewhere, a Reuters poll revealed that economists maintained their forecast for two more ECB rate cuts this year. An over 80% majority expect a rate cut in September and December. This survey boosted the euro because it is a less dovish outlook than what markets expect. Traders are betting on three more ECB cuts before the year ends. EUR/USD key events today Core CPI m/m CPI m/m CPI y/y EUR/USD technical price analysis: Bulls seek new high above 1.1000 On the technical side, the EUR/USD price is on the brink of making a new high above the 1.1000 psychological resistance level. The bullish bias is strong, with the price well above the 30-SMA. At the same time, bulls are pretty enthusiastic with the RSI in the overbought region. Therefore, there is a high chance the price will breach 1.1000 to make a higher high. On the other hand, if the resistance holds firm, EUR/USD might pull back to retest the 30-SMA before continuing higher. The bias will only shift if it goes below the SMA. https://www.forexcrunch.com/blog/2024/08/14/eur-usd-price-analysis-soft-us-inflation-fuels-euro-above-1-10/
