2024-01-09 08:51
US consumers’ short-term inflation projections reached the lowest level in almost three years in December. Australia’s November retail sales experienced the most significant surge in two years. Swaps indicated that the RBA’s tightening campaign is likely over. On Tuesday, the AUD/USD outlook took a bearish turn, influenced by a strengthening dollar as investors strategically positioned themselves in anticipation of the upcoming US inflation report. On Thursday, the US inflation reading will likely provide additional insight into the Fed’s policy outlook in the coming months. In Australia, November retail sales experienced the most significant surge in two years due to Black Friday discounts. Despite a 425-basis-point increase in interest rates, consumer spending has remained resilient. This is attributed to rising house prices, a population surge, and savings from pandemic stimulus measures. However, the Reserve Bank of Australia will likely disregard the November retail sales result, considering the distortion caused by Black Friday sales. Meanwhile, swaps indicated that the RBA’s tightening campaign is likely over. Moreover, there will be approximately 40 basis points of easing in for 2024. Elsewhere, an ANZ survey revealed a significant increase in consumer confidence in Australia at the beginning of 2024. It reached the highest level in almost a year. Notably, confidence among homeowners increased sharply due to rising house prices and the belief that interest rates have likely peaked. Meanwhile, data on Monday showed that US consumers’ short-term inflation projections reached the lowest level in almost three years in December. Consequently, bets on Fed rate cuts edged higher. AUD/USD key events today No major events will be released today from Australia or the US. Therefore, investors might remain cautious ahead of inflation readings from both countries. AUD/USD technical outlook: Price respects 30-SMA resistance Aussie bulls failed an attempt to push above the 30-SMA, allowing bears to resume the downtrend. The pullback to the SMA came after the price paused at a strong support zone comprising the 0.6674 support and the 0.618 fib levels. Previously, the bearish move tried to break below the support zone, but the move was sharply rejected, making a big wick. A break above the 30-SMA would signal a bullish takeover, allowing the price to retest the 0.6775 resistance level. However, given that the price is still below the SMA and the RSI is below 50, the bias is still bearish. Therefore, the price will likely retest the support zone. https://www.forexcrunch.com/blog/2024/01/09/aud-usd-outlook-dollar-on-the-front-foot-ahead-of-the-us-cpi/
2024-01-08 11:43
A new lower low activates more declines. The US inflation data should shake the price. False breakdowns may bring a new rally. The gold price is trading in the green at $2,026 at the time of writing. Still, the downside pressure remains high in the short term despite Friday’s rally. Surprisingly or not, the XAU/USD jumped higher in the last trading session even though the US reported positive data. However, the yellow metal edged higher only because the US dollar was overbought after its strong swing higher. Now, the greenback has turned to the upside again, so gold erased the latest gains. The Non-Farm Employment Change, Average Hourly Earnings, Unemployment Claims, and Factory Orders came in better than expected. Gold price seems to be under pressure in the short term after Switzerland’s inflation data was released today. The Consumer Price Index reported a 0.0% growth compared to the 0.1% drop estimated after the 0.2% drop in the previous reporting period, while Retail Sales rose by 0.7%, beating the 0.0% growth forecasted. The week’s most important event is the publication of US inflation data. The CPI m/m may report a 0.2% growth versus the 0.1% growth in the previous reporting period, while CPI y/y is expected at 3.2%. Higher inflation in December compared to November could boost the USD. Technically, the gold price dropped again after registering a false breakout through the 23.6% ($2,061). Now, it has dropped below the 50% (2,030) retracement level and challenges the $2,027 static support. The metal is trading in the demand zone. So, only making a new lower low could trigger more declines. False breakdowns and coming back above 61.8% may result in a new bounce back. https://www.forexcrunch.com/blog/2024/01/08/gold-price-under-pressure-as-market-awaits-us-cpi-data/
2024-01-08 10:54
Investors waited for more clues on the Fed’s policy outlook in the US inflation report. Business data suggested Britain’s economy was more resilient than feared in December. Data on Friday revealed a mixed picture of the US economy. Monday witnessed a bearish GBP/USD outlook, influenced by a stronger dollar, as investors breathed for additional insights into the Fed’s policy stance through the US inflation report. This crucial report keeps investors from risk assets, supporting the dollar. Moreover, investors are still absorbing data released Friday in the US and the UK. Business data suggested Britain’s economy was more resilient than feared in December. The UK’s construction sector showed a possible recovery from a decline caused by a surge in interest rates to a 15-year high of 5.25% in August. Notably, the S&P Global/CIPS UK construction Purchasing Managers’ Index for December rose to 46.8 from November’s 45.5. However, it remained below the 50.0 growth threshold for a fourth consecutive month. Additionally, data from mortgage lender Halifax revealed an annual rise in British house prices in December. It is the first in eight months, indicating stabilization in the property market. As a result, traders reduced their expectations of BoE rate cuts. Currently, they anticipate around 120 basis points of cuts in 2024, compared to the 140 bps expected on Thursday. Meanwhile, in the US, employment came in higher than expected while the unemployment rate fell. However, the US services sector weakened significantly last month, showing a mixed picture of the US economy. GBP/USD key events today Investors do not expect any key events today from the US or The UK. As such, they will continue absorbing Friday’s reports. GBP/USD technical outlook: Bulls take the lead within a range On the technical side, the pair oscillates between the 1.2800 resistance and the 1.2601 support levels, with no clear direction. However, bulls are ahead inside the range as the price sits above the 30-SMA. Moreover, the price made an engulfing bullish candle after breaking above and retesting the 30-SMA. This indicates strong bullish momentum that might propel the price to retest the range resistance near the 1.2800 level. Still, the pair will likely continue in its sideways move until either bears or bulls break out of the range. A bullish trend will emerge if the price pushes above the 1.2800 resistance. https://www.forexcrunch.com/blog/2024/01/08/gbp-usd-outlook-investors-eye-us-inflation-for-policy-guidance/
2024-01-08 09:00
A rebound in US Treasury yields supported a rally in the dollar. Data revealed stronger-than-expected US employment and wage growth in December. Canada’s economy added only 100 jobs in December. The USD/CAD forecast points northward as investor sentiment tilts towards caution, with all eyes on a pivotal US inflation report scheduled later in the week. Moreover, traders adjusted their expectations for the number and size of Fed cuts this year. Consequently, there was a rebound in US Treasury yields, which gave more support to the dollar. The upcoming US inflation reading on Thursday could further influence views on Fed rate cuts. Current market pricing indicates a 64% chance that the Fed might initiate rate cuts as early as March, compared to nearly 90% a week ago, according to the CME FedWatch Tool. Meanwhile, Friday’s data showed stronger-than-expected US employment and wage growth in December, signaling a resilient labor market. However, a separate survey on the same day revealed a significant slowdown in the US services sector last month. Notably, employment figures hit a nearly three and a half year low. On Friday, the Canadian dollar showed little change against the US dollar after a mixed job report from the US and Canada. Canada’s economy added only 100 jobs in December. Still, wages for permanent employees increased at the fastest pace in three years. As a result, money markets lean towards April for the first Bank of Canada rate cut. Furthermore, a Reuters poll suggests that if the Fed shifts to rate cuts before the Bank of Canada, the Canadian dollar will trade stronger than anticipated throughout the year. USD/CAD key events today It will be a quiet session for USD/CAD as neither the US nor Canada will release high-impact economic reports. USD/CAD technical forecast: Bullish momentum falters near 1.3350 The USD/CAD bullish move has weakened near the 1.3350 key level. Notably, the price is not swinging too far from the 30-SMA, showing buyers are weak. At the same time, although the price is moving higher, the RSI is descending, indicating a bearish divergence. If buyers regain momentum, the price will likely bounce off the 30-SMA to retest the 1.3501 resistance level. On the other hand, if the divergence plays out, there will be a shift in sentiment as the price will break below 1.3350 and the 30-SMA. Consequently, the price might drop to the 1.3200 support level. https://www.forexcrunch.com/blog/2024/01/08/usd-cad-forecast-dollar-gains-as-market-brace-for-us-inflation/
2024-01-06 11:13
Fed policymakers agreed that inflation was under control. US job openings and initial jobless claims fell. Private employment and nonfarm payrolls rose, strengthening the dollar. The GBP/USD weekly forecast is slightly bearish as the robust US labor market’s strength means a potential delay in the Fed’s rate-cut plans. Consequently, it challenges the earlier March anticipation. Ups and downs of GBP/USD The pound had a slightly bearish week where the price fluctuated amid high-impact data from the US. The week started with minutes from the Fed’s December meeting. At the meeting, policymakers agreed that inflation was under control. Additionally, a series of employment reports from the US showed a robust labor market. Job openings and initial jobless claims fell. Meanwhile, private employment and nonfarm payrolls rose, strengthening the dollar against most major currencies. Next week’s key events for GBP/USD Next week, the US will release the crucial figures showing consumer and producer inflation. Meanwhile, the UK will release data on manufacturing production and the gross domestic product. After a strong employment report from the US on Friday, all focus will be on the inflation report. Notably, Richmond Fed President Thomas Barkin stated that robust US job growth and a low unemployment rate indicate that the Federal Reserve hasn’t reached a stage where its attempts to manage inflation pose a direct tradeoff with its goal of sustaining maximum employment. Therefore, if inflation is still high, it could mean higher rates for longer. On the other hand, if inflation falls, the Fed will likely continue with its plan to cut rates this year. GBP/USD weekly technical forecast: Bullish momentum fades near the 1.2800 resistance The pound is bullish on the charts, and the price has risen to the 1.2800 resistance level. However, the bullish move has become shallower, with the price sticking close to the 22-SMA. At the same time, the slope of the SMA is not as steep as when bulls took over. These are all signs that bulls have weakened. Additionally, the RSI has made a bearish divergence, moving lower as the price makes new highs. This indicates weaker bullish momentum. Currently, the price trades with the nearest resistance at 1.2800 and the nearest support at 1.2500. Therefore, if bears take over, the price will likely retest the 1.2500 support. Meanwhile, bears could target lower support levels like 1.2202 if the divergence leads to a reversal. https://www.forexcrunch.com/blog/2024/01/06/gbp-usd-weekly-forecast-strong-nfp-pours-water-on-rate-cuts/
2024-01-06 11:04
The dollar strengthened due to upbeat employment data and reduced rate-cut bets. Analysts indicated that the jobs report means the Fed is unlikely to cut rates as soon as March. The Fed projected an approximately 75 basis points cut in rates for 2024. A surge in the dollar, fueled by an upbeat employment report, sets a bearish tone in the AUD/USD weekly forecast. The employment report showed the US economy remains hot and might need high rates for longer. Ups and downs of AUD/USD The Aussie closed the week lower as the dollar strengthened due to upbeat employment data and reduced rate-cut bets. Notably, at the start of the week, the dollar gained as investors became less confident about a March Fed rate cut. Later, the nonfarm payroll report gave it another boost. Analysts indicated that the jobs report means the Fed is unlikely to cut rates as soon as March. Moreover, they observed that the futures market would eventually align more closely with the Fed’s projection of approximately a 75 basis points cut in rates for 2024. Next week’s key events for AUD/USD The calendar for next week will feature inflation data from the US. The US will release the consumer and producer price index reports. These reports will majorly impact the pair as they will determine when the Fed will start cutting rates. A higher-than-expected reading on consumer inflation could lower bets for a rate cut as early as March. On the other hand, easing inflation would increase bets for a March cut. Consequently, it would weaken the dollar and support a rally in the pound. AUD/USD weekly technical forecast: Bears test channel support On the technical side, AUD/USD is trading in a bullish channel, respecting its support and resistance. At the same time, the price is respecting the 22-SMA support and bouncing higher every time it touches the line. Meanwhile, the RSI has traded above 50 since the price crossed above the 22-SMA, supporting bullish momentum. The bullish move recently paused at the 0.6850 resistance level, leading to a retracement. Bears managed to push the price down to a solid support zone comprising the 22-SMA and the 0.6674 support level. Moreover, the price has reached the channel support. Therefore, bulls will likely return next week to continue the uptrend from this support zone. On the other hand, if the price breaks below this zone, it will signal a shift in sentiment to bearish and a possible reversal. https://www.forexcrunch.com/blog/2024/01/06/aud-usd-weekly-forecast-dollar-strengthens-on-upbeat-nfp/
