2023-10-30 05:00

US DOLLAR, DXY, FED, FOMC MEETING- OUTLOOK: USD rally has consolidated ahead of next week’s FOMC meeting. US exceptionalism continues to broadly support USD. The US dollar’s rally has stalled ahead of the Oct. 31-Nov.1 FOMC meeting. Part of the reason for the consolation is dovish rhetoric from Fed officials earlier this month, pointing out that tightening in financial conditions as a result of the jump in yields has reduced the need for imminent tightening. As a result, markets widely expect the Fed to hold rates next week. US Fed chair Powell, while acknowledging the tightening in financial conditions recently, left the door open for higher rates. For more details, see “US Dollar Outlook After Powell: GBP/USD, AUD/USD, EUR/USD Price Action,” published October 20. Furthermore, solid US economic data and the perception of higher for longer rates have triggered a pushback in rate cuts in 2025. Having said that, for the recent consolidation to turn out into a reversal, US exceptionalism – the outperformance of the US economy relative to the rest of the world and a broadly hawkish Fed -- would need to reverse.Until then, it could be premature to conclude that the USD has peaked. DXY Index Daily Chart Chart Created by Manish Jaradi Using TradingView DXY Index: An inflection point? On price charts, the US dollar index’s rally appears to be stretched. Market diversity, as measured by fractal dimensions, appears to be low as the DXY Index hit a multi-month high earlier this month. Fractal dimensions measure the distribution of diversity. When the measure hits the lower bound, typically 1.25-1.30 depending on the market, it indicates extremely low diversity as market participants bet in the same direction, raising the odds of at least a pause or even a price reversal. For the DXY Index, recently the 65-day fractal dimension fell below the threshold of 1.25, flashing a red flag, pointing to a consolidation/minor retreat at the very least. For more discussion, see “Has the US Dollar Rally Hit Limits? DXY Index Fractals, Price Action,” published October 17. DXY Index Daily Chart Chart Created by Manish Jaradi Using TradingView Having said that, until there is a price confirmation, the path of least resistance remains sideways to up in the interim. For the immediate upward pressure to ease, the index would need to fall below support at the mid-October low of 105.50. For a reversal of the uptrend since July, the index would need to fall below the 200-day moving average (now at 103.25), near the lower edge of the Ichimoku cloud on the daily charts. EUR/USD 240-Minute Chart Chart Created by Manish Jaradi Using TradingView EUR/USD: Minor reverse head & shoulders? EUR/USD’s slide appears to be temporarily stalled at vital support at the January low of 1.0480. The recent base-building appears to be a minor reverse head & shoulders (the left shoulder is at the end-September low, the head is at the early-October low, and the right shoulder is at the mid-October low). A cross above 1.0650-1.0700 could open the door toward 1.0800, near the 200-day moving average. https://www.dailyfx.com/news/us-dollar-forecast-could-the-fed-be-the-catalyst-for-a-correction-20231029.html

2023-10-30 04:59

GOLD, SILVER WEEKLY FORECAST Bullish: Gold on track to end the week flat as bulls take a breather Talks regarding hostage negotiations and potential ceasefire contrasted with Israel’s latest advance - a ground raid into northern Gaza Neutral: Silver trending lower, on pace for more than a 2% decline for the week GOLD PRICE SUBDUED DESPITE ISRAEL’S GROUND RAID AND CONTINUED BOMBING Gold is highly sensitive to geopolitical conflict and therefore, it comes as no surprise to see the safe haven metal posting an exponential rise in recent weeks, near 10% from the low. However, the bullish momentum appears to have paused this week as traders assess the overbought status of the commodity and closely monitor the latest negotiations around a possible ceasefire and the release of civilian hostages. While early indications suggest conversations are moving in the right direction, Israel appears to be pushing ahead, “preparing the battlefield” in Thursday evenings operation aimed at clearing mines, destroying anti-tank defences and gathering intelligence on positions held by Hamas. Gold prices dipped at the start of the week but made a recovery as the week went on. US Yields remain elevated, suggesting that the dominant driver of gold is centered around its safe haven appeal. Price action has revealed a reluctance to trade higher than the $1985 level – evidenced by upper long wicks at each occasion prices traded above the level. This does not suggest that the precious metal will start selling off, even if the RSI has entered overbought territory. In times of uncertainty, gold maintains the potential for further upside. $2010 appears as the next level of resistance, followed by the all-time high around $2081.80. In addition, gold is now well above the 200 simple moving average (SMA). In the event price action pulls back from here, support emerges at $1937 which coincides with the 200 SMA. Gold (XAU/USD) Daily Chart Source: TradingView, prepared by Richard Snow The weekly chart shows the magnitude of the move, propelling the asset above the well-defined descending channel. Gold (XAU/USD) Weekly Chart Source: TradingView, prepared by Richard Snow SILVER TRENDING LOWER, ON PACE FOR A DECLINE OF MORE THAN 2% FOR THE WEEK In a somewhat unusual twist, silver’s price path differs from gold. While gold traded flat, silver continued its weekly descent but put in a late attempt to trade higher on Friday. Silver peaked one week ago after attempting to test the 50% Fibonacci retracement of the major 2021-2022 decline at $23.83. At the start of the week the 200 SMA came into play, capping prices and forming the start of the shorter-term bearish move. The decline may find support ahead of the 38.2% Fib retracement at $22.35. Technically, with silver beneath the 200 SMA this suggests a bearish outlook. However, the fundamental landscape remains a major risk to this bias as long as tensions remain high in the Middle East. Silver (XAG/USD) Daily Chart Source: TradingView, prepared by Richard Snow The weekly silver chart reveals the longer-term downtrend remains intact, in contrast to the massive impulse seen in gold. Silver (XAG/USD) Weekly Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/gold-silver-forecast-bullish-run-cools-but-upside-potential-remains-20231029.html

2023-10-30 04:57

If you're new to trading and would like to know how to develop confidence in trading, click on the free guide! Global equity markets declined, led by the US on mixed third-quarter earnings, lingering uncertainties in the Middle East, and higher for longer interest rate outlook. The MSCI All Country World index dropped 2.0%, the S&P 500 index fell 2.6%, and the Nasdaq 100 index declined 2.6%. The German DAX 40 fell 0.7% and the UK FTSE 100 dropped 1.4%. In Asia, the Hang Seng index fell 1.3%, while Japan’s Topix was mostly flat. Risk-sensitive currencies, including the Australian dollar and the New Zealand dollar, were mostly lower. Bitcoin continued its spectacular run, up 13% during the week. Past week market performance Source Data: Bloomberg; chart prepared in excel. Note: Global Bonds proxy used is Bloomberg Global Aggregate Total Return Index UnhedgedUSD; Commodities proxy used is BBG Commodity Total Return. Around 49% of the companies in the S&P 500 have reported actual results for Q3 2023 to date, of which 78% have reported actual EPS above estimates, according to FactSet. The S&P 500 is now reporting year-over-year growth in earnings for the first time since Q3 2022. A key focus in the coming week is on the Bank of Japan meeting on Tuesday and the US FOMC meeting on Oct. 31-Nov.1. See “Central Banks, NFP and Soft EU Data in Focus Next Week,” published October 27. Markets widely expect the Fed to hold rates next week after a number of Fed officials, including Fed chair Powell, earlier this month pointed out that tightening in financial conditions as a result of the jump in yields has reduced the need for imminent tightening.See “US Dollar Forecast: Could the Fed be the Catalyst for a Correction?, published October 29. BOJ officials meet at a time when USD/JPY is within the zone that prompted the BOJ to intervene last year. Japanese authorities have warned against selling the yen, saying they are closely watching moves with a sense of urgency. Speculation is rife that BOJ could further tweak its yield curve control policy next week amid rising global yields and inflation in Japan.See “Japanese Yen Forecast: Bank of Japan and Fed Decision to Shape USD/JPY’s Path,” published October 29. Meanwhile, the Bank of England is widely expected to keep interest rates on hold when it meets next week as the central bank tries to help boost the ailing economy while at the same fightinginflation. For more details see “British Pound (GBP/USD) Weakens Further Ahead of BoE Decision,” published October 28. Germany's Q3 GDP and October inflation are due on Monday. Bank of Canada governor Macklem's speech, Japan unemployment, China NBS Manufacturing PMI, BOJ decision, Euro area October inflation and Q3 GDP, and US consumer confidence are due Tuesday. New Zealand Q3 jobs data, US ISM Manufacturing, and ADP Employment data are due Wednesday. US Fed rate decision, Bank of Canada governor Macklem speech, Germany jobs data, and Bank of England rate decision are due Thursday. China Caixin PMI, Canada jobs data, US non-farm payroll, and ISM Services PMI data are due Friday. Gold, Silver Forecast: Bullish Run Cools but Upside Potential Remains Gold and silver have witnessed a week of relative calm despite continued potential for conflict escalation. Elevated US yields keep gold below $2000 for the time being. Euro Weekly Forecast: EUR/USD, EUR/JPY Remain Vulnerable Following Lackluster ECB Meeting EUR/USD technicals are hinting at a recovery but we do have a lot of high impact data ahead. EUR/JPY continues to struggle for direction on the threat of FX intervention by the BoJ. Will the week ahead provide any clarity? Australian Dollar Forecast: The RBA is Ready to Rock but AUD May Still Struggle The Australian Dollar remains hostage to the US Dollar as global macro factors outweigh the prospect of the RBA looking to stamp out pesky inflation. AUD/USD and AUD/JPY are in focus. --- Individual Articles Composed by DailyFX Team Members https://www.dailyfx.com/news/markets-week-ahead-nasdaq-gold-us-dollar-fomc-boj-boe-china-pmi-euro-area-inflation-us-jobs-20231029.html

2023-10-30 04:55

Gold, XAU/USD, US Dollar, Fed, FOMC, Treasury Yields, Real Yields, GVZ Index - Talking Points The gold price leapt to new highs as haven demand continues The psychological US$ 2,000 mark has been eclipsed with volatility ticking up The FOMC meeting lies ahead. Will it provide price swings for XAU/USD? The spot gold price cleared the psychological US$ 2,000 level last Friday as markets prepare for this week’s Federal Open Market Committee (FOMC) meeting that will conclude on Wednesday. Treasury yields have eased from recent peaks but remain elevated with the benchmark 10-year bond trading at 5.02% last week, its highest yield since 2007. It consequently raced back down toward 4.80% and has seen whippy price action since. The run-up in the return on US Government debt has helped to underpin the US Dollar. In addition, perceived haven assets such as USD and gold have appreciated with the geopolitical situation in the Middle East assisting to undermine growth and risk-orientated assets. In loose terms, when the US Dollar and Treasury yields rise, gold sometimes comes under selling pressure. Similarly, when US real yields are advancing, gold occasionally slips as it is a non-interest-bearing asset. US real yields have been on the march higher through 2023 and recently stretched to a 15-year peak at the 10-year part of the curve, trading above 2.60%. The real yield is the nominal yield less the market-priced inflation rate derived from Treasury inflation-protected securities (TIPS) for the same tenor. A combination of higher nominal yields and an easing of inflation expectations has boosted it in this latest surge. Looking at the chart below, the elevated 10-year Treasury yields, real yields and DXY (USD) index are yet to impact the gold price, but it might be worth watching should those markets move abruptly. SPOT GOLD, DXY (USD) INDEX, US 10-YEAR TREASURY AND REAL YIELD Chart created in TradingView All this price action across markets has seen gold volatility tick higher as measured by the GVZ index. The GVZ index measures implied volatility in the gold price in a similar way that the VIX index gauges volatility in the S&P 500. At the same time, the width of the 21-day simple moving average (SMA) based Bollinger Bands. has expanded. The Bolling Bands represent historical volatility. SPOT GOLD, BOLLINGER BANDS AND GVZ INDEX Chart created in TradingView https://www.dailyfx.com/news/gold-price-jumps-hurdles-ahead-of-fed-and-despite-a-usd-rally-higher-xau-usd-20231030.html

2023-10-30 04:54

Canadian Dollar Vs US Dollar, Euro, Australian Dollar - Outlook: USD/CAD is testing major resistance. AUD/CAD is attempting to rebound from strong support. No sign of reversal of EUR/CAD’s broader uptrend. What is the outlook and key levels to watch in USD/CAD, EUR/CAD, and AUD/CAD? The Canadian dollar is testing the lower end of the past one-year range against the US dollar after the Bank of Canada (BoC) governor last week indicated that interest rates may have peaked. BoC Governor Tiff Macklem indicated last week that the central bank may not need to raise rates further if inflation continues to moderate. However, the central bank governor added that the BoC would be looking for “clear evidence” that inflation is heading toward the 2% target before it would cut interest rates. BoC kept benchmark rates at a 22-year high on Wednesday but left the door open for more hikes saying inflation could exceed its target for another two years.Meanwhile, markets are pricing in a very small chance of another rate hike at its next meeting in December. USD/CAD Weekly Chart Chart Created by Manish Jaradi Using TradingView USD/CAD: Looming bullish break? USD/CAD has been testing a major barrier on the upper edge of a sideways channel since late 2022 (that comes at about 1.3900-1.3975). This resistance is strong and may not be easily broken – at least in the first attempt. However, any break above could open the way toward the 2020 high of 1.4675. For the upward pressure to begin fading, USD/CAD would need to fall under the early October high of 1.3785. However, the broader upward pressure is unlikely to ease while it holds above the September low of 1.3375. USD/CAD has maintained a steady uptrend since mid-2023, rebounding from a crucial cushion on the 200-week moving average, coinciding with an uptrend line from 2021. AUD/CAD Daily Chart Chart Created by Manish Jaradi Using TradingView AUD/CAD: Holding support for now AUD/CAD is holding above strong support at the end-2022 low of 0.8600. Still, this wouldn’t necessarily mean that the downtrend is reversing – it could, but for that the cross would need to initially break above the 89-day moving average, coinciding with the upper edge of a declining channel since mid-2023. For a sustained rebound to occur the cross would need to clear the June high of 0.9100. EUR/CAD Daily Chart Chart Created Using TradingView EUR/CAD: Consolidation within a bullish phase EUR/CAD has remained sideways for much of this year. However, there is no sign of a reversal of the bullish structure that began last year. The cross holds quite strong support on a horizontal trendline from early 2023, slightly above the lower edge of the Ichimoku cloud on the daily charts (at about 1.4000). Only a break below 1.4000 would confirm that the upward pressure had faded. https://www.dailyfx.com/news/canadian-dollar-outlook-after-boc-stands-pat-usd-cad-eur-cad-aud-cad-20231030.html

2023-10-30 04:52

Crude Oil, WTI, Brent, US Dollar, Gold, FOMC - Talking Points Crude oil might be in for some sideways price action as the Middle East conflict unfolds Haven assets remain desirable amongst the noise and volatility as gold surges The markets appear poised with range trading across many markets Crude oil is contained in the range to start the week, but it has eased slightly through the Asian session. The market remains cautious and concerned about the potential disruption to the global oil supply as a result of the fighting in the Middle East. Israel began to move ground troops into the Gaza Strip over the weekend and there are hopes that the conflict will not expand across the region. The US and Iran have voiced concerns that the theatre of war might not be contained. The WTI futures contract has traded below US$ 85 bbl while the Brent contract has dipped under US$ 90 bbl at the time of going to print. Perceived haven assets have had a mixed start to the week with gold easing slightly after another stellar rally on Friday, dipping toward US$ 2,000 an ounce. Currency markets have had a quiet start to the week and all eyes will be on the Bank of Japan (BoJ) this week as they contemplate a tilt in monetary policy. Most pundits are anticipating a shift in yield curve control (YCC) although there has been some speculation that the negative interest rate policy (NIRP) might be addressed. Meanwhile, the Federal Open Market Committee (FOMC) meeting decision will be known on Wednesday and the interest rate market is not anticipating any change in the Fed funds target rate. The focus will be on the post-conclave press conference. APAC equities are softer overall after Wall Street finished last week lower while Treasury yields have ticked up slightly after easing on Friday. The focus for this week is the central bank meetings. WTI CRUDE OIL TECHNICAL SNAPSHOT The structural backdrop for crude oil might not be as supportive as initially thought from the prospect of tighter global supply from the war in the Middle East. Crack spreads are lower as is backwardation at a time when volatility is ticking up. Backwardation occurs when the futures contract closest to settlement is more expensive than the contract that is settling after the first one. It highlights a willingness by the market to pay more to have immediate delivery, rather than having to wait. The RBOB crack spread is the gauge of gasoline prices relative to crude oil prices and reflects the profit margin of refiners. RBOB stands for reformulated blendstock for oxygenate blending. It is a tradable grade of gasoline. If profitability increases for refiners, it may lead to more demand for the crude product. WTI CHART Chart created in TradingView https://www.dailyfx.com/news/crude-oil-steadies-after-as-markets-assess-middle-east-risks-ahead-of-the-fed-20231030.html