2024-07-12 11:30

British Pound (GBP/USD) Analysis and Charts GBP/USD continues to gain Stronger UK growth and increased bets on lower US rates have done the trick Bets on Bank of England action have been pared The British Pound remains bid and close to its highs for the year against the United States Dollar, thanks to support from both sides of the currency pair. On the ‘GBP’ side, growth data have surprised to the upside. The United Kingdom’s Gross Domestic Product expanded by 0.4% in May. Growth flatlined in April but appears to be accelerating again out of the recession which clouded the end of 2023. This surprise has seen bets reduced on an interest rate reduction in August. Before the numbers this was seen as highly likely, now the odds are down to about 50./50. Moreover, after years of churn at the top of government, the UK is starting to look like a haven of political stability compared with its most obvious national peers. Its new government was installed this month with a massive electoral majority, adding to the Pound’s allure. The US Dollar, meanwhile, has been knocked by more docile inflation numbers. These have kept alive the possibility that the Federal Reserve will at last start to reduce its interest rates in September with markets now betting on two quarter-point reductions before the end of the year. The next major UK data event will be official inflation figures. That’s sure to be a big one for traders but it’s not due until July 17. The interim will likely see Dollar action setting the pace. GBP/USD Technical Analysis GBP/USD Daily Chart Compiled Using TradingView GBP/USD has clearly surged in July, with the daily candles a forest of green since the month began, At this point the only near-term question is how far the rally can run without starting to look overstretched. The broad uptrend channel from the lows of late April has been quite well respected, but its upper limit has survived numerous tests and is in any case quite a long way above the current market even after this rapid rise. It offers resistance at 1.29971. That’s unlikely to be tested soon. For now, bulls are holding on close to the year’s peak and it will be interesting to see if they can hold the market there into next week’s trading. If they can’t, June 12’s peak of 1.28539 may beckon, ahead of retracement support at 1.27484. The latter would represent a major reversal but, given that the market is nearly five full cents above its 200-day moving average, shouldn’t be ruled out. Unsurprisingly the Pound is starting to look a little overbought at current levels, with GBP/USD’s Relative Strength Indicator at 72.6 on Friday. --By David Cottle for DailyFX https://www.dailyfx.com/news/british-pound-holds-at-24-highs-vs-usd-but-starts-to-look-stretched-20240712-20240712.html

2024-07-12 07:56

Japanese Yen (USD/JPY) Analysis USD/JPY hit a three-week low after a softer-than-expected US CPI print. Size and speed of the move fuel intervention speculation. US Dollar Slumps After Inflation Eases Further – Stocks, Gold, and Silver Rally USD/JPY shed over 400 pips in just over 30 minutes yesterday afternoon, hitting 157.42, after the latest US CPI report showed price pressures easing by more than expected in June. US dollar weakness was driven by a sharp boost in US rate cut expectations which at one stage yesterday hit a 97% probability for a cut at the September 18 FOMC meeting. The US dollar fell across the board, but the weakness in USD/JPY stood out for the size and speed of the sell-off. This invariably sparked talk about Bank of Japan (BoJ) intervention, especially as USD/JPY was trading around a 38-year high just before the US CPI data was released. Various reports suggest that the BoJ may have been checking market prices, a known form of verbal intervention that precedes any actual action, although this remains difficult to confirm. Stop losses may also have been triggered for traders who have been running the long USD/JPY trade over the last few weeks. Japanese officials refused to comment on market speculation, leaving the market waiting for official data at the end of the month to see if the BoJ/MoF bought any Japanese Yen. The US dollar is marginally stronger in early European trade, pushing USD/JPY back to 159.25. The pair have made a handful of attempts to break above 162.00 over the last two weeks without any success and this level of resistance should hold going forward. Financial markets are currently showing a 46% chance that the BoJ will hike rates by 10 basis points at the end of July, a move that would start to narrow the interest rate differential between the two currencies and weaken USD/JPY. USD/JPY Daily Price Chart Chart using TradingView Retail trader data shows 28.57% of traders are net-long with the ratio of traders short to long at 2.50 to 1.The number of traders net-long is 6.24% higher than yesterday and 19.65% higher than last week, while the number of traders net-short is 24.54% lower than yesterday and 27.96% lower than 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. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current USD/JPY price trend may soon reverse lower despite the fact traders remain net-short. 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 contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/japanese-yen-analysis-usd-jpy-trims-losses-official-intervention-of-jawboning-20240712.html

2024-07-11 12:59

US Dollar, Stocks, Gold, and Silver Analysis and Charts US headline inflation y/y fell to 3.0% from 3.3% in May. US dollar down, stocks and gold rally. The US dollar index fell by nearly half a point after the latest US CPI showed inflation eased by more than forecast. Headline inflation y/y fell to 3.0% from 3.3% in May, while core inflation y/y fell to 3.3% from 3.4%. Core inflation m/m fell to 0.1% from a prior month’s reading of 0.2%. Markets are now showing an 87% chance of a 25 basis point interest rate cut at the September 18th FOMC meeting. The US dollar index fell around 40 pips on the news and continues to sell off. The DXY is now closing in on the recent low prints around 104.00 made in early June US Dollar Index Daily Chart US indices have now turned positive pre-open with the Nasdaq 100 and the S&P 500 currently showing gains of 0.3% on the session. Gold is back above $2,400/oz. for the first time since late May, and there is little resistance left on the daily charts until the recent high at $2,450/oz. comes into play. Gold Daily Price Chart Silver outperforms gold and is over 2.5% higher after the data release. Silver has also broken out of the recent daily pennant pattern, confirming a bullish outlook and a test of $32.50/oz. Silver – Bullish Technical Patterns on the Daily Chart Silver Daily Price Chart What are your views on the US Dollar – 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/us-dollar-slumps-after-inflation-eases-further-stocks-gold-and-silver-rally-20240711.html

2024-07-11 11:30

Gold Price Analysis and Chart Gold has risen for three straight days Solidifying hopes that US rates could fall at least once this year have helped Inflation data will of course be key, and are coming up Gold prices are higher again on Thursday as the market hopes that the United States will see lower interest rates this year keeps demand solid and allows traders to dream again of record highs. Recent US labor market data and commentary from Federal Reserve Chair Jerome Powell have done nothing to alter bets that the longed-for first reduction in borrowing costs will come in September, with the chances of yet another cut by December prices at just under 50%. The prospect that rates could rise seems to have been comprehensively banished absent a huge, unexpected upward turn in the inflation data. Gold famously yields nothing so tends to do better when rates fall, taking broader paper yields with them. Of course, gold is also held rightly or wrongly as an inflation hedge. But there’s little sign that relaxing global price pressures are undermining its appeal to date. Sadly, there are also plenty of geopolitical risks that are keeping gold’s haven qualities to the fore, notably of course conflict in Ukraine and Gaza. The metal hit record highs above $2,400/ounce back in May. The London Bullion Market Association price hit $2,427.30 and hasn’t retreated far since. The market will now look to official US inflation figures, with consumer prices in the spotlight on Thursday, and producer prices on Friday. Gold Prices Technical Analysis Daily Chart Compiled Using TradingView With prices so elevated you can take your pick of uptrends on the gold charts, with prices a very long way indeed from threatening the longer-term trend lines. However, the uptrend from mid-March remains in immediate focus. Prices broke below it at the end of June but that didn’t last. They very obviously bounced at retracement support of $2,299.241 and have respected the trendline since. It now offers support well below the market at $2,342. Bulls will now need to regain July 5’s peak of $2,391.78 and durably hold the market there if they’re going to crack psychological resistance at $2,400 and put the record peaks back in view. Despite a quite solid fundamental and technical backdrop, it’s possible that this market could start to look a little over-extended. Prices are nearly $200/ounce above their 200-day moving average after all, even if the Relative Strength Index doesn’t suggest massive overbuying yet. This could be an environment in which it’s as well to watch out for reversals, but they’re unlikely to be very serious while that retracement support holds. --By David Cottle for DailyFX https://www.dailyfx.com/news/gold-prices-edge-closer-to-record-highs-as-fed-rate-cut-hopes-boost-demand-20240711.html

2024-07-11 07:41

British Pound Latest – GBP/USD and EUR/GBP Analysis and Charts Solid UK growth driven by all three main sectors. UK rate cut expectations trimmed by 3-4 basis points. The latest monthly UK GDP data surprised to the upside earlier today with all three sectors – services (+0.3%), production (+0.2%), and construction (+1.9%) – expanding. According to the Office for National Statistics (ONS), ‘Real gross domestic product (GDP) is estimated to have grown by 0.9% in the three months to May 2024, compared with the three months to February 2024. This is the strongest three-monthly growth since January 2022. Services output was the main contributor, with a growth of 1.1% in this period, while production output showed no growth and construction fell by 0.7%. Monthly real GDP is estimated to have grown by 0.4% in May 2024, after showing no growth in April 2024 (unrevised from our last publication).’ ONS – GDP Monthly Estimate – May 2024 Today’s strong GDP data trimmed UK rate cut expectations by 3-4 basis points but market pricing still shows just under 47 basis points of rate cuts this year with the September 19th meeting heavily favored for the first 25 basis point move. GBP/USD posted a multi-week high of 1.2668 after the release, and now eyes the early March high of 1.2896. GBP/USD Daily Chart EUR/GBP continues its recent move lower and is set to test the June 14 low at 0.8397. A break below here would see EUR/GBP back at levels last seen in August 2022 and would leave 0.8340 vulnerable. EUR/GBP Daily Chart All charts using TradingView IG Retail trader data shows 69.80% of traders are net-long with the ratio of traders long to short at 2.31 to 1.The number of traders net-long is 8.11% higher than yesterday and 11.58% higher than last week, while the number of traders net-short is 12.50% lower than yesterday and 9.26% lower than last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/GBPprices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EUR/GBP-bearish contrarian trading bias. What is your view on the British Pound – bullish or bearish?? You can let us know via the form at the end of this piece or contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/british-pound-latest-uk-gdp-beats-estimates-rate-cut-expectations-trimmed-20240711.html

2024-07-10 15:00

British Pound (GBP/USD) Analysis and Charts UK 2-year Gilt yields set to break below 4%. GBP/USD eyes Thursday’s US CPI release. UK government borrowing costs are declining as investors anticipate lower interest rates. The 2-year gilt yield is approaching levels not seen in over three months, reflecting market expectations of two 25 basis point rate cuts this year. Investors are projecting the first reduction at the Bank of England's September meeting. Additionally, the current political stability is contributing to downward pressure on gilt yields, despite long-term concerns about potentially increased borrowing under the new Labour government. A break and open below the March 22nd low at just under 4.08% should open the way for the 2-year gilt yield to test 4.0% and then 3.96%. US 2-Year Gilt Yield GBP/USD remains around the 1.2800-1.2850 area ahead of Thursday’s US CPI release. Cable tested, and quickly rejected the early June 1.2863 level on Monday and now needs a catalyst if it is to break higher. All three simple moving averages remain positive. Initial support is seen around 1.2750. GBP/USD Daily Chart Retail trader data shows 34.93% of traders are net-long with the ratio of traders short to long at 1.86 to 1.The number of traders net-long is 2.01% higher than yesterday and 19.14% lower from last week, while the number of traders net-short is 3.39% lower than yesterday and 15.61% higher from last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/USD prices may continue to rise. Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed GBP/USD trading bias. What is your view on the British Pound – bullish or bearish?? You can let us know via the form at the end of this piece or contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/british-pound-gbp-usd-latest-cable-under-pressure-as-gilt-yields-slide-20240710.html