2023-11-03 07:58

POUND STERLING ANALYSIS & TALKING POINTS BoE sentiments linger in favor of sterling. US NFP and services PMI to dominate headlines later today. GBP/USD eyes symmetrical triangle breakout. GBPUSD FUNDAMENTAL BACKDROP The British pound has held onto yesterday’s gains after the Bank of England (BoE) decided to keep interest rates on hold. A quick summary of the meeting included BoE Governor Andrew Bailey reiterating the need to maintain rates at current levels for a longer period of time to bring down inflation in the UK. With lagged effects from prior hikes, keeping monetary policy conditions tight can ensure further declines in inflation and the UK jobs market respectively. Money market pricing (see table below) shows December 2024 expectations for additional rate cuts being increased to 51bps from 40bps earlier this week. This pricing is incongruent with Governor Bailey’s messaging as well as the BoE’s inflation forecasts. Time and more data will give traders a more accurate picture of the potential trajectory of the BoE. BOE INTEREST RATE PROBABILITIES Source: Refinitiv ISM services PMI is another crucial statistic for the US being a primarily services driven economy. Unlike the UK, the US has managed to remain within the expansionary zone for this metric. Fed speakers are also scattered throughout the day and will provide their thoughts post-FOMC. TECHNICAL ANALYSIS GBP/USD DAILY CHART Chart prepared by Warren Venketas, IG GBP/USD price action above shows the pair trading within a symmetrical triangle pattern (black) that traditionally tends to follow the preceding trend – downtrend in this case. That being said, a confirmation close and breakout above triangle resistance could invalidate this outlook. The short-term directional bias will likely be determined by the aforementioned US data which should keep investors cautious ahead of the announcements. The Relative Strength Index (RSI) supplements this viewpoint as the 50 level suggests market hesitancy favoring neither bullish nor bearish momentum. Key resistance levels: 200-day MA (blue) 1.2308/50-day MA (yellow) Triangle resistance Key support levels: 1.2200 1.2100/Triangle support Trendline support 1.2000 1.1804 BULLISH IG CLIENT SENTIMENT (GBP/USD) IG Client Sentiment Data (IGCS) shows retail traders are currently net LONG on GBP/USD with 67% of traders holding long positions (as of this writing). https://www.dailyfx.com/news/forex-gbp-price-forecast-pound-clinging-to-post-boe-gains-wv-20231103.html

2023-11-02 22:30

US NFP REPORT KEY POINTS: The U.S. economy is forecast to have created 180,000 jobs in October The unemployment rate is seen holding steady at 3.8% A weak NFP report would be bearish for the U.S. dollar, creating the right conditions for a moderate rally in EUR/USD and GBP/USD Most Read: US Dollar Forecast - USD/JPY Slips but AUD/USD Breaks Out After Fed, NFP Ahead Wall Street will be on high alert Friday morning when the U.S. Bureau of Labor Statistics publishes its most recent employment survey. With the potential to alter the Federal Reserve's monetary policy outlook, this report is set to draw substantial attention and scrutiny, possibly resulting in greater market volatility heading into the weekend. Consensus forecasts suggest that U.S. employers increased payrolls by 180,000 in October, following the addition of 336,000 jobs in September. Separately, household data is expected to reveal that the unemployment rate remained unchanged at 3.8%, highlighting the persistent tightness in labor market conditions. Focusing on compensation, average hourly earnings are seen rising 0.3% monthly, which would result in an annual reading of 4.3%. For the Federal Reserve, pay growth is a critical metric, serving as an indicator of inflationary trends. Therefore, it is of utmost importance to observe the progression of wages in the broader economy and assess their compatibility with the 2.0% inflation target. UPCOMING US LABOR MARKET DATA POSSIBLE MARKET SCENARIOS Fed Chair Powell has maintained the possibility of additional policy tightening for the current cycle, but has not firmly embraced this scenario, pledging to proceed carefully in the face of growing uncertainties. This suggests that policymakers will rely heavily on incoming information to formulate future decisions. Looking at implied probabilities, the odds of a quarter-point rate rise at the December Fed meeting sits at roughly 20% at the time of writing. Market pricing has been in a state of flux lately, but the likelihood of another hike could rise materially if payroll numbers beat projections by a wide margin. Any NFP headline figure above 275,000 could have this effect on expectations. Generally speaking, a very hot employment survey could spark a hawkish repricing of the Fed’s policy path, creating the right conditions for U.S. Treasury yields to resume their ascent after their recent pullback. This scenario could give the U.S. dollar a boost against its top peers such as the euro and the British pound. On the other hand, if hiring activity disappoints and confirms that the economic outlook is deteriorating, rates could continue their retrenchment, sending the broader U.S. dollar lower. This scenario would be supportive of EUR/USD and GBP/USD, allowing both pairs to extend their nascent recovery. Anything below 100,000 jobs should be bearish for the American currency. Keen to understand the role of retail positioning in EUR/USD's price action dynamics? Our sentiment guide delivers all the essential insights. Get your free copy today! FOMC MEETING PROBABILITIES Source: FedWatch Tool EUR/USD TECHNICAL ANALYSIS EUR/USD rebounded on Thursday amid broad-based U.S. dollar weakness, but fell short of taking out overhead resistance stretching from 1.0670 to 1.0695. For confidence to improve further, we need to see a clear and clean move above 1.0670/1.0695 in the coming days. If this scenario unfolds, the bullish camp may reassert dominance, paving the way for a rally towards 1.0765, the 38.2% Fibonacci retracement of the July/October selloff. On the other hand, if sellers regain the upper hand and drive prices below trendline support at 1.0535, downward momentum could intensify, opening the door for a drop toward the 1.0450. Below this region, the next area of interest is located at 1.0355. EUR/USD TECHNICAL CHART EUR/USD Chart Creating Using TradingView GBP/USD TECHNICAL ANALYSIS The British pound has been weakening against the U.S. dollar since mid-July, with GBP/USD steered to the downside by a well-defined bearish trendline and marking impeccable higher lows and lower lows during its slide. Earlier in the week, cable made a push towards trendline resistance at 1.2200, but failed to clear it decisively, a sign that the bulls have not yet developed the necessary momentum for a breakout. For a clearer picture of the short-term prospects for GBP/USD, it's vital to assess how prices behave around crucial levels over the next few days, taking into account two potential scenarios. Scenario one: Breakout If cable manages to breach dynamic resistance at 1.2200, we could see a move towards 1.2330. On further strength, the focus shifts to the 200-day simple moving average near 1.2450. Scenario two: Bearish rejection If cable gets repelled lower from its current position, the pair could head toward its yearly lows at 1.2075, where the 38.2% Fibonacci retracement of the 2022/2023 rally aligns with several swing lows. Maintaining this technical support is of utmost importance; any breach could trigger a decline towards the 1.1800 handle. Wondering how retail positioning can shape the short-term trajectory of GBP/USD? Our sentiment guide has all the relevant information you need. Grab a free copy now! GBP/USD TECHNICAL CHART GBP/USD Chart Created Using TradingView https://www.dailyfx.com/news/forex-nfp-us-jobs-report-preview-forecast-for-eur-usd-and-gbp-usd-20231102.html

2023-11-02 20:00

USD/CAD PRICE, CHARTS AND ANALYSIS: USDCAD Extends Losses on a Weak Dollar Index and Fed Rate Cut Bets. US and Canadian Labor Data Ahead Could Help Give Further Direction. IG Client Sentiment Data Has Traders Overwhelmingly Net Short on USD/CAD. To Learn More About Price Action,Chart PatternsandMoving Averages, Check out theDailyFX Education Series. Read More: The Bank of Canada: A Trader’s Guide USDCAD has continued to selloff today following a rejection at the 1.3900 resistance level. The decline in the DXY has helped USDCAD push lower as well in what will be a welcomed by the Bank of Canada and Canadian consumers. In October the Canadian Dollar was the third worst performing G10 currency as it lost ground against the Greenback, the rise in Oil prices not even able to support the CAD. USD INDEX AND US, CANADIAN DATA AHEAD The Dollar Index continues to struggle at the key resistance area around the 1.0680-1.0720 area. The failure to break higher yesterday was bolstered by the FOMC meeting which saw the FED maintain their current policy path and outlook despite robust US data. The result saw market participants pin their hopes on the idea that the Fed is now done with hiking and the next move likely to be a rate cut, with participants now seeing a 70% chance of a rate cut in June of 2024. DXY Daily Chart Source: TradingView Data tomorrow could be key for USDCAD as we have releases from both the US and Canada. Canadian Unemployment and average hourly wage data will be released but is likely to be overshadowed by the release of the US NFP and labor data release. The NFP is even more interesting this month following a blockbuster print last month, with market participants keeping a close watch to gauge whether that was a one off or whether the strong hiring of late will continue. TECHNICAL ANALYSIS USDCAD USDCAD failed in its attempts to pierce through the 1.3900 resistance area closing yesterday with a shooting star candle close and followed by another bearish day. A candle close as we stand now would see the pair print an evening star candlestick pattern which is strong reversal pattern and could signal further downside ahead. Immediate support is provided by the 20-day MA around 1.3720 which hovers just above the recent descending trendline break and support around the 1.3650 mark. Alternatively, if we are to rally higher tomorrow post the NFP release and break above the recent high at 1.3900 then focus will shift to the psychological 1.4000 handle as a key area of resistance. Key Levels to Keep an Eye On: Support levels: 1.3720 1.3650 1.3500 Resistance levels: 1.3820 1.3900 1.4000 USD/CAD Daily Chart Source: TradingView, prepared by Zain Vawda IG CLIENT SENTIMENT Taking a look at the IG client sentiment data and we can see that retail traders are currently net SHORT with 68% of Traders holding short positions. Given the contrarian view adopted here at DailyFX to Client Sentiment will USDCAD revisit recent highs at 1.3900? For Tips and Tricks on How to use Client Sentiment Data, Get Your Free Guide Below https://www.dailyfx.com/news/usd-cad-price-forecast-1-3900-holds-firm-as-dxy-retreats-will-20-day-ma-provide-support-20231102.html

2023-11-02 18:30

USD/JPY AND AUD/USD OUTLOOK: USD/JPY retreats for the second straight day as the broader U.S. dollar softens after the Fed fails to steer markets toward pricing another hike Meanwhile, AUD/USD breaks out to the topside after clearing trendline resistance Attention now turns to Friday's U.S. economic data, which includes the nonfarm payrolls report and the ISM services survey Most Read: EUR/USD, Gold Forecast - Powell Fails to Steer Markets Towards Another Hike. What Now? The U.S. dollar depreciated broadly on Thursday after the Federal Reserve kept interest rates unchanged and did little to guide markets toward another potential hike. While the FOMC maintained a tightening bias in its statement, Chairman Powell fail to strongly endorse further policy firming, leading traders to conclude that the terminal rate has been reached and the hiking campaign is effectively over. U.S. economic data released this morning accelerated the greenback’s descent after reinforcing the pullback in Treasury yields. For context, U.S. labor costs showed a surprising contraction in the third quarter, falling 0.8% versus expectations for a 0.7% increase, indicating that wage pressures are easing at a time of rising productivity, an encouraging development for the central bank. US TREASURY CURVE TODAY VERSUS MONDAY Source: TradingView US DATA AT A GLANCE With the Fed pledging to proceed carefully, perhaps in recognition that the full impact of past actions has yet to be felt, the U.S. dollar may soon undergo a prolonged downward correction, especially if sentiment stabilizes. To trust this assessment, however, incoming data will have to confirm that the economic outlook is deteriorating under the weight of overly restrictive financial conditions. Traders will have a chance to gauge the health of the overall economy on Friday when the U.S. October nonfarm payrolls numbers and the ISM services PMI survey are unveiled. If both reports surprise to the downside, in a manner reminiscent of ISM manufacturing activity earlier this week, the U.S. dollar could take a big hit, resulting in a sharp pullback for USD/JPY and a meaningful rally for AUD/USD. The figure below reflects investors' outlook for both releases For a comprehensive view of the Japanese yen's fundamental and technical outlook, grab a copy of our Q4 trading forecast today. It’s totally free! USD/JPY TECHNICAL ANALYSIS USD/JPY fell on Thursday, extending losses for the second straight day after failing to clear resistance around the psychological 152.00 level earlier in the week. If the decline extends further in the coming sessions, support is seen at 148.75. While the pair may establish a base in this area on a pullback, a breakdown might entice new sellers into the market, potentially resulting in a drop toward 147.30. On the other hand, if the bullish camp reasserts dominance and initiates an upward reversal, technical resistance stretches from 151.95 to 152.00, where this year's high aligns with the 2022 peak. If strength is maintained, we could see a potential rally towards 153.00, which corresponds to the upper boundary of a medium-term rising channel, as shown in the daily chart below. USD/JPY TECHNICAL CHART USD/JPY Chart Created Using TradingView AUD/USD TECHNICAL ANALYSIS AUD/USD has been in a prolonged downtrend, with sharp declines since mid-July, as shown in the chart below. Late last week, however, prices managed to find support near the 0.6275 area before staging a moderate comeback in the days that followed. This rebound took the pair above trendline resistance and the 50-day simple moving average, creating a more constructive backdrop for the Australian dollar. For AUD/USD's outlook to improve further, bulls need to take out overhead resistance at 0.6460. If this scenario plays out, we could see a rally towards 0.6510. On further strength, buyers could be emboldened to launch an attack on the 0.6600 handle. Conversely, if sellers return and regain the upper hand, initial support appears at 0.6395, followed by 0.6360. Below this area, attention turns to the 2023 lows. AUD/USD TECHNICAL CHART AUD/USD Chart Created Using TradingView https://www.dailyfx.com/news/forex-usd-dollar-forecast-usd-jpy-slips-but-aud-usd-breaks-out-after-fed-nfp-ahead-20231102.html

2023-11-02 17:00

SP 500 & NAS100 PRICE FORECAST: SPX and NAS 100 Continue to Advance, Now Up 4.7% and 5.7% Since the Recent Lows. Market Participants Buoyed on Belief that the Central Bank Hiking Cycles are Over Which Could Keep US Equities Supported. Apple Earnings Are Due After Market Close Today as US Jobs Data Tomorrow Could Set the Tone for What Comes Next. To Learn More About Price Action, Chart Patterns and Moving Averages, Check out the DailyFX Education Section. Most Read: Oil Price Forecast: 100-Day MA Provides Support to WTI but Will it Last? US Indices are enjoying a stellar recovery this week with the SPX up around 4.7% and the NAS 100 up around 5.7%. This is in stark contrast of the recent slide which had put the SPX and the Nasdaq in correction territory following 10% of losses from the recent highs printed in mid-July. The rally received a further boost the lack of certainty provided by Federal Reserve and the Bank of England (BoE) had market participants betting that peak rates have been reached. Neither Central Bank openly saying as much, however, market participants are apparently seeing light at the end of the tunnel. Source: Refinitiv Fed Chair Powell reiterated his commitment to the 2% inflation target saying that he believes current policy should get the Fed to target but leaving the door open for the Fed to tighten should the need arise. The probability for rate cut in June 2024 have risen to a high of 70% following the FOMC meeting and could in part explain the upbeat mood we are seeing today. EARNINGS AND MORE US DATA AHEAD Today after market close, we get one of the most hotly anticipated earnings report as Apple will report on its quarterly performance. Expectations are for a 1% decrease in quarterly revenue, and this could hold some extra importance as Apple is a bellweather for consumer demand and the tech sector. This report and any hints at what to expect for Q4 could be intriguing given recent murmurs around poor sales in China for recent Apple product releases. Tomorrow and all eyes will be focused on the US employment data with NFP, the unemployment rate and of course the all-important average earnings number. Any sign of labor market softening and a drop in average earnings could further embolden bulls and result in gains for the SPX, NAS 100 and risk assets as a whole. TECHNICAL OUTLOOK AND FINAL THOUGHTS The SPX rally to the upside has been gaining traction throughout the week and breaking through some key areas of resistance. Despite the excellent gains this week the index is still in a downtrend until the 4399 swing high isn’t broken. However, there is a key confluence area approaching before the previous swing high can be reached and this may prove a stumbling block for the S&P. The 4325 level which is a resistance area lines up perfectly with the descending trendline and we also have the 50-day MA just above this level adding a further layer of resistance. My hesitance about this level also stems from the fact that the weekend is approaching and following the size of the rally this week we could see some profit taking ahead of the weekend which could see the SPX experience a retracement tomorrow. The middle east tension has seen market participants unwilling to hold positions open over the weekend and I think this will continue for a while longer. Key Levels to Keep an Eye On: Support levels: 4271 4254 4198 Resistance levels: 4325 4350 4399 S&P 500 November 2, 2023 Source: TradingView, Chart Prepared by Zain Vawda The NAS100 has been on a similar tear as the SPX but has gained about 1% more. The charts look very similar with the Nasdaq also facing a key confluence area up ahead. The 15000-15100 area promises to be key for the Nasdaq if the bullish momentum is set to continue as this confluence area has the 100-day MA as well as the descending trendline. Above this area we have another resistance area around 15300. A rejection here will bring immediate support around the 14740 mark into focus before 14540 and then the recent lows may come into focus. As I mentioned with the SPX, we could see market participants do some profit taking ahead of the weekend and this could keep the Nasdaq under pressure tomorrow assuming US data doesn’t throw any upbeat surprises on the labor market data release. NAS100 November 2, 2023 Source: TradingView, Chart Prepared by Zain Vawda https://www.dailyfx.com/news/s-p-500-nas-100-approaching-key-confluence-area-can-the-rally-continue-20231102.html

2023-11-02 15:39

Gold (XAU/USD) Analysis Gold’s bullish momentum weighed down by general lift in sentiment Gold prices test key level of support as the current pullback extends The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Gold’s Bullish Momentum Weighed Down by General Lift in Sentiment The FOMC statement and presser resulted in a reduced expectation that the Fed will hike rates in December – the final meeting for the year. Jerome Powell attempted to keep the door open for another rate hike after expressing that the majority of the committee foresee a greater probability of another rate hike before rate cuts appear on the horizon. Outperformance in US data poses upside risks to inflation, something the Fed has used to avoid any notion that interest rates are at their peak. This is because the Fed understands that once markets know we’re at a peak, they will start to price in rate cut, loosening financial conditions. Fed funds futures suggest that the market now places the likelihood of another rate hike in December at 20%, down from a month earlier at 40%. The Fed’s hawkish message with dovish undertones has resulted in a continuation of the risk on sentiment with global sock indices posting impressive rises. Stocks are up, bonds are up (yields down) and the dollar lower – with gold failing to rise. The weekly chart shows gold is on track for its first weekly decline since the Middle East conflict began. The market is due a pullback given the exponential rise that started on the 9th of October. $1956 is the nearest level of support on the weekly chart. Gold (XAU/USD) Weekly Chart Source: TradingView, prepared by Richard Snow Supplement your trading knowledge with an in-depth analysis of gold's outlook, offering insights from both fundamental and technical viewpoints. Claim your free Q4 trading guide now: As the war has gone on, the gold volatility index has been steadily declining. While failing to reach similar levels as prior spikes, the trough to peak matches that of the banking turmoil in March this year. Expected volatility has waned as gold prices slowed. 30-Day Expected Gold Volatility (GVZ) Source: TradingView, prepared by Richard Snow The daily chart shows how gold touched the $2010 level before turning lower. $1985 is the immediate level of support that is currently being tested. A weekly close below $1985 highlights the 200 SMA which appears at $1937. Gold (XAU/USD) Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/gold-price-update-bullish-momentum-wanes-despite-softer-usd-yields-20231102.html