2023-10-26 12:50

US GDP Q3 ’23 (PRELIM) KEY POINTS: US GDP Growth Q3 4.9% Actual Vs Forecast 4.3%. Durable Goods Orders MoM 4.7% Actual Vs 1.7% Forecast. Markets Appear Cautious Given the Multiple Headwinds in Play with the Federal Reserve Meeting Drawing Closer. To Learn More About Price Action, Chart Patterns and Moving Averages, Check out the DailyFX Education Section. READ MORE: S&P500, NAS100 Weighed Down by Tech Earnings and Rising Yields. 4000 Level Up Next? Real gross domestic product (GDP) increased at an annual rate of 4.9 percent in the third quarter of 2023, this according to an advanced estimate by the Bureau of Economic Analysis. This is the most since the last quarter of 2021, above market forecasts of 4.3% and the previous print of a 2.1% expansion in Q2. Consumer spending rose 4%, the most since Q4 2021 (vs 0.8% in Q2 2023), led by consumption of housing and utilities, health care, financial services and insurance, food services and accommodations and nondurable goods (led by prescription drugs) as well as recreational goods and vehicles. Exports soared 6.2%, rebounding from a 9.3% fall in Q2 and imports also increased (5.7% vs -7.6%). Private inventories added 1.32 pp to growth, the first gain in three quarters. Most interestingly however, residential investment rose for the first time in nearly two years (3.9% vs -2.2%) this despite the extremely high mortgage rates in the US. Source: US Bureau of Economic Analysis Personal saving was $776.9 billion in the third quarter, compared with $1.04 trillion in the second quarter. The personal saving rate—personal saving as a percentage of disposable personal income—was 3.8 percent in the third quarter, compared with 5.2 percent in the second quarter. This has been a figure i have been watching closely as if this continues then the US economy could come under strain in Q4 or Q1 of 2024 as consumers continue to deplete their savings to keep up with cost-of-living increases. US DURABLE GOOD ORDERS New orders for manufactured durable goods in the US surged by 4.7% month-over-month in September 2023, rebounding from a 0.1% contraction in August and significantly surpassing market expectations of a 1.7% rise. This is the largest increase in 3 years and was primarily driven by strong demand for transportation equipment. US ECONOMY MOVING FORWARD The US economy has continued to surprise and remain resilient in the face of many challenges. The Fed according to many are ‘winging’ with policymakers themselves admitting that these are unprecedented times. The rest of the quarter is unlikely to offer any kind of reprieve as there are still a host of risks for the US economy and US Dollar to navigate. The First will be averting a government shutdown before November 17 which should come to fruition following the election of a new House Speaker in Republican Mike Johnson. A Government shutdown could be detrimental to US growth prospects for Q4. October is also the first month that student loan payments resumed since October 2020. I have spoken about this at length over the past couple of months and it appears to already be having an impact. According to recent data 37% of households are struggling to pay expenses up from 32% in September. Source: Apollo, The Kobeissi Letter In stark contrast however the US home sales data yesterday showed a surge in September as homebuilders appear to be taking on some of the cost of higher mortgages with new homes a better option for buyers at this stage. The funadamentals may be a bit mixed but on the rate front the USD is in the driving seat and likely to remain supported. The technicals may show the USD to be in overbought territory with a small technical inspired retracement a possibility but unlikely to be sustainable. The potential for safe-haven demand through Q4 continues to grow as well which makes the US Dollar an intriguing prospect heading toward the end of the year. MARKET REACTION The initial market reaction was relatively subdued with the DXY turning cautious at a key area of resistance around 106.80-107.20. This area will be key for USD bulls if we are to see the DXY rally continue. Right now, it's a tough one to call as the fundamental factors support the US Dollar whereas the Technicals hint an imminent retracement. DXY Daily Chart, October 26, 2023 Source: TradingView, prepared by Zain Vawda GOLD REACTION Gold did experience a bit of a pullback following the news release, but safe haven appeal continues to underpin the precious metal. Right now, for a sustained retracement lower only a change in the overall risk sentiment in regard to Geopolitical risks can likely lead to a sustained selloff in Gold. Central Bank meetings next week are likely to be important but could also be overshadowed by the risk profile of markets heading into the meetings. Gold is also testing a key area of resistance (marked by the pink box where price currently trades). A failure to break above and print a daily candle close may embolden bears but given the Fundamentals at play any move may prove short-lived. XAU/USD Daily Chart, October 26, 2023 Source: TradingView, prepared by Zain Vawda IG CLIENT SENTIMENT Taking a quick look at the IG Client Sentiment, Retail Traders have maintained a more bullish stance of late with 61% of retail traders now holding long positions. Given the Contrarian View to Crowd Sentiment Adopted Here at DailyFX, is this a sign that Gold may begin to fall? https://www.dailyfx.com/news/us-q3-gdp-smashes-estimates-as-the-dxy-and-gold-adopt-a-cautious-approach-20231026.html

2023-10-26 12:31

EUR/USD Forecast - Prices, Charts, and Analysis ECB leaves rates unchanged as expected. EUR/USD heading towards 1.0500. The ECB left all three of its key interest rates unchanged today and noted that while inflation is expected to ‘stay too high for too long’, inflation dropped markedly in September due to strong base effects. The central bank added that ‘The Governing Council’s past interest rate increases continue to be transmitted forcefully into financing conditions. This is increasingly dampening demand and thereby helps push down inflation.’ ECB President Lagarde’s commentary at the upcoming press conference may give traders a clearer view of the thinking behind the central bank’s decision. Financial markets had no change in interest rates fully priced-in earlier today with rate cuts being seen between the end of Q1 and the start of Q2 2024 and there is little in today’s decision to change the market’s view. EUR/USD continues to drift lower and is eyeing a break below the 1.0516 and 1.0500 levels. Recent weakness in the pair has been fueled by a stronger US dollar and upcoming US data may push the pair lower. EUR/USD Daily Price Chart – October 26, 2023 All Charts via TradingView IG Retail trader data shows 68.74% of traders are net-long with the ratio of traders long to short at 2.20 to 1.The number of traders net-long is 0.82% higher than yesterday and 2.29% higher than last week, while the number of traders net-short is 5.68% lower than yesterday and 15.02% lower than last week. is your view on the EURO – 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/euro-eur-latest-ecb-leaves-interest-rates-unchanged-eur-usd-slips-lower-20231026.html

2023-10-26 11:00

Article by IG Chief Market Analyst Chris Beauchamp Nasdaq 100, Nikkei 225, S&P 500 Analysis and Charts Nasdaq 100 losses resume Losses accelerated on Wednesday, taking the index to its lowest level since early June. A move towards the lower bound of the channel appears likely, which would see the index head down to 14,250. A breakout to the downside then targets the 200-day SMA. Wednesday’s drop negated the possible bullish view from earlier in the week, and it would take a rally back above 14,500 to indicate that a new attempt to halt the selling is underway. Nasdaq 100 Daily Chart Nikkei 225 stumbles An attempt to continue the gains of Monday and Tuesday was beaten back on Wednesday, with the index dropping back to the 200-day SMA. Additional declines now target the low from Tuesday at 33,500, and then below this the September low at 33,270 comes into view. It would need a close back above 31,300 to indicate that a new attempt to form a low is beginning. Nikkei 225 Daily Chart See our Q4 Top Trading Opportunities Below S&P 500 hits five-month low The index resumed its fall on Wednesday, dropping to its lowest level in almost five months.The February highs around 4165 now seem to beckon as a downside target, followed up by the early March high at 4079. Buyers will need a close back above the 200-day SMA to help suggest that a more bullish view prevails. S&P 500 Daily Chart See the Latest S&P 500 Sentiment https://www.dailyfx.com/news/nasdaq-100-nikkei-225-and-s-p-500-all-come-under-fresh-pressure-20231026.html

2023-10-26 03:07

S&P500 & NAS100 PRICE FORECAST: SPX Faces a Host of Challenges as Recovery Hopes are Dashed by Rising US Yields and Poor Tech Earnings. Google Parent Alphabet Fell as Much as 8.7% as it Missed Expectations for its Cloud Business as Microsoft Gained 2.3% as it Beat Estimates. Meta and IBM Reporting After Market Close. IG Client Sentiment Shows that Retail Traders are Long with 64% of Traders Currently Holding Long Positions on the S&P. Given the Contrarian View to Crowd Sentiment Adopted Here at DailyFX, is this a sign that the SPX may continue to fall? US Indices have struggled today with both the S&P 500 and Nasdaq 100 testing key levels of support as earnings and a rebound in the US 10Y yield posed obstacles. The S&P struggled to build on a positive close yesterday and is down about 2% for the month of October but it was the NAS100 which lost more ground down as much as 1.8% on the day. Google parent Alphabet fell around 8.7% as the company’s cloud business continued to slow. In contrast Microsoft saw a rise in its share price of around 2.3% after it beat estimates. Alphabet is now on course for its largest one-day drop in market value ever following todays earnings release. An indication of the importance of the revenue miss of the cloud business is evidenced by the rise in the share price of Microsoft who beat expectations for its cloud business and is enjoying a decent day of gains. Looking at the Heat Map for the S&P 500 below and we can see the strain markets have been under today as it does not paint a pretty picture. Technology Services is having a bad day across the board with only two stocks in the green for the day with Microsoft and F5 Inc. leading the way. Source: TradingView Another factor that has weighed on stocks today has been the resurgence in the 10Y US Treasury Yield. US 10Y Yield has rebounded quite aggressively today in part thanks to better-than-expected US home sales data and followed a selloff yesterday leaving the 10Y Yield at 4.92% at the time of writing. The US 10Y note is rising at its fastest pace since 1980, with the last 3 years seeing the 10Y note yield rise by some 400bp. To put this into context during the 2008 financial crisis US Treasury Yields only rose at about 50% of the current pace. Are higher rates the new normal? US 2Y and 10Y Yield Chart Source: TradingView, Created by Zain Vawda Looking ahead and it appears that for now the ground offensive into Gaza is on hold which has somewhat put Geopolitical risk on the back burner. This is likely to remain short-lived however and should be monitored moving forward. After market close today we do have two tech sector big boys reporting earnings in the US with both Meta and IBM due to release their numbers. Meta in particular being a massive player could have a material impact on the moves in Equity futures overnight and also have a knock-on effect to equities in the APAC region. Looking ahead and tomorrow we have the prelim Q3 GDP numbers from the US which is expected to come in hot given the strength of the US economy during the last quarter. A major beat or miss here could have a definite impact on overall sentiment heading into the US session and could be a driving force if the Geopolitical situation remains relatively unchanged. For all market-moving earnings releases, see theDailyFX Earnings Calendar S&P 500 TECHNICAL OUTLOOK Form a technical perspective, the S&P is now flirting with a key area of support at the 4200 mark. The 200-day MA remains a major stumbling block to any potential recovery for the SPX and as mentioned previously it has been a number of months since the Index has traded below the 200-day MA. For now, a daily candle close is needed below the 4200 mark if we are to see further downside and a potential retest of the 4000 mark. There is a bit of support on the downside with 4168 the first area of interest as it was the May 31 swing low before the 4120 mark comes into focus. Quite a bit of hurdles for the SPX to navigate if it is to return to the 4000 mark in the coming days and weeks. Key Levels to Keep an Eye On: Support levels: 4200 4168 4120 Resistance levels: 4248 4295 4325 S&P 500 October 25, 2023 Source: TradingView, Chart Prepared by Zain Vawda NASDAQ 100 Looking at the Nasdaq 100 and the selloff has been more severe as the largest losses for the day appear to be coming from Megacap tech stocks. Meta reporting after market close could help the Nasdaq in afterhours trade to arrest the slide but a poor report from Meta could send the NAS100 further into the doldrums. The Technical picture is similar to the SPX as the NAS100 is testing a key area of support around the 14500 mark. a daily candle close below could be the start of a larger downside move opening up a potential retest of the 200-day MA around the 14000 mark. Immediate support rests at 14228 before the 200-day MA comes into focus and could help the NAS100 put in a short-term retracement before falling back toward the 14000 handle. Key Levels to Keep an Eye On: Support levels: 14228 14000 13750 Resistance levels: 14540 14871 15000 NAS100 October 25, 2023 Source: TradingView https://www.dailyfx.com/news/s-p-500-nas-100-weighed-down-by-tech-earnings-and-rising-yields-4000-level-up-next-20231025.html

2023-10-26 03:01

GBP, DXY PRICE, CHARTS AND ANALYSIS: GBP/USD Appears Vulnerable to Further Downside Following Trendline Rejection. Fundamentals and Geopolitics Give the USD the Upper Hand, Keeping it Supported. The Possibility of Rangebound Trade Ahead of the FOMC and Central Bank Meetings Remains a Possibility. GBPUSD enjoyed a mixed day with some consolidation in the European session as the DXY started the day on the back foot. The US session however, has seen a rise in US Yields which has underpinned the US Dollar and reignited the bullish rally in the Dollar Index. The Question is how high can the Dollar Index (DXY) Go? DOLLAR INDEX (DXY) AND US Q3 GDP As mentioned earlier this week the DXY is unlikely to come under sustained selling pressure at the moment given the trajectory of US Yields and ongoing Geopolitical tensions. This support means that any dips at present are likely to present short term USD buying opportunities as risk sentiment continues to shift between risk-on and risk-off. Looking at the technical at play in the DXY and yesterday's bullish engulfing candle close and todays bullish US session there are signs of a return to the key 106.80-107.20 resistance area. I do think the DXY will struggle at resistance here and is in need of a catalyst if we are to break higher. US Q3 GDP lies ahead tomorrow and even a print above expectation may not be enough for sustained break above resistance. Expectations are for the US economy to show growth of 4.3% for the quarter, well above the 2.1% in Q2. As we approach next week’s Federal Reserve, and the overall market mood I expect market participants to remain cautious. For all market-moving economic releases and events, see the DailyFX Calendar Dollar Index (DXY) Daily Chart Source: TradingView, Chart Created by Zain Vawda GBP FUNDAMENTALS Cable has failed to find support in UK data this week and the potential for further weakness remains a possibility. Data this week has showed labor data remained quite positive but comments from the BoE Governor and policymakers suggest the Bank of England are done with rate hikes in 2023. This assumption seems to be a drag on GBP at present leaving GBPUSD vulnerable to a break of the 1.2000 psychological level. TECHNICAL OUTLOOK AND FINAL THOUGHTS GBPUSD is back at recent lows and a key support area which if broken could push Cable toward the 1.2000 psychological mark. A break of 1.2000 could leave GBPUSD in freefall particularly if the Fundamentals line up as well. Cable saw a trendline rejection yesterday and a marubozu candle close which hinted at further downside today. However, some early USD weakness in the European session kept the slide at bay until the latter part of the US session. A daily candle close below the 1.2080 handle could however prove elusive as Central Bank meetings come into focus and could see GBPUSD rangebound between the 1.2080 and 1,2280 handles. Alternatively, we must bear in mind the US dollar and is safe haven appeal which could increase on Geopolitical concerns and that could also leave cable vulnerable for an accelerated mood to the downside with no other data for the British Pound to rely on for the rest of the week (not that it helped much this week anyway). Key Levels to Keep an Eye On: Support levels: 1.2080 1.2030 1.2000 (Psychological Level) 1.1850 Resistance levels: 1.2182 1.2312 1.2399 GBP/USD Daily Chart, October 25, 2023 Source: TradingView, Chart by Zain Vawda https://www.dailyfx.com/news/gbp-usd-at-risk-of-freefall-if-1-2000-psychological-level-is-broken-20231025.html

2023-10-26 02:58

EUR/USD, AUD/USD OUTLOOK: Traders will closely watch U.S. GDP data on Thursday The U.S. economy is forecast to have grown by 4.3% in the third quarter Strong economic activity numbers could boost the U.S. dollar, sending both EUR/USD and AUD/USD sharply lower The U.S. Bureau of Economic Analysis will release preliminary gross domestic product data on Thursday. The median estimate suggests that the American economy grew at an annualized pace of 4.3% in the third quarter, although several investment banks are forecasting a stronger expansion above 5.0% on solid personal consumption expenditures, which likely surged 4.5% during the period under review. Economic resilience may assuage concerns about the health of the business cycle, but it is unlikely to affect the FOMC’s peak rate outlook in light of recent messaging. For context, the Fed has sort of adopted a more cautious approach, with an increasing number of officials questioning the necessity of additional hikes after 525 basis points of cumulative tightening since 2022. FOMC MEETING PROBABILITIES Source: CME Group While a solid GDP print may not lead investors to price in another Fed adjustment for 2023, it will reinforce expectations that policymakers will maintain a restrictive stance for an extended period, meaning higher interest rates for longer. This scenario could exert upward pressure on yields, particularly those at the long end, creating a constructive backdrop for the U.S. dollar. With the greenback riding a wave of bullish momentum, it's conceivable that EUR/USD and AUD/USD could experience additional losses in the near term. This article offers a comprehensive analysis of the potential direction for these two currency pairs. UPCOMING US ECONOMIC DATA Source: DailyFX Economic Calendar EUR/USD TECHNICAL ANALYSIS EUR/USD extended its decline on Wednesday after a fakeout earlier in the week, with sellers back in control of the market. If losses gain momentum in the coming trading sessions, the first floor to keep an eye on is located around 1.0550. Further down the line, the focus shifts to trendline support at 1.0510, followed by this year’s lows nestled slightly below the 1.05 handle. On the flip side, if the bulls stage a comeback and manage to push prices higher, overhead resistance is positioned at 1.0625, and 1.0675 thereafter, which corresponds to the 50-day simple moving average. In the event of additional gains, market attention will transition to 1.0765, the 38.2% Fibonacci retracement of the July/October selloff. EUR/USD TECHNICAL CHART EUR/USD Chart Created Using TradingView AUD/USD TECHNICAL ANALYSIS After failing to clear cluster resistance located a touch below the psychological 0.6400 level earlier in the trading session, AUD/USD took a sharp turn to the downside, falling rapidly towards the 2023 lows around the 0.6300 handle. While prices could find a foothold in this zone on a retest, a breakdown could open the door for a drop towards last year's lows at 0.6170. On the other hand, if buyers return to the charge and trigger a bullish turn, the first ceiling to consider appears at 0.6350. Upside clearance of this barrier could expose the 0.6400 mark. On further strength, buyers could become emboldened to launch an attack on 0.6460 and then 0.6510. AUD/USD TECHNICAL CHART AUD/USD Chart Created Using TradingView https://www.dailyfx.com/news/forex-usd-dollar-forecast-eur-usd-aud-usd-on-shaky-ground-ahead-of-us-gdp-data-20231025.html