2024-01-23 12:36

Pound Sterling (GBP/USD, EUR/GBP, GBP/JPY) Analysis Reduced budget deficit reignites calls for tac cuts ahead of the 2024 election campaign UK PMI data could add to the EUR/GBP downtrend ahead of tomorrow's release GBP/JPY fatigues ahead of major bullish hurdle despite lift from the BoJ Download our brand new Q1 pound sterling forecast below: Reduced Budget Deficit Reignites Call for Tax Cuts Ahead of 2024 Election Campaign Dates are released today from the office for National Statistics reported that a smaller than expected budget deficit of £7.77 billion was recorded in December, producing the narrowest budget deficit since 2020 and freeing up more room for tax cuts ahead of the 2024 general election. During last year's Autumn Statement Chancellor Jeremy Hunt announced multiple measures to stimulate growth but appeared at the time to have elected to keep his powder dry in favour of a larger, more impactful reprieve for taxpayers in the spring. Political commentators suggest that a tax cut could be seen as a means for an out-of-favour (according to polls) Tory government to reclaim some lost ground from the Labour party. Tax cuts, if implemented responsibly, will further ease the burden of the cost of living crisis after fuel and energy costs have already dropped considerably. The date for the general election is yet to be announced but is likely to take place towards the end of the year. Voting intentions (general election) in the UK from July 2017 to January 2024 Source: Statista GBP/USD Edges Higher as Markets Await High Importance US Data Cable continues its general climb higher which hints at finding resistance at 1.2736 where a longer upper wick on the daily candle chart can be seen alongside today's price action which reveals a similar scenario thus far. The pair has enjoyed a modest decline but price action has broadly been contained within a trading channel highlighted in orange. the 50 day simple moving average appears to have dynamics support for the pair but overall momentum appears to be waning according to the MACD indicator. The signs of fatigue witnessed at 1.2736 could potentially mark a weekly ceiling if the US economy grew faster than anticipated in the final quarter of 2023 when US GDP data is sue on Thursday. Additionally, the Fed’s favoured measure of inflation (PCE) is due on Friday and given the recent lift in December price readings across developed markets, a hotter than expected result could further strengthen the US dollar, weighing on GBP/USD. Dynamic support at the 50 SMA may come into view, followed by 1.2585. Thus far, economic data has proven ineffective in driving price action out of the current range. GBP/USD Daily Chart Source: TradingView, prepared by Richard Snow UK PMI Data Could add to the EUR/GBP Downtrend Ahead of Tomorrow’s Release EUR/GBP has revealed an early indication of a bearish move outside of the existing triangle pattern. The pair has closed beneath the ascending trendline, previously acting as support, numerous times now and could be given a boost if EU PMI data remains inferior to that seen in the UK when the data is released tomorrow morning. UK composite PMI data has risen into expansionary territory (>50) while the EU's comparable statistic remains in a contraction, led lower by a struggling manufacturing sector in particular. Should the bearish momentum continue, the next zone of support emerges at 0.8515, a zone which captured Lowe's in June July, August and September of 2023. Resistance appears at the prior trendline support followed all the way up at 0.8635 where the 200 SMA resides currently. EUR/GBP Daily Chart Source: TradingView, prepared by Richard Snow GBP/JPY Fatigues Ahead of Major Bullish Hurdle Despite Lift from the BoJ GBP/JPY trades flat as the London AM session comes to an end but that does not tell the whole story as price action rose around 188.80 but also declined to 187.35 earlier in the day as a result of the Bank of Japan's (BoJ) decision to leave policy settings unchanged. As far as the pound is concerned, GBP/JPY has shown the most potential to the upside as sterling holds up rather well and the yen has come under pressure after subsequent lower inflation figures have cooled assumptions of an imminent rate hike from the BoJ. Along with the decisions on monetary policy settings, the Bank of Japan also produced it's quarterly economic forecast where it estimates inflation around 1.9% for 2024, just shy of its 2% target, keeping hopes alive that we may still see that all important rate hike if incoming data suggests that prices will rise above this key level for a lengthy period of time. 188.80 shows a notable level of resistance and is likely to provide a challenge for continued bullish momentum. Speaking of momentum, the MACD indicator remains in favour of upside price action but the RSI, interestingly enough, is very close to overbought territory, suggesting a minor pullback may be in order. Previous pullbacks have been rather short-lived which bears testament to the fundamentals at play. Sterling attracts a superior yield while Japan has witnessed a broad depreciation in its local currency. Support appears all the way down at 184.00 which coincides with the 50-day simple moving average (blue line). GBP/JPY Daily Chart Source: TradingView, prepared by Richard Snow FX markets are a combination of ranging and trending markets depending on where you look. Equip yourself with the knowledge to trade both of these market conditions with confidence by reading our guide below: https://www.dailyfx.com/news/pound-sterling-price-action-setups-gbp-usd-eur-gbp-gbp-jpy-20240123.html

2024-01-23 11:00

Dow Jones, Nasdaq 100, Russell 2000 Analysis and Charts Dow clocks up new record Monday saw the index record a new record high, after doing the same at the end of last week.The consolidation of mid-December until mid-January has resolved into a move higher it appears, and fresh record highs seem to beckon. Sellers will need a reversal back below the previous highs of 37,800, and then a close below the low of the trading range of the past month at 37,140. Dow Jones Daily Chart Nasdaq 100 on a high ahead of tech earnings Record highs have been seen in this index over the past three sessions. However, the arrival of earnings this week from Netflix and Tesla, plus the rest of the ‘Magnificent 7’ next week, means that upward progress could slow. A reversal below 16,500 would be needed to suggest that a move towards the 50-day simple moving average (SMA) is in the offing. Nasdaq 100 Daily Chart Russell 2000 rebounds US small caps have enjoyed a solid recovery over the past week, having endured a sharp pullback from their December highs.Continued gains above the psychological 2000 level put the index on course to target the highs of December once more, with the next level to watch is the March 2022 high at 2140. The buyers have reasserted control with the bounce from last week’s lows, so a close below 1900 would be needed to indicate a further leg down is underway. Russell 2000 Daily Chart https://www.dailyfx.com/news/dow-and-nasdaq-100-at-record-highs-while-the-russell-2000-continues-to-rebound-20240123.html

2024-01-23 08:28

Japanese Yen - USD/JPY Prices, Charts, and Analysis Bank of Japan keep monetary policy ultra-loose for now. Short-term rates are left at -0.1%, 10-year bond yield is around 0.0%. The Bank of Japan today said that consumer inflation may be moving higher, giving a nudge towards tighter monetary policy conditions in the months ahead. In the Quarterly Outlook, the BoJ lowered their forecasts for core inflation to 2.4% from 2.8% but said, ‘Consumer inflation is likely to increase gradually toward the BOJ's target as the output gap turns positive, and as medium- to long-term inflation expectations and wage growth heighten,’ adding, ‘the likelihood of realizing this outlook has continued to gradually rise, although there remain high uncertainties over future developments,’ The latest BoJ interest rate probabilities see a rough 50/50 chance of a rate hike at the April 26th central bank meeting. While the Bank of Japan may have added a bit of support to the Japanese Yen, the medium-term outlook for USD/JPY will be driven by the US dollar and upcoming data releases and events. This Friday the latest Core PCE report will drive price action going into next week’s FOMC meeting. While the Fed is fully expected to leave rates untouched, Chair Jerome Powell’s comments in the post-meeting press conference will need to be followed closely. The markets will be looking for Chair Powell to give some sort of indication about when the central bank expects to begin its rate-cutting cycle, and any comment around this will steer the US dollar. USD/JPY has turned lower from last Friday’s 148.80 multi-week high and has tested 147.00 so far today. The pair remain supported by all three simple moving averages and a break below 146.00 opens the way to 145.00 or lower. A combination of Yen strength and US dollar weakness could see the pair eventually move down to 140.00. The upside remains capped and it will take an above forecast US inflation release or a hawkish Chair Powell next week to send USD/JPY back to 150. USD/JPY Daily Price Chart Retail trader data show 26.13% of traders are net-long with the ratio of traders short to long at 2.83 to 1.The number of traders net-long is 7.17% higher than yesterday and 15.88% lower from last week, while the number of traders net-short is 2.86% higher than yesterday and 14.98% higher from last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USD/JPY prices may continue to rise. What is your view on the Japanese Yen – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/usd-jpy-slips-lower-after-boj-stands-pat-but-hints-on-improving-inflation-outlook-20240123.html

2024-01-22 20:30

Article by IG Market Analyst Monte Safieddine Tesla (TSLA) Q4 Analysis, Charts, and Price When is Tesla’s results date? It’s expected to get volatile for Tesla’s share price on Wednesday, January 24th after market close, as that’s when they’ll be releasing their fourth-quarter results. Tesla share price: forecasts from Q4 results It wasn’t a pretty picture last time around, as third-quarter results were a miss on both earnings and revenue and came with added caution on the Cybertruck’s potential (or lack thereof) to deliver significant short-term positive cashflow. Production and Deliveries Breakdown But looking beyond that and breaking down deliveries and production for the final quarter of 2023, it was a record. Deliveries totaled over 484K with production nearly 495K, and in all producing 1.846m and delivering under 1.81m while above 2022’s 1.37m and within October’s guidance of 1.8m, fell short of its earlier 2023 goal of two million. The breakdown for the final quarter of 2023 showed nearly 477K Model 3/Y were produced and over 461K delivered, while “Other Models” were 18.2K (3.8% of the total) and 23K respectively. Tesla’s Eventful Quarter It was a quarter where Chinese rival BYD and its lower-priced models helped it overtake Tesla as the world’s largest producer of electric vehicles, even if there’s the argument by Elon Musk that his company is “an AI/robotics company that appears to many to be a car company” and in turn shouldn’t fall under an apples-to-apples comparison. And it’s been busy on other fronts as well. There were (1) troubles in Scandinavia though hasn’t seemed to dent its sales in the region, (2) mixed numbers for other areas as they were tested for Germany and UK but strong for China with a 69% increase year-on-year for December according to CPCA (China Passenger Car Association), (3) the Cybertruck release, (4) Model 3 refresh for some markets in what is considered to be a lineup that aside from recent releases has aged quite a bit, (5) further progress on the charging port adoption front with its massive network of chargers, (6) recalls that aren’t uncommon amongst automakers and for Tesla only required an over-the-air software update, and (6) price cuts with the average lowered again during the fourth quarter (cargurus.com). And then came more at the start of this quarter with rising labor costs, further price cuts, and supply chain woes on recent geopolitical factors. Expect investors to note that and any further updates on the low-cost model where they are already “quite far advanced” that would feed into the mass market with a lower price point unlike the Cybertruck, its guidance for 2024 in the face of subsidy and tax credit reductions/removals and whether it’ll translate into even more price cuts this year to retain growth, how it might impact profit margins, and its plans on expansion in terms of geographic locations with rate cuts in view this year that might ease what was expected to be a “stormy” macroeconomic situation. EPS and Revenue Forecasts In all, expectations for the fourth quarter are that we’ll get an earnings per share (EPS) reading of $0.74, a lower figure both quarter-on-quarter as well as year-on-year. Revenue should come in stronger based on both metrics, rising to $25.5bn, and where growth should be seen across all its key segments. Margins will likely remain tested (relative to figures before 2023) but improve into the 18% handle from 17.89% in Q3 (source: Refinitiv). As for analyst recommendations, there are five in the ‘strong buy’ category, 12 ‘buy’, 19 ‘hold’, and four for both ‘sell’ and ‘strong sell’, with the average price target amongst them only recently above its falling share price (source: Refinitiv). Trading Tesla’s Q4 results: weekly technical overview and trading strategies There’s no denying how strong 2023 has been for the ‘magnificent seven’, and Tesla relatively outperforming amongst them (Nvidia +233%, Meta +188%, Tesla +109%, Amazon +78%, Alphabet +57%, Microsoft +55%, Apple +48%), but those gains were realized in the first half when it comes to its share price and started to get tested after mid-July. The technical overview on the shorter-term daily time frame was a bit rosier back when price managed to remain within its bull channel, with the break beneath it at the start of this year throwing a wrench into its key technical indicators and included a negative DMI (Directional Movement Index) cross and price beneath all its main short and long-term daily moving averages. Zooming out to the weekly time frame, and while the same negative cross has occurred, price-indicator, as well as indicator-indicator proximity, has made it difficult to get enough clarity on the technical front given the ease with which they can generate signals on a not-so-significant move. That has translated into an overview that’s more cautious at this stage even as it suffers from negative technical bias, with most weeks offering relatively controlled intraweek moves. There’s the obvious matter that the earnings release is a fundamental event where technicals are shelved, especially when it involves a surprise, and means technical levels will likely struggle or even fail to hold once the latest figures are released. That means conformists ought to go in with added caution avoiding fading any move towards 1st levels and retaining that caution even when it approaches 2nd levels, while contrarian breakout strategies may see added follow-through if price has already gotten near it just before the event. Tesla Weekly Chart with IG client sentiment https://www.dailyfx.com/news/tesla-s-share-price-what-to-expect-from-q4-results-20240122.html

2024-01-22 17:09

Oil (Brent Crude, WTI) Analysis US Q4 GDP data could shape the ‘global growth slowdown’ narrative Brent crude technical analysis – upside level of interest at $82 IG Client Sentiment is mixed while longs massively outweigh shorts The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library The oil market is struggling for direction, which is likely to continue as long as oil fundamentals remain unchanged. Economic forecasts anticipate low global economic growth in 2024 which means oil demand growth is likely to be minimal. This brings about the possibility of an oversupplied oil market which pushes down on prices. Speaking of growth, this week oil (WTI) will be in focus as US GDP data for the 4th quarter is due. The final three months of 2023 are expected to reveal a sharp drop from the phenomenal 4.9% in Q3 (2%). On the other side of the equation, the current tensions in the Middle East and threat on western shipments making their way via the Red Sea has the potential to jolt prices. However, only around 12% of total global seaborne oil trade goes through the Red Sea meaning a major disruption will be required to materially shift oil prices. Brent Crude Technical Analysis – Upside Level of Interest at $82 Brent crude oil prices have struggled to really get going, due to the unclear fundamental situation. The MACD points towards a slow and steady rise to the upside, especially after the December 13th swing low. Should the current measured rise extend further, $82 appears as a key level of resistance as the level has proved to be a pivot point in the past. In addition, the $82 level is roughly where the 200-day simple moving average resides. Support is all the way down at the $71.50 level with a less significant $77 emerging as the 50% Fibonacci retracement of the major 2020- 2022 ascent. Brent Crude Oil Daily Chart Source: TradingView, prepared by Richard Snow WTI Faces Resistance Ahead of Significant $77.40 Marker WTI oil prices successfully navigated the $72.50 test, opening up a return to the significant long-term level of $77.40 – which coincides with the 200-day simple moving average. The lift in prices since the swing low continues with trepidation, lacking conviction. $72.50 appears as near-term support. WTI Oil Daily Chart Source: TradingView, prepared by Richard Snow IG Client Sentiment ‘Mixed’ While Longs Massively Outweigh Shorts IG Client Sentiment (US Oil) WTI Source: TradingView, prepared by Richard Snow Oil- US Crude:Retail trader data shows 83.18% of traders are net-long with the ratio of traders long to short at 4.94 to 1.. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggestsOil- US Crude prices may continue to fall. Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed Oil - US Crude trading bias. Read the full client sentiment report for the daily positioning developments were essential in arriving at the ‘mixed’ trading bias. https://www.dailyfx.com/news/oil-brent-crude-wti-edge-cautiously-higher-follow-through-lacking-20240122.html

2024-01-22 14:00

USD/JPY looks a bit tired after a strong run but remains well-supported Investors doubt that the BoJ will be tightening monetary policy this week Will it do so this year? Just possibly, but keep an eye on its wage-growth take The Japanese Yen made modest gains on the United States Dollar in Europe on Monday in a market perhaps drifting as the Bank of Japan’s first monetary-policy meeting of the year gets under way. The decision is due on Tuesday and market-watchers aren’t expecting any changes. Indeed, signs that inflation might be loosening its grip on the Japanese economy have seen bets pared that the longest period of ultra-low interest rates in modern history could be coming to an end. Those bets had supported the Yen at the end of 2023, as the prospect of aggressive rate cuts from the Federal Reserve stood in rare contrast with market hopes that Japan could see some tighter policy at last. The BoJ has been trying to stoke sustainable domestic demand and pricing power for many years. However, while Japanese inflation has certainly risen, the BoJ has often expressed doubt that this was anything more than the importation of global price pressures. Rate-setters are almost certain to argue that it needs more time to assess the truth of this, with its key short-term rates likely to stay at minus 0.1%. For USD/JPY much is likely to depend on the BoJ’s assessment of likely wage growth, and anything it may say about longer-term Japanese government bond yields. Durable rises in either might offer the Yen some support. The central banks’ quarterly outlook report will accompany the policy decision. This month and early next are likely to see a raft of ‘on hold’ central banks. The BoJ will have the privilege of kicking the process off. The Fed will join in on the last day of this month. USD/JPY Technical Analysis USD/JPY Daily Chart Compiled Using TradingView The US Dollar has gained in value by more nearly eight full Yen since January 2 so it’s perhaps unsurprising that USD/JPY momentum should be waning a little now. In any case the pair is edging up into overbought territory according to its Relative Strength Index so a pause is warranted even if another leg higher occurs over time. For now the Dollar is faltering within a trading band between November 28’s intraday high of 148.81 and the first Fibonacci retracement of the rise from the lows of late March 2023 and November’s significant highs. That comes in at 146.69. The upper boundary of that range was rejected once again on Friday and, while it will need to be topped convincingly if the bulls are to make another attempt at those highs, there doesn’t seem much sign of that happening yet. Still, the market will probably retain its broader upside bias for as long as that trading band holds. --By David Cottle for DailyFX https://www.dailyfx.com/news/japanese-yen-ticks-up-as-market-looks-toward-boj-s-first-2024-rate-call-20240122.html