2024-01-12 14:00

Oil Analysis, Prices, and Charts Traders concerned over potential retaliatory attacks. Supply chain fears over further Red Sea shipping disruption. Learn how to trade Oil with our complimentary guide: Financial markets are pricing in risk premiums to the price of oil after US and UK forces struck Houthi rebel targets in Yemen overnight. According to reports in The Daily Telegraph, US and UK air forces hit more than 60 targets in 16 different locations, including sites in and around airports, military bases, and a Houthi naval base. The Middle East is critically important for global oil supply, with major producers including Saudi Arabia, Iraq, and UAE relying on vulnerable transportation routes including the strategic Bab el-Mandeb Strait next to Yemen. Around 4.8 million barrels of crude oil and refined products flow through this narrow passage each day. Oil is also benefitting from a marginally lower US dollar after the yield on the rate-sensitive UST2-year fell yesterday, in part on increased haven demand. A weaker dollar makes oil less expensive for foreign buyers, increasing demand and pushing prices higher. US crude is currently stuck between two Fibonacci retracement levels, the 61.8% level at $75.64/bbl. and the 78.6% level at $70.36/bbl. A negative 50-/200-day simple moving average crossover on December 22nd continues to weigh down on the price of oil, while the current spot price is bouncing off the 20-dsma and testing the 50-dsma. The chart shows the recent series of lower lows is now broken, while the series of lower highs remains intact until $76.14/bbl. is taken out. Oil Daily Price Chart – January 12, 2024 Chart via TradingView IG Retail Trader data shows 82.49% of traders are net-long with the ratio of traders long to short at 4.71 to 1.The number of traders net-long is 8.62% lower than yesterday and 7.42% lower than last week, while the number of traders net-short is 49.13% higher than yesterday and 18.07% higher than last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggestsOil- US Crude prices may continue to fall. What is your view on Oil – 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/crude-oil-latest-heightened-geopolitical-tensions-push-oil-prices-higher-20240112.html

2024-01-12 11:30

Article by IG Senior Market Analyst Axel Rudolph FTSE 100, CAC 40, Russell 2000, Analysis and Charts FTSE 100 tries to recover amid slightly better month-on-month GDP reading The FTSE 100, which Thursday dropped to the 200-day simple moving average (SMA) at 7,573 on a higher-than-expected US CPI inflation reading, tries to recover on the last trading day of the week amid a decent month-on-month performance on UK GDP which was negated by a drop of the 3-month average. Resistance sits at last week’s 7,635 to 7,647 lows ahead of Thursday’s 7,694 high. Downside pressure should remain in play while 7,694 isn’t overcome. Above it lies resistance between the September and December highs at 7,747 to 7,769. A fall through Thursday’s 7,573 low would put the 55-day simple moving average (SMA) and October-to-January uptrend line at 7,548 to 7,546 on the map. FTSE 100 Daily Chart CAC 40 drops towards this week’s low The French CAC 40 stock index continues to range trade in a tight band between 7,488 and 7,351 amid pared back rate cut expectations. The index targets Thursday’s low at 7,415, below which lies last week’s low at 7,351. It should continue to do so while it remains above Friday’s 7,457 intraday high. This level would need to be exceeded for the recent highs 7,686 to 7,687 to be revisited. CAC 40 Daily Chart Russell 2000 slips back post higher-than-expected US CPI reading The Russell 2000 continues to sideways trade in a relatively tight range as it awaits US PPI data and the beginning of Q4 earnings season. Thursday’s uptick in US CPI inflation took the index back down from its one-week high at 1,992 to Thursday’s 1,933 low. This level may well be revisited on Friday, a fall through which would likely engage last week’s 1,921 low. Resistance now sits between this week’s highs at 1,986 to 1,991 highs. This area would need to be bettered for a continuation of the medium-term uptrend to gain traction. Russell 2000 Daily Chart https://www.dailyfx.com/news/ftse-100-cac-40-and-russell-2000-remain-under-pressure-following-higher-us-inflation-print-20240112.html

2024-01-12 09:06

UK GDP (November), Pound Sterling Analysis UK GDP shows signs of potential via latest November data GBP little changed but holds gains heading into the weekend UK and US conduct joint strike of Houthi military targets in Yemen The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library UK GDP Shows Signs of Potential via Latest November Data UK GDP rose more than expected in November 2023, mainly boosted by the services sector and marginal improvements in production output. However, the main concern is around how the economy fared over the final quarter of the year and whether seasonally higher spending over the festive season was enough to see the UK avoid a technical recession. Q3 GDP contracted by a meagre 0.1% while Q2 came in flat. The longer-term picture reveals massive challenges to growth – something the Chancellor of the Exchequer Jeremy Hunt sought to address in his Autumn Statement last year. The UK economy has struggled to grow at its pre-Covid pace, with growth petering out in 2022 and 2023 it would appear. Source: The Office for National Statistics (ONS), prepared by Richard Snow Pound Sterling Little Changed but Holds Recent Gains Heading into the Weekend The pound was little changed against the US dollar but rose slightly on the back of the data. GBP/USD has climbed higher this week but still appears to be lacking the necessary momentum that would see the pair retest the late December swing high. However, the golden cross and near-term direction suggests it may simply be a question of time. Constrained USD upside has helped cable grind higher – something that was evident after the higher US inflation print yesterday that failed to result in a sustained move higher for the greenback. Next week it’s the UK’s turn to release inflation data for December alongside jobs data for October (Employment change) and November (Unemployment rate). GBP/USD Daily Chart Source: TradingView, prepared by Richard Snow UK Gilt yields dropped after the data release as bond market participants played down the significance of the month on month beat. UK interest rate expectations had initially held off on large rate cuts in 2024 but has more recently approached that aggressive estimates seen in the US and EU. UK 2-Year GILT Yield (5-Min Chart) Source: TradingView, prepared by Richard Snow In other news the UK and the US conducted a joint strike against Houthi military targets in response to attacks on ships in the red sea, elevating the possibility of a geopolitical relevance in sterling but for now that appears contained. https://www.dailyfx.com/news/pound-sterling-latest-uk-gdp-rose-in-november-but-remains-lacklustre-20240112.html

2024-01-11 22:40

NASDAQ 100, GOLD PRICE FORECAST: Gold and the Nasdaq 100 present an unattractive risk-reward profile at this precise moment following recent U.S. economic data With U.S. inflation running above the 2.0% target and the labor market showcasing exceptional resilience, Fed rhetoric could start shifting in a more hawkish direction in the near term Fedspeak will be key in the near term Most Read: US Dollar Bid as Sticky CPI Poses Dilemma for Fed, Setups on EUR/USD, GBP/USD Gold prices and the Nasdaq 100 could be at risk of a larger downward correction following the latest set of consumer price and unemployment claims figures released on Thursday. This means that new all-time highs for the precious metal and the technology index may have to wait a bit longer. On the inflation front, the December CPI report surprised to the upside, with the all-items index accelerating to 3.4% from 3.1% prior. In terms of labor market data, last week’s applications for jobless benefits sank to the lowest level in three months, indicating that layoffs remain very limited in the economy. US ECONOMIC DATA With consumer prices comfortably above the Fed's 2.0% target and the job market showcasing exceptional resilience, the U.S. central bank will be reluctant to cut interest rates sharply in 2024. This could shock markets given current expectations for about 135 basis points of easing for the year. While Treasury yields moved lower on the day, contrary to intuition, the pullback may not be related to Thursday’s data, but perhaps to safe-haven demand following reports that the U.S. and its allies may conduct airstrikes against Houthi rebels in Yemen. Geopolitical risks are always a wild card, but this situation should be contained, meaning no escalation into a broader regional conflict in the Middle East. On that note, yields are likely to resume their advance once the dust settles, but to get a better sense of their trajectory, traders should closely follow Fedspeak. The following chart shows recent inflation trends for both the headline and core indicator. Source: BLS In light of recent events, traders shouldn’t be surprised if Fed rhetoric begins to shift in a more hawkish direction, with policymakers pushing back against a rate cut in March arguing that more evidence on disinflation is needed to pull the trigger. This could be quite bearish for precious metals and tech stocks. For the reasons outlined before, the risk-reward profile for both gold and the Nasdaq 100 doesn’t look attractive at this precise moment. While the outlook could change with the introduction of new information, traders should exercise caution for now, avoiding blindly chasing suspicious rallies. If you're looking for an in-depth analysis of U.S. equity indices, our first-quarter stock market forecast is packed with great fundamental and technical insights. Get the full trading guide now! https://www.dailyfx.com/news/gold-price-nasdaq-100-at-risk-of-larger-correction-after-hot-us-cpi-data-why-20240111.html

2024-01-11 20:00

Article by IG Market Analyst Jun Rong Yeap US Q4 Bank Earnings Preview As per tradition, the 4Q 2023 earnings parade will kick off with the major US banks, starting this Friday (12 January 2024) with JPMorgan (JPM), Citigroup, Wells Fargo, and Bank of America (BAC) leading the pack. US bank stocks: Earnings schedule Source: Refinitiv US bank stocks: Share price performance On a one-year basis, the share price performance for the banks has varied widely. JPM is the clear outperformer with a 26.9% gain over the past year, while BAC lagged the broader industry (+9.3%) with a mere 0.9% gain. Its underperformance may partly be attributed to a slower price recovery from the March 2023 US banking turmoil, given its relatively larger exposure to unrealized losses in its bond portfolio. US bank stocks: Revenue and earnings expectations for 4Q 2023 Source: Refinitiv. Data as of 3 January 2024. For 4Q 2023, expectations are for most major US banks to turn in positive revenue growth from the previous year. Notably, a double-digit growth (11.8%) for JPM is the consensus, with optimism surrounding the revenue and cost synergies brought by the ongoing integration of First Republic Bank into its business. On the other hand, BAC is expected to be the exception with negative top-line growth (-2.6%) out of the major US banks, while turning in the biggest earnings per share (EPS) decline (-19.9%). Falling bond yields in 4Q 2023 may offer banks stock some breathing space 4Q 2023 has seen a drastic plunge in bond yields on expectations of rate cuts ahead, with the US 10-year Treasury yields easing sharply from its peak of 5.02% to the current 4.05%. Given that the banks are previously forced to pay up for deposits to compete with higher-yielding instruments, falling yields may aid in easing some pressures on the bank’s funding costs. The recovery in bond prices in 4Q 2023 may also alleviate the losses on the bank’s securities portfolio, potentially aiding in bringing back some confidence for the stability of the banking sector. Impact on net interest income on watch In 3Q 2023, most banks' net interest margins (NIM) largely declined, as banks moved to provide higher deposit costs to limit deposit outflows. Therefore, with the rate narrative pivoting towards lower rates through 2024, eyes will be on the subsequent impact on the banks’ NIM and whether margins can remain supported. Based on the Federal Reserve (Fed)’s data which tracks commercial bank balances, lending activities in the 4Q 2023 may remain weak, amid tighter lending standards and high interest rates. This seems to be a continuation of the prevailing trend throughout 2023, and market participants will be on the lookout for any positive surprises on the lending front from the banks. Validation for soft landing hopes on the lookout With market participants basking in hopes of a soft landing scenario into 2024, the banks’ guidance will be closely watched for validation of a resilient economy. During 3Q 2023, the major banks have provided lower-than-expected allowance for credit losses, with a decline from 2Q 2023. The extent of provisions for credit costs provides a gauge of economic risks that the banks foresee, therefore, market participants will want to see loss provisions moderating further towards ‘normal’ levels (levels preceding the Covid-19 pandemic) to support views of a soft landing. The banks have also previously guided that US consumers' finances remain healthy while noting some resilience in US economic conditions, which leaves views in place for similar positive guidance ahead. Improved risk environment may support investment banking and wealth management activities Following a disappointing first nine months of 2023 in investment banking activities, expectations are in place that better times are ahead, with resilient economic conditions and a different course of rate outlook into 2024. The improved risk environment seen in 4Q 2023 could be supportive of such views and with early signs of revival in deal-making, market participants will want to see the positive impact being reflected in the banks’ results, although it may come with a few months lag. Nevertheless, any signs that the worst is over on that front will be very much cheered and may help to contribute to the banks’ earnings recovery. Technical analysis – JPMorgan’s share price hovers around record high JPMorgan’s share price briefly touched a fresh record high last week for the first time in more than two years, hovering around its October 2021 peak at the US$173.00 level. Near-term overbought technical conditions may call for some cooling in its recent rally, but any sell-off could still be a near-term retracement within a broader upward trend at the current point in time. Prices continue to trade above its Ichimoku cloud support on the weekly chart, alongside various moving averages (MA) which keep the bullish bias intact. On the downside, the US$166-$168 level may serve as a support zone to hold with recent consolidation. Source: IG Charts Technical analysis – Bank of America’s share price showing some signs of life Despite underperforming the broader industry for the bulk of 2023, BAC share price has been showing some signs of life lately, having broken above a broad descending wedge pattern in November 2023. Notably, on the weekly chart, its share price has overcome its Ichimoku cloud resistance for the first time since March 2022, while its weekly moving average convergence/divergence (MACD) headed above the key zero mark as a sign of building upward momentum. Further upside may leave its 2023 high at the US$37.12 level on watch for a retest, while on the downside, recent consolidation leaves US$32.84 as potential support to hold. Source: IG Charts Technical analysis – Goldman Sachs’ share price broken out of descending triangle Goldman Sachs’ share price broke out of a broad descending triangle last month, moving on to retest the US$388.40 horizontal resistance, which marked its November 2022 peak. Similarly, on the weekly chart, its MACD has also reverted back above the zero level as a reflection of building upward momentum. Overcoming the US$388.40 level of resistance may leave its all-time high at the US$429.80 level on watch next. Source: IG Charts https://www.dailyfx.com/news/us-banks-4q-earnings-preview-what-to-expect-20240111.html

2024-01-11 17:15

US DOLLAR FORECAST – EUR/USD & GBP/USD The U.S. dollar rises after U.S. inflation data surprises to the upside and unemployment claims fall to lowest level in nearly three months With consumer prices running above target and the U.S. labor market still firing on all cylinders, the Fed may be reluctant to cut rates prematurely This article focuses on the technical outlook for EUR/USD and GBP/USD, examining critical price levels following the U.S. CPI report. Most Read: Crude Oil Prices Gain as Iran Seizes Tanker Off Yemen, China Trade Data Eyed The U.S. dollar, as measured by the DXY index, advanced 0.3.% on Thursday in a volatile trading session following the release of two key U.S. economic reports: the December inflation survey and weekly jobless claims data. For context, headline CPI from last month surprised on the upside, coming in at 3.4% y-o-y, versus the 3.2% y-o-y expected. The core gauge also exceeded forecasts, clocking in at 3.9% - one tenth of a percent above consensus estimates. Elsewhere, applications for jobless benefits sank to the lowest level in nearly three months last week, indicating that mass layoffs are not yet occurring and that hiring is probably continuing at a good pace, a sign that the labor market is still firing on all cylinders despite the late stage of the business cycle. US ECONOMIC DATA Want to know more about the U.S. dollar's outlook? Find all the insights in our Q1 trading forecast. Request a free copy now! With consumer prices well above the 2.0% target and a labor market displaying exceptional resilience, the Federal Reserve will be reluctant to cut interest rates sharply, contravening Wall Street’s expectations calling for 135 basis points of easing this year. For clues on the outlook for monetary policy, it is important to keep an eye on Fedspeak in the coming days and weeks. In light of recent developments, traders should not be surprised if central bank rhetoric begins to lean in a more hawkish direction, a scenario that should be bullish for yields and the U.S. dollar. 2024 FED FUNDS FUTURES IMPLIED RATES Source: TradingView EUR/USD TECHNICAL ANALYSIS EUR/USD retreated on Thursday but managed to remain above technical support at 1.0930. If this floor holds, the pair could resume its upward journey in the coming days, setting the stage for a move towards 1.1020. On continued strength, attention will shift to 1.1075/1.1095, followed by 1.1140. On the flip side, if bearish momentum accelerates and the exchange rate slips below 1.0930, a retracement towards 1.0875 may occur - a region where the 50-day simple moving average aligns with the lower limit of a short-term ascending channel. Further weakness could lead to a retest of the 200-day SMA. EUR/USD TECHNICAL CHART EUR/USD Chart Prepared Using TradingView Interested in learning how FX retail positioning can offer clues about GBP/USD’s near-term trend? Our sentiment guide has valuable insights about the subject. Request your free copy now! GBP/USD TECHNICAL ANALYSIS GBP/USD weakened on Thursday but held above channel support near 1.2675. The bulls must protect this technical floor at all costs; failure to do so could trigger a pullback towards the 1.2600 handle. Subsequent losses from this point onward could expose the 200-day simple moving average. On the other hand, if cable reverses higher and manages to push above resistance at 1.2765, sentiment around the British pound could improve further, creating the right conditions for a climb toward the December highs above the 1.2800 level. Further gains hereon out could facilitate a rally towards 1.3000. GBP/USD TECHNICAL CHART GBP/USD Chart Prepared Using TradingView https://www.dailyfx.com/news/forex-usd-dollar-bid-as-sticky-cpi-poses-dilemma-for-fed-setups-on-eur-usd-gbp-usd-20240111.html