2023-10-09 10:11

NATURAL GAS, NG - OUTLOOK: Natural gas prices jumped 14% last week – the biggest weekly gain since mid-June. Recent drivers include cooler weather, smaller inventory build and higher exports. To what extent natural gas can rise and what are the key levels to watch? Natural gas could be set for a material rebound: it rose to an eight-month high last week on higher heating demand, smaller-than-expected inventory build, and rising exports. Natural gas rose 14% last week, the biggest weekly percentage increase since mid-June. LSEG forecast US gas demand, including exports, would rise in the coming two weeks. On technical charts, natural gas’ break above crucial resistance at the March & August highs of 3.03 has triggered a significant break out from an eight-month-long sideway range. Natural Gas Daily Chart Chart Created by Manish Jaradi Using TradingView The price objective of the pattern points to a rise to around 4.00-4.10 in the coming weeks. Last week's jump was also associated with a rise above the 200-day moving average and a decisive break above the 89-day moving average for the first time this year. Natural gas pulled back in August-September but held fairly strong support on the lower edge of the Ichimoku cloud on the daily charts. Natural Gas Monthly Chart Chart Created by Manish Jaradi Using TradingView Importantly for the first time in 2023, natural gas staged a higher low. Last week’s rise has sealed the higher-high-higher-low sequence in the interim. 30-month moving average, coinciding with the 200-month moving average, around the psychological 4.00 mark. Subsequent resistance is at 4.20 (the 38.2% retracement of the November 2022-February 2023 fall, followed by the October 2022 low of 4.75. On the downside, a fall below the August low of 2.40 would negate the bullish view. Immediate support is at 3.03. The possibility of natural gas bottoming was first highlighted in early 2023 - see “Natural Gas Price Action Setup: Is the Slide Overdone?”, published February 21, and subsequently “Natural Gas Week Ahead: Base Building May Have Started”, published May 22, and “Natural Gas Price Rebound Could Extend; What’s Next For Crude Oil?”, published May 18. https://www.dailyfx.com/news/bullish-natural-gas-base-may-have-been-built-20231009.html

2023-10-09 10:10

Crude Oil, WTI, Brent, US Dollar, Israel, USD, Gold - Talking Points Oil prices have leapt higher as markets re-appraise the Middle East The US Dollar resumed strengthening as perceived havens gain favour If geo-political conditions remain unstable, is that supportive of WTI? Crude oil prices jumped higher today as markets take stock of the tragedy unfolding in the Middle East. Hopes for peace in the region have diminished in the aftermath of the military offensive of Hamas into Israel. The WTI futures contract is near US$ 86 bbl while the Brent contract is around US$ 87.50 bbl. For markets, stereotypical haven status assets such as gold and the US Dollar have benefitted in somewhat of a befuddled day for markets. Japan, South Korea and Taiwan are on holiday, while Hong Kong has seen limited trading hours due to a typhoon and the US will be away due to Columbus Day. Spot gold is back above US$ 1,850 an ounce while the DXY (USD) index up around 0.20%. Growth and risk-sensitive assets are on the backfoot with the Aussie and Kiwi seeing the largest losses leading into the start of the week. USD/JPY is steady above 149.00 while GBP/USD is holding ground above 1.2200 at the time of going to print. Supporting the US Dollar, Treasury yields continued to higher levels after a robust jobs report on Friday that saw 336k jobs added in September. The benchmark 10-year note eclipsed 4.88% in the aftermath, the highest return for the low-risk asset since 2007. It has since settled near 4.80%. Looking forward, it appears that the markets are perplexed on how to interpret the events of the last few days and with some holidays and a lack of significant economic data release, volatility could evolve. WTI CRUDE OIL TECHNICAL SNAPSHOT Last week’s sell-off in the WTI futures contract broke below the lower band of the 21-day simple moving average (SMA) based Bollinger Band. Today it has emphatically traded back within the band and if it closes inside the band at the close today, it may signal a pause in the bearish move or a potential reversal. Nearby resistance could be at the breakpoints of 87.76, 88.15 and 88.19. On the downside, support may lie near the breakpoints of 84.89, 83.53,83.34 or the prior low at 81.50. WTI CHART Chart created in TradingView https://www.dailyfx.com/news/crude-oil-reverses-recent-losses-as-markets-recalibrate-after-israeli-invasion-20231009.html

2023-10-09 10:08

U.S. stocks sank in the third quarter, hurt by soaring U.S. Treasury yields. During this period, the Nasdaq 100 fell about 2.75% while the S&P 500 plunged approximately 3.40%. Meanwhile, the surge in nominal and real rates propelled the broader U.S. dollar (DXY) to the highest level since November 2022, creating a hostile environment for gold and silver. The fourth quarter's trajectory for key financial assets could mirror that of the prior three months, particularly if U.S. yields continue their upward trajectory. As of the first week of October, there's scant evidence that bond market dynamics will reverse, with the U.S. economy's remarkable staying power giving Fed officials the leeway to maintain a restrictive position. At the latest FOMC meeting, policymakers hinted at the possibility of further tightening in 2023 but stopped short of firm endorsement. For this reason, traders have not entirely priced in another quarter-point hike for this year, but the situation could change if incoming data continues to surprise to the upside, as was the case with the September U.S. employment report. In the event that interest rate expectations reprice in a more hawkish direction on account of sticky inflation and economic resilience, the U.S. dollar’s upward momentum may persist, exacerbating weakness in the precious metals complex. In such a scenario, equity indices could also come under pressure, paving the way for further losses for the S&P 500 and Nasdaq 100. With the U.S. dollar in a dominant position heading into Q4, the euro, British pound, and Japanese yen may find themselves in a vulnerable state, with a possible inclination toward further depreciation. Their prospects, however, could improve if the Fed begins to embrace a softer posture for fear of a potential hard landing. Traders should therefore keep a close eye on policy guidance. Focusing on the yen now, Bank of Japan’s ultra-dovish will remain a headwind for the Asian currency in the early part of Q4, but the tide may turn in its favor toward the latter part of the year. As we approach 2024, the BoJ may start to signal a policy shift. As investors attempt to front-run the normalization cycle, USD/JPY, EUR/JPY, and GBP/JPY may head lower. Different market dynamics are poised to unfold in the near term, potentially paving the way for increased volatility and attractive trading setups in major assets. To dive deeper into the catalysts that will affect currencies, commodities (gold, oil, silver) and digital assets (Bitcoin) in the fourth quarter, explore the comprehensive technical and fundamental forecasts put together by DailyFX's team of experts. PERFORMANCE OF KEY ASSETS IN THE THIRD QUARTER Source: TradingView Q4 TOP TRADING OPPORTUNITIES Short USD/JPY: A Reprieve in the DXY Rally and FX Intervention by the BoJ The USD/JPY has held the high ground for the majority of Q3 with rallies to the downside proving short-lived at this stage. The potential for downside moves however remains in play and with the right fundamental developments. Short USD/ZAR: Top Trade Opportunities USD/ZAR in Q4 looks to the US for guidance while keeping a close eye on China and the local landscape. Q4 Trade Opportunity: EUR/CAD Long-Term Reversal as Oil, Inflation Rise EUR/CAD primed for a LT reversal upon ‘head and shoulders’ confirmation. Souring fundamentals in Europe combined with rising oil and interest rate expectations in Canada are considered in this article. The Range Trade is Alive and Well as Markets Ponder Central Bank Rate Strike Range trading unfolds as several major global central banks may have put the cue back in the rack on rate rises. Q4 Top Trading Opportunity: Is the US Dollar Rally Coming to An End? The U.S. dollar has been a one-way trade since the middle of July, rallying in excess of 6% since printing a 99.49 low. Will the Tide Turn in the Last Three Months of 2023? Crude Oil Prices Might Have Ran Too Far in Q3 Amid a Deteriorating China Outlook Crude oil prices might have run too far in the third quarter, setting the stage for potential disappointment amid deteriorating economic conditions in China. https://www.dailyfx.com/news/forex-market-q4-outlook-gold-oil-stocks-us-dollar-euro-pound-yen-btc-at-tipping-point-20231008.html

2023-10-09 10:06

The Australian Dollar lost its footing going into Monday’s trading session The news of violence erupting in the Middle East has roiled markets Treasury yields and the US Dollar are stretching higher. Will that sink AUD/USD? The Australian Dollar sunk on Monday morning after weekend news of an all-out assault by the terrorist group Hamas on Israel, opening up another theatre of war. The US Dollar is broadly stronger to start the week but especially so against the growth and risk sensitive currencies such as the Aussie and Kiwi. The Japanese Yen and Swiss Franc have fared better on their perceived haven status. Futures markets are pointing toward lower prices for equities across Asia, Europe and North America later today. It is a holiday in Japan, Taiwan and the US which may contribute to slipperier market conditions than would otherwise be the case on potentially less liquidity. The US Dollar had already been underpinned by Treasury yields continuing their march north after a solid jobs report on Friday that saw 336k jobs added in September. The benchmark 10-year note eclipsed 4.88% on Friday, the highest return for the low-risk asset since 2007. It has since settled near 4.80%. By comparison, the yield on the 10-year Australian Commonwealth Government Bond (ACGB) has slipped under 4.50% today after nudging 4.70% last week. Government bond spreads have historically seen fluctuating correlation to AUD/USD but the moves to start this week have moved aggressively in favour of the US Dollar. AUD/USD, 3- AND 10-YEAR AU-US BOND SPREADS Chart created in TradingView Gold, silver and crude oil futures prices have opened higher on a combination of haven buying for the precious metals and possible supply constraints and increased demand for energy. At the time of going to print, most other commodity futures are yet to open and if risk aversion is a theme for the trading session ahead, excessive volatility may unfold. AUD/USD TECHNICAL ANALYSIS AUD/USD rejected a move below a descending trendline last week but overall remains in a descending trend channel. It briefly traded above a historical breakpoint of 0.6387 on Friday but was unable to sustain the move and it may continue to offer resistance. That peak of 0.6400 coincides with the 21-day Simple Moving Average (SMA) and that level may offer resistance ahead of the 34-day SMA, currently near 0.6412. The inability of the Aussie to move above these SMAs could suggest that bearish momentum is intact for now. A move above the 21- and 34-day SMAs might indicate more sideways price action. The 0.6500 – 0.6520 area contains a series of prior peaks and might be a notable resistance zone. Further up, the 0.6600 - 0.6620 area might be another resistance zone with several breakpoints and previous highs there. On the downside, support may lie near the previous lows of 0.6285, 0.6270 and 0.6170. The latter might also be supported at 161.8% Fibonacci Extension level at 0.6186. To learn more about Fibonacci techniques, click on the banner below. Chart created in TradingView https://www.dailyfx.com/news/australian-dollar-dips-as-us-dollar-rallies-after-israel-attack-lower-aud-usd-20231009.html

2023-10-09 10:03

POUND STERLING ANALYSIS & TALKING POINTS Israel/Palestine conflict war favors US dollar. Fed and BoE speakers under the spotlight later today. GBP/USD slips but some positive technical signals keep bulls hopeful. GBPUSD FUNDAMENTAL BACKDROP The British pound opened lower this Monday morning as conflict in the Middle East saw global markets adopt a risk off approach. Naturally, the US dollar received support being a safe haven currency in addition to Friday’s Non-Farm Payroll (NFP) report which beat forecasts highlighting a very robust labor market within the US. That being said, money market expectations for a November interest rate hike from the Fed was little changed and with US CPI scheduled later this week, only a significant upside surprise may shift the needle. China has returned to market activity after their Golden Week holiday but spending during this period underwhelmed, reinforcing the need for additional stimulus by the Chinese government. This weaker outlook weighs negatively on the pound and will be closely monitored moving forward. Bank of England (BoE) prospects (refer to table below) remain in favor of a rate pause in November but the upcoming UK GDP (Thursday) could may add to hawkish bets as forecasts reveal a healthy growth report. BANK OF ENGLAND INTEREST RATE PROBABILITIES Source: Refinitiv The economic calendar for today is relatively light but could stoke some volatility via Fed and BoE (Mann) later in the trading session. GBP/USD ECONOMIC CALENDAR (GMT +02:00) Source: DailyFX Economic Calendar TECHNICAL ANALYSIS GBP/USD WEEKLY CHART Chart prepared by Warren Venketas, IG The longer-term weekly chart above shows last week’s long lower wick close (blue) and could hint at subsequent upside to come despite risk aversion today. GBP/USD DAILY CHART Chart prepared by Warren Venketas, IG Price action on the daily cable chart sees the pair peering out of the oversold zone on the Relative Strength Index (RSI) after the bullish/positive divergence mentioned in my prior analysis unfolded. Moving forward this week, US and UK GDP data will be key in terms of short-term directional guidance as well as the developments in the Middle East. Key resistance levels: 1.2308 1.2200 Key support levels: 1.2100 1.2000 1.1804 BULLISH IG CLIENT SENTIMENT (GBP/USD) https://www.dailyfx.com/news/forex-gbp-usd-price-forecast-souring-risk-sentiment-shackles-pound-wv-20231009.html

2023-10-06 02:51

GBP PRICE, CHARTS AND ANALYSIS: GBP/USD Eyeing Deeper Retracement as Long as the 1.2100 Handle Holds Firm. EUR/GBP Remains Rangebound Between the 0.8700-0.8500 Mark. UK PMI Paints Grim Picture but Bank Panel Survey Provides a few Positives. To Learn More About Price Action, Chart Patterns and Moving Averages, Check out the DailyFX Education Section. Read More: Bitcoin Technical Outlook: Price Action Remains Choppy Heading into Q4 GBP has arrested its slump with a midweek recovery largely thanks to a recovery in overall risk sentiment. Cable has been the bigger beneficiary as the improving risk sentiment has seen the Dollar Index and US Treasury Yield rallies stalled helping GBP/USD hold above the 1.2100 mark. UK PMI DATA AND BOE SURVEY UK construction PMI data came in weaker than expected today and kept GBP gains in check against the Greenback. The S&P Global PMI report showed construction spending falling once more to 45.0 in September, quite the drop off from the previous release of 50.8. This now leaves both the construction and services PMI languishing in contractionary territory. The drop off in construction spending was expected however as higher mortgage rates continue to weigh on consumers. The S&P warned that the broader outlook is still sluggish with weak order books, a further sign of the weak demand environment in the UK. Source: DailyFX Website Bank of England (BoE) Governor Andrew Bailey meanwhile remains optimistic regarding inflation despite the potential for further inflation shocks. The Governor reiterated his belief of bringing inflation down below 5% and remains opposed to changing the UK’s inflation target of 2%. The latest Bank of England (BoE) survey backed up Governor Bailey’s optimism around price pressure as the survey indicated price expectations are continuing to fall. The UK jobs market also showed signs of cooling, but Policymakers remain relatively weary of placing too much emphasis on surveys and are likely to wait on data confirmation before making any decision. The Survey also confirmed that the recent surprise hold of interest rates by the BoE was the correct decision. On the whole the survey and recent data from the UK seem to bode well for another hold at the upcoming November meeting but the actual data will likely be more important. RISK EVENTS AHEAD The end of the week brings about some key US data releases with no high impact data due from the UK and EU until next week. US Jobs data so far this week painted a mixed picture but still remains relatively resilient heading into NFP tomorrow. Jolts job openings remain strong, but we did see a slight loss of momentum in private sector hiring which makes tomorrows NFP print all the more interesting. For all market-moving economic releases and events, see the DailyFX Calendar PRICE ACTION AND POTENTIAL SETUPS GBP/USD Daily Chart Source: TradingView, Prepared by Zain Vawda GBPUSD is enjoying a midweek renaissance ahead of the NFP report tomorrow. Cable came within a whisker of the psychological 1.2000 mark yesterday before a strong bounce saw the pair close back above the 1.2100 handle. Asian and European session gains were wiped out following US data today before a sharp bounce from key support around the 1.2100 mark. The weakness in the US Dollar has certainly helped coupled with an improvement in risk sentiment. Looking at the bigger picture and we are at key resistance around the 1.2180-1.2200 area with a break above opening up the long-awaited 3rd touch of the descending trendline. A return of US Dollar strength to end the week could end up pushing Cable back toward the 1.2000 mark. Key Levels to Keep an Eye On: Resistance levels: 1.2200 1.2250 1.2312 Support levels: 1.2100 1.2030 (weekly low) 1.2000 EURGBP EUR/GBP Daily Chart Source: TradingView, Prepared by Zain Vawda From a technical perspective, EURGBP continues to struggle at the 0.8700 mark as the pair appears desined for a move lower once more. The resurgence in the Sterling has seen the pair print a lower high with a lower low seemingly on the way below the 20-day MA around the 0.8638. A break below will bring the ascending trendline into focus with a short-term bounce of the dynamic support area remaining a possibility. There is also support on the downside provided by the 100-day MA around the 0.8600 mark. A retest of the YTD lo around the 0.8500 handle at this stage looks unlikely as the 200-pip range between 0.8500-0.8700 remains intact. IG CLIENT SENTIMENT DATA IGCS shows retail traders are currently Net-Short on EURGBP, with 53% of traders currently holding SHORT positions. Given the contrarian view adopted here at DailyFX, is EURGBP destined to rise above the 0.8700 mark? https://www.dailyfx.com/news/gbp-usd-eur-gbp-forecast-sterling-brushes-off-pmi-data-and-eyes-recovery-20231005.html