2024-06-18 16:33

Gold (XAU/USD) News and Analysis Global central banks indicated a continued willingness to increase gold holdings Gold remains within a downtrend since declining from the all-time-high, the shorter-term rise looks to be contained The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library World Gold Council Survey Points to Increasing Gold Holdings The World Gold Council's annual survey, which included responses from 69 central banks was conducted between February and April and showed that 29% of central banks expect their own gold reserves to rise, the highest percentage since the survey began in 2018 despite relatively high gold prices. Source: WGC 2024 Perhaps one of the more telling findings from the World Gold Council’s annual survey is the broad expectation amongst central banks that gold holdings across the board are expected to rise over the next 12 months. 81% of respondents believe global central bank gold holdings will rise over the next year, a sign that current high prices may not deter banks for long. The Fed has indicated that there will likely be one rate cut this year, potentially two as the dot plot revealed a narrow decision between the two anticipated outcomes. However, the first interest rate cut is only expected to arrive in Q4 according to markets, meaning the current decline in gold prices may show little urgency unless incoming US data deteriorates, bringing a rate cut forward in time which is likely to drive gold prices higher once again. Gold is a non-yielding asset meaning investors tend to view it more favourably when interest rates are heading lower. Lower interest rates lowers the opportunity cost of holding gold and therefore makes it more attractive. Source: WGC 2024 Gold Prices Give Very Little Away – Short and Medium-Term Trends Collide Gold prices have risen since the NFP low at the start of the month but the broader downtrend remains intact. Prices have headed lower, in a choppy fashion, since the all-time-high at $2,450 after negative divergence reared its head and hinted at a period of lower prices. The downtrend developed as a series of lower lows and lower highs ensued – marking the recent low on Friday the 7th of June (NFP). Since then prices have attempted a comeback, rising above $2,320 but momentum has been lacking – evidenced by the narrowing pattern. If the blue 50 DMA holds as resistance, gold may adhere to the medium-term downtrend and head lower. In recent times gold drivers have dissipated. There have been no notable escalations in either eastern Europe or the Middle East and US data has failed to provide a favourable environment for rate cuts. To the downside, gold bears will be eying the swing low at $2,287 and $2,287 which could act as a tripwire for an extended move lower. Gold (XAU/USD) Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/gold-price-update-negative-divergence-hints-at-lower-prices-nfp-marked-recent-bottom-20240618.html

2024-06-18 10:09

Euro (EUR/USD) Analysis Focus returns to Europe and France in particular in the lead up to the elections Will the ECB step in to calm widening bond spreads considering Frances debt load? EUR/USD fails to capitalize on Mondays reprieve – downside risks remain The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Will the ECB Step in to calm widening bond spreads considering France's debt load? With last week’s top tier US data and the FOMC out of the way, the focus returns to Europe and France in particular. The campaign effort is in full swing ahead of the first round of parliamentary elections on the 30th of this month where representatives across the entire political spectrum campaign for votes. The resounding rise in popularity for Marine Le pen’s National Rally party in the European elections has spooked markets ahead of the snap election. Markets seek stability and certainty and broadly view the Eurosceptic National Rally as an unpredictable force weighing on European bond markets currently. French-German spreads reveal a notable risk premium that has been applied to riskier nations with higher debt loads like Italy and France, while investors have piled into safer German bonds. A sell-off in periphery nations’ bonds tends to be followed by a weaker euro – something to monitor as France head to the voting booths. French-German 10Y Bond Spread (Risk Gauge) Source: TradingView, prepared by Richard Snow Just yesterday the ECB’s Chief Economist Philip Lane characterised the recent move in the bond market as ‘repricing’ and not being in the world of ‘disorderly market dynamics’. The ECB unveiled a new tool to counter any unwarranted fragmentation in the bond market in 2022 when it began raising interest rates. It could be deployed to purchase bonds from qualifying member states in the event borrowing costs spiralled out of control, subject to fiscal and other conditions. France currently has a debt to GDP ratio above 110%, more than the EU proposed 60% which may complicate whether France qualifies for the assistance should spreads spiral out of control. Source: IMF, Financial Times EUR/USD Attempts to Hold 1.0700 but Downside Risks Remain On Monday the pair attempted to lift off the 1.0700 level but momentum has already come into question as risks to the downside remain. Price action trades below the 200 simple moving average and appears on course for a retest of 1.0700. The major level of support appears at 1.0600 and potentially even 1.0450 – the low of the major 2023 decline. Despite a slight uptick in May, EU inflation data has been declining steadily as the ECB contemplate when it may be appropriate to cut interest rates again. Earlier today, ZEW economic sentiment disappointed expectations of 50, coming in at 47.5 (a slight improvement from last month’s 47.1). Inflation expectations were noted for having increased on the back of the slightly hotter May print. EUR/USD Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/eur-usd-fails-to-capitalize-on-monday-s-reprieve-downside-risks-persist-20240618.html

2024-06-18 07:42

AUD/USD Analysis and Charts RBA leaves rates unchanged, and discussed moving rates higher. First RBA rate cut is now seen in April next year. Easing Australian Inflation: Progress Slows, Target Still Distant The Reserve Bank of Australia (RBA) left all monetary settings unchanged earlier today, but warned that ‘the economic outlook remains uncertain and recent data have demonstrated that the process of returning inflation to target is unlikely to be smooth.’ RBA governor Michele Bullock later said that the central bank ‘needs a lot to go our way to bring inflation back to range’ and that the board had discussed the case for a rate hike at today’s meeting. Australia has made strides in curbing elevated inflation levels since the peak in 2022. However, consumer prices remain well above the Reserve Bank's 2-3% target band. According to the monthly CPI indicator, annual headline consumer price growth came in at 3.6%. When excluding volatile items and holiday travel costs, the core inflation rate was 4.1% - virtually unchanged from December 2023 readings. The latest rates forecast shows a very small chance of a rate hike in Q3, while rate cuts are not expected until the start of Q2 2025. The Australian dollar has been pushing marginally higher against the US dollar since the RBA announcement. AUD/USD has traded in a narrow range for the last 6 weeks and looks set to remain rangebound in the short term. The CCI indicator shows the pair in oversold territory, while the 20-day sma is currently being tested. Initial support is around 0.6575 with resistance starting around 0.6650. AUD/USD Daily Chart IG retail client sentiment shows 65.54% of traders are net-long with the ratio of traders long to short at 1.90 to 1.The number of traders net-long is 5.11% higher than yesterday and 1.01% higher than last week, while the number of traders net-short is 4.10% higher than yesterday and 3.92% lower than last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUD/USDprices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger AUD/USD-bearish contrarian trading bias. What are your views on the Australian dollar – bullish or bearish?? You can let us know via the form at the end of this piece or contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/aud-usd-nudges-higher-rba-leaves-policy-untouched-discussed-hiking-rates-20240618.html

2024-06-17 16:30

USD/JPY Testing Multi-Week Highs, Will the BoJ Wait Until the End of July? Japanese Yen Prices, Charts, and Analysis Official talk may no longer be enough to prop up the Japanese Yen JGB 10-year yield now back below 1.00% Talk overnight by Japanese officials was unable to prop up the Japanese Yen with USD/JPY floating back to highs last seen in late April. Bank of Japan governor Kazuo Ueda stressed that he is looking at FX levels and their impact on import prices, while Japan's PM Fumio Kishida said that it was important to guide policy 'flexibly' to end deflation and promote growth. While both officials made market-related comments, the Japanese Yen continued to slip lower, testing levels that have seen FX intervention. The Bank of Japan said last week that they would cut their bond-buying program but would not announce by how much until the next BoJ meeting on July 31st. Unless the US dollar turns sharply lower, the BoJ will likely have to intervene to prop up the Yen as verbal intervention is no longer working. The yield on the 10-year Japanese Government Bond (JGB) has moved higher since the start of 2024 until a sharp reversal at the end of May. With markets now starting to question when officials will start to tighten monetary policy, in the short-term at least, the yield on the benchmark JGB 10-year will struggle to move appreciably higher. Japanese Government Bond (JGB) 10-Year Yield The daily USD/JPY chart looks positive, despite the CCI being in overbought territory. The pair are now above all three simple moving averages and are set to print a fresh multi-week high. Above the 158 area, there is little in the way of resistance before the recent multi-decade high at 160.215. USD/JPY Daily Price Chart Retail trader data show 25.87% of traders are net-long with the ratio of traders short to long at 2.87 to 1.The number of traders net-long is 11.66% higher than yesterday and 4.94% higher than last week, while the number of traders net-short is 5.87% higher than yesterday and 2.52% higher than last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USD/JPY prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current USD/JPY price trend may soon reverse lower despite the fact traders remain net-short. What is your view on the Japanese Yen – 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/usd-jpy-testing-multi-week-highs-will-the-boj-wait-until-the-end-of-july-20240617.html

2024-06-17 14:00

BoE, Sterling Outlook and Scenario Analysis: Sterling at the mercy of the UK CPI print and the Bank of England rate decision GBP/USD reveals downside potential after FOMC revisions Will the SNB cut again despite Chariman Jordan's currency comments? The Bank of England (BoE) meets on Thursday where it is highly likely the Monetary Policy Committee (MPC) will keep rates at a 16-year high. Market participants will scrutinize every word from Governor Bailey and his cohort regarding the timing of the inevitable rate cut now that inflation is moving in the right direction, the economy has stagnated in April and the job market continues to ease. A notable amount of repricing risk may present itself this week if May’s inflation data continues to decline and if there is a notable dovish shift within the committee. The vote split may remain 7-2 (hold-cut) due to the internal committee members historically moving as a group. When Dave Ramsden voted for a cut in May it was just the 6th time an internal committee member has voted against the majority since the start of the rate hiking cycle at the end of 2021. Markets currently price in more than 25-basis points worth of easing in November but September is looking increasingly likely. A dovish statement/presser combined with softer CPI, and more importantly lower services inflation, could see the majority weigh up a possible move in August. Implied Interest Rate Path (in Basis Points) Source: Refinitiv, prepared by Richard Snow Learn how to prepare for high impact economic data or events with this easy to implement approach: GBP/USD Reveals Downside Potential after FOMC Revisions Sterling has been one of the better performers against the dollar this year, but the recent FOMC projections compromised its performance. The GBP/USD appears as a viable short from both a technical perspective and a positioning perspective. On the technical side, the pair tests at a zone of support (1.2680) that had contained previous attempts to breakdown since late May. The RSI has only just breached the 50 mark, indicating the capacity for further selling before overheating. The 1.2585 level – which provided support during the drawn out period of consolidation at the start of the year – provides the next level of support followed by the 200 SMA around 1.2550. GBP/USD Daily Chart Source: TradingView, prepared by Richard Snow Speculative positioning form large speculators, hedge funds and other large institutions known collectively as the ‘smart money’, have piled into GBP longs widening the gap between longs and shorts. The sizeable net-long positioning provides a backdrop where a dovish surprise can lead to a very quick unwinding of some of the long exposure. The previous two peaks in long positioning appeared shortly after GBP/USD peaked and proceeded to drop. CBOE Commitment of Traders Report (CoT) – Data accurate up until Tuesday 11 June Source: Refinitiv, prepared by Richard Snow Will the SNB Cut Again Despite Chairman Jordan’s Currency Comments? The Swiss National Bank (SNB) is expected to issue another 25-basis point cut on Thursday according to market expectations. The implied probability derived from interest rate futures suggests a 70% chance of a cut from 1.5% to 1.25%. Interest rates are very low in Switzerland when compared to other developed nations but it has not struggled to appreciate in recent days thanks to comments from the SNB Chairman himself. Thomas Jordan previously stated that a weak franc is likely the biggest risk to the inflation outlook, leading to a sharp appreciation in the local currency despite markets looking for a second interest rate cut this year. GBP/CHF exhibits a longer-term reversal pattern, a head and shoulders formation – although it isn’t the cleanest of formations and involves a compound left shoulder. After finding resistance at 1.1650, the pair reversed lower where it currently trades above 1.1245 – a prior level of resistance now acting as support. Bears will be hopeful for a series of events materializing in the following fashion: a dovish BoE with softer UK CPI and the SNB voting to hold rates despite the consensus view that they will lower rates. Such an outcome may bring the swing low of 1.1170 into focus. In the event 1.1245 holds this week, upside levels to watch include 1.1462. Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/boe-sterling-outlook-gbp-usd-gbp-chf-key-levels-and-scenarios-to-watch-20240617.html

2024-06-17 09:59

Nasdaq, Gold, US Dollar Analysis and Charts Nasdaq 100 eyes 20,000 as buyers remain in control. Gold slips as risk sentiment turns positive. US dollar little changed, markets eye SNB and BoE this week. The technology sector in the United States continues its upward momentum, propelled by the persistent demand for the Mag 7 stocks. The Nasdaq 100 index is nearing the significant 20,000 level. The top three corporations in the Nasdaq – Nvidia, Microsoft, and Apple – collectively account for nearly 26% of the index's total market capitalization. This figure underscores the substantial concentration risk posed by these Mag 7 stocks within the index. Nasdaq Daily Price Chart The United States dollar is maintaining a steady course in early trading, with a scarcity of high-impact data or events this week to provide directional guidance. US Treasury yields persist at or slightly above their recent multi-week lows, while expectations for US interest rate cuts remain largely unchanged. The market currently anticipates the first reduction in November, although a move at the September meeting would not come as a surprise. Furthermore, an additional rate cut is expected by the end of the year. The US dollar index is trading around 105.60 and is consolidating its recent move higher. The greenback is back above all three simple moving averages, a bullish signal, but looks overbought using the CCI indicator. USD Daily Price Chart Gold is consolidating its recent gains and remains within a multi-week range. The 20- and 50-day simple moving averages are currently acting as short-term resistance, and these need to be broken and opened above to keep the precious metal moving higher. Support just below $2,280/oz. should hold in the short term. Gold Respecting a Recent Trading Range but Support Needs to Hold Firm Gold Daily Price Chart Retail trader data shows 56.86% of traders are net-long with the ratio of traders long to short at 1.32 to 1.The number of traders net-long is 1.99% higher than yesterday and 22.10% lower than last week, while the number of traders net-short is 0.30% higher than yesterday and 33.70% higher than last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall. Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed Gold trading bias. Charts via TradingView Are you risk-on or risk-off? You can let us know via the form at the end of this piece or contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/positive-market-sentiment-nudge-risk-assets-higher-gold-slips-lower-20240617.html