2023-09-04 03:10

The Australian Dollar bounced off some trend lines last week The RBA appears certain to be on hold tomorrow as the guard prepares to change GDP data and China relationships may provide some impetus. The Australian Dollar is steady near 0.6450 going into Monday’s trading session ahead of the Reserve Bank of Australia’s rate decision tomorrow and then GDP data on Wednesday. Tuesday’s RBA monetary policy committee meeting will be the last chaired by Governor Philip Lowe as he will be passing the baton to Michele Bullock later this month. Interest rate markets anticipate that the bank will keep rates on hold at 4.10% for the third month in a row after raising them by 400 basis points since May 2022. A Bloomberg survey of economists supports this perspective. The decision can be watched live here. Last week, the incoming Governor made it clear that future rate decisions are a meeting-by-meeting scenario and data-dependent. The market is currently not pricing in any more hikes in this cycle and is looking for cuts in the cash rate at the back end of 2024. On Wednesday, 2Q quarter-on-quarter GDP is forecast to be 0.3% against 0.2% previously. Annual GDP to the end of July is anticipated to be 1.8% against the prior read of 2.3% as the base effect kicks in. The US are on holiday today and market conditions could be skittish overnight on less liquidity. Elsewhere, the ASEAN 2023 summit gets underway in Jakarta tomorrow. It is being reported that Australian and Chinese officials will be meeting on the sidelines for the first time since 2020 when relationships soured. Although there are not expected to be any major announcements, the thawing of tension between the nations might be seen as a positive step by the markets. AUD/USD DAILY CHART AUD/USD appears to be at somewhat of a crossroads. It has consolidated after bouncing off a long-term ascending trend line but remains in a shorter-term descending trend channel. The price remains below the 34-, 55- and 100-day Simple Moving Averages (SMA) which may suggest that bearish momentum is intact for now. The 0.6600 - 0.6620 area seems to be shaping up as a notable resistance zone with several breakpoints and prior peaks there. The 100-day SMA is currently just above there, near 0.6640 and if it clears that, it might indicate that the overall range trade scenario is intact for now. To learn more about range trading, click on the banner above. On the downside, support may lie at the breakpoints and previous lows of 0.6386, 0.6365, 0.6272 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. https://www.dailyfx.com/news/australian-dollar-steadies-ahead-of-rba-and-gdp-will-aud-usd-get-a-grip-20230904.html

2023-09-04 03:08

Market Recap The US jobs data release last Friday continues to reflect signs of softening in the US labour market, which seems to be in line with what the Federal Reserve (Fed) wants to see. Job additions were somewhat lukewarm despite being slightly higher than consensus (187,000 versus 170,000 forecast), while unemployment rate jumped to 3.8% from previous 3.5%. Along with some moderation in wage growth, rate expectations found validation for the Fed to keep rates on hold this month, with 62% probability being priced for the November meeting. Treasury yields were higher however, with the two-year yields paring earlier losses while the ten-year is up 7 basis-point (bp), overall lifting the US dollar. This comes as US Institute for Supply Management (ISM) manufacturing purchasing managers index (PMI) data may support rates to be keep high for longer by displaying a lesser-than-expected contraction in manufacturing prices (48.4 versus 43.9 forecast). Wall Street was little changed, somewhat catching a breather from its recent rally, with US markets offline today due to Labour Day holiday. This may bring about lighter trading volume across the globe and set the stage for a quieter start to the week. Attention will then be turned to China’s Caixin PMI data and the RBA interest rate decision tomorrow, along with retail sales figure in Singapore. Perhaps one to watch is the Russell 2000 index, which is up 3.4% for the week. On the weekly chart, a morning star formation seems to be in place, while its relative strength index (RSI) attempts to defend its key 50 level last week. This follows after a retest of the lower edge of its Ichimoku cloud pattern on the weekly chart, which has supported prices for the second occasion since May this year. Staying above its 200-day MA may keep the near-term bias intact, with immediate support at the 1,900 level. On the upside, the key psychological 2,000 level will serve as key resistance to overcome. Source: IG charts Asia Open Asian stocks look set for a positive open, with Nikkei +0.32%, ASX +0.71% and KOSPI +0.19% at the time of writing. The Nasdaq Golden Dragon China Index was up 3.2% last Friday, digesting the recent fresh moves from China authorities to support the CNY and its housing market. China’s financial regulators have cut the down-payment requirements for first and second-time home buyers and lowered rates on existing mortgages – a move to provide some support for home sales demand as a bid to restore confidence, although much still awaits on how much impact it may eventually have. On another front, Country Garden’s recent success in buying some time from its creditors for its 3.9 billion yuan onshore private bond could provide some support for Chinese equities to start the week, although past lessons from China Evergrande suggests that any extension could be just a near-term reprieve, with the lack of an eventual resolution still a headwind for risk sentiments eventually. Aside, one to watch may be the USD/JPY, which saw the formation of a bullish hammer on the daily chart last Friday to defend the key 145.80 level. This level marked a crucial level of intervention by the Bank of Japan (BoJ) in September last year, with the dip-buying in place reflecting some expectations for the US-Japan yield differentials to be well-supported by policy divergence. A move above last Tuesday’s high may potentially support a move to retest the 148.80 level next, while on the downside, the 145.00-145.80 range will remain a key level of support for buyers to hold. Source: IG charts On the watchlist: Brent crude prices setting its sight for new year-to-date high Brent crude prices continue to climb last Friday (+2.1%), shrugging off the stronger US dollar to stand just less than 1% away from a new year-to-date high. For the week, prices are up 5.5% - its best week since April this year. Declining inventories in the US, along with further output cuts expected out of Russia, continues to underpin a tightening supply outlook while on the technical front, prices continue to trend above its 200-day MA. A bullish crossover was formed on its MACD on the daily chart last week, overall supporting some build-up in positive momentum. Further upside may leave the US$98.00 level on watch for a retest next, which marked its October and November 2022 highs. Source: IG charts https://www.dailyfx.com/news/us-holiday-today-but-focus-could-be-on-china-russell-2000-usd-jpy-and-brent-crude-20230904.html

2023-09-01 01:39

EUR/USD NEWS AND ANALYSIS Mixed EU inflation and cautious ECB tone add to downside risks EUR/USD appears vulnerable – will the 200 SMA hold? Institutional positioning remains heavily net-long, opening up risk of sustained EUR/USD selloff The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library MIXED EU INFLATION AND CAUTIOUS ECB TONE ADD TO DOWNSIDE RISKS The euro sold off on Thursday after markets chose to pay close attention to the more encouraging core inflation print for the Euro area, as opposed to the slight move higher on headline readings. Core inflation printed at 5.3%, in line with expectations but represents a move lower from last month’s 5.5% print. In addition, recent communication from ECB rate setters suggests that a more cautious approach will be adopted by the governing council ahead of next month’s central bank meeting. In the moments before Christine Lagarde addressed delegates at Jackson Hole, unknown ECB ‘sources’ suggested that hawks within the committee have eased their previous stance which could see the group err on the side of caution should the decision to hike or hold be finely balanced. Earlier today, well-known hawk Isabel Schnabel Elsewhere, US PCE data printed in line with market consensus for both the core and headline readings and both measures recorded a rise on the prior month’s year-on-year comparison. Markets now look to tomorrow’s NFP report which attracts even more anticipation than before, given the build up of lower impact jobs data in the lead up. EUR/USD APPEARS VULNERABLE – WILL THE 200 SMA HOLD? The EUR/USD pair declined on Thursday after European core inflation edged lower and US PCE remained elevated. The pair briefly traded above 1.0910 before surrendering all of yesterday’s gains. Immediate support now appears at 1.0831, followed closely by the 200 day simple moving average (SMA). Thereafter, 1.0700 comes into view, however, that remains a fair distance off for now. Of course it is worth noting year end flows can play a part in price discovery today so that always needs to be taken into account. The difficulty with EUR/USD right now is you have vulnerability appearing across both currencies. The dollar has weakened amid slower GDP outperformance (outperformance nonetheless) and early signs of a softer jobs market – something the Fed has eyed as crucial to bringing inflation down to the 2% target. Downside risks have also accrued for the euro amid broadly declining inflation, and growth concerns that appear to be weighing on ECB members ahead of the rate decision next month. Resistance is back at 1.0910 followed by 1.1012 - the June 2023 high. EUR/USD Daily Chart Source: TradingView, prepared by Richard Snow The weekly chart shows the relentlessness of the medium-term selloff which too place over six consecutive weeks. The pair has tagged channel support and has risen this week, although, gains are rapidly being clawed back ahead of NFP. This level of support remains a big test for EUR/USD bears – one to keep an eye on heading into the end of the week. EUR/USD Weekly Chart Source: TradingView, prepared by Richard Snow INSTITUTIONAL POSITIONING (HEDGE FUNDS, MONEY MANAGERS) FROM THE COT REPORT Euro positioning remains strongly net-long, something that could soon change depending on incoming data and will certainly be tested in the lead up to the ECB’s September meeting. The CoT report gathers positioning data from reportable speculators like hedge funds and other large money managers. Source: Refinitiv, prepared by Richard Snow https://www.dailyfx.com/news/eur-usd-price-outlook-euro-risks-accumulate-ahead-of-nfp-20230831.html

2023-09-01 01:23

GOLD PRICE (XAU/USD) FORECAST Gold prices stall after encountering trendline resistance near $1,950 ahead of a high-impact event on Friday: the release of the latest U.S. jobs report Total nonfarm payrolls for August are forecast to have risen by 170,000, following July’s 187,000 increase This article looks at XAU/USD’s key technical levels to watch in the coming days Gold prices (XAU/USD) lacked directional conviction on Thursday, moving between small gains and losses around the $1,940 threshold, in a trading session characterized by limited volatility across many assets ahead of a high-impact event for financial markets just before the weekend: the release of the latest U.S. jobs report. During the Jackson Hole Symposium, Fed Chair Powell noted that inflation remains too high and called for more vigilance, but indicated that the FOMC will “proceed carefully” in any further moves after having already delivered 525 basis points of tightening since 2022. This cautious stance means one thing: the institution will lean heavily on data. The pivot toward a data-centric strategy elevates the role of incoming economic information to a paramount status. For this reason, the next employment survey will take on added importance. Within this context, a robust report has the potential to nudge policymakers towards one or two additional rate hikes, while lackluster figures could prompt them to embrace a more dovish posture. Focusing on Friday's event, total non-farm payrolls for August are forecast to have risen by 170,000, following the 187,000-gain recorded in July. Meanwhile, nominal wages are seen increasing 0.3% on a monthly basis, resulting in the yearly reading holding steady at 4.4%, a figure that is still too high and could be incompatible with a sustained convergence of inflation towards 2%. UPCOMING NFP REPORT Source: DailyFX Economic Calendar When considering potential scenarios, the string of disappointing macro indicators in recent days, including JOLTS, consumer confidence, and private sector hiring, has heightened uncertainty about the outlook. If the NFP figures validate the trend of economic weakness, interest rate expectations could drift lower, weighing on yields and on U.S. dollar. This could be quite bullish for gold prices. In the event of better-than-expected results, there may be limited room for a strong rally in yields and greenback, barring a massive upside surprise in the numbers, as traders may be reluctant to fully embrace the narrative of persistent economic strength due to conflicting signals emitted by other indicators. GOLD PRICE TECHNICAL ANALYSIS Gold rose in the latter part of August, reclaiming both its 200-day and 50-day simple moving averages. However, XAU/USD’s upward momentum faltered before the month concluded, coinciding with prices encountering short-term trendline resistance. While the ongoing rebound remains viable, a clean break above the $1,950 barrier is necessary for renewed bullish confidence to infiltrate the precious metal market. Should this scenario play out, we could see a climb towards $1,985, followed by progression towards the psychological $2,000 mark. On the flip side, if sellers regain the upper hand and repel prices from current levels, initial support appears at $1,930, and $1,912 thereafter, the 200-day SMA. Further down the line, the next floor to keep an eye on is located around $1,895, which corresponds to the 38.2% Fibonacci retracement of the Sept 2022/May 2023 rally. GOLD PRICES TECHNICAL CHART https://www.dailyfx.com/news/gold-prices-stall-at-trendline-resistance-will-nfp-spark-breakout-or-rejection-20230831.html

2023-08-30 01:14

EUR/USD AND EUR/JPY FORECAST - PRICES, CHARTS, AND ANALYSIS Heavyweight US and Euro Area data are on tap this week. The US dollar remains undecided after chair Powell’s Jackson Hole speech. The Federal Reserve and the European Central Bank both reiterated their stance of keeping rates higher for as long as it takes at the Jackson Hole Symposium last week, leaving EUR/USD traders with little to work with. Fed chair Powell gave the market a very gentle dovish nod when he said that the central bank would ‘proceed carefully’ when assessing future policy moves, while President Lagarde said that while progress was being made, ‘the fight against inflation is not yet won’. Both central bank heads remain data-dependent and unless inflation begins to fall sharply, rates are set to be held at current levels in the coming months. Inflation readings for Germany, the Euro Area, and the US are due this week and this is likely to give EUR/USD traders the volatility that has been lacking of late. At the end of the week, the latest monthly US Jobs Report (NFPs) will be released at 13:30 UK and this again may provide a shot of price action going into the weekend. DailyFX Calendar The daily EUR/USD chart shows medium-term EUR/USD weakness and the short-term state of indecision. The pair have fallen from the mid-July high of 1.1276 with little in the way of support stemming the move. EUR/USD now sits on the 200-day simple moving average with a break below here leaving the May 22 swing high at 1.0787 vulnerable. Below here there is little in the way of support ahead of the late-May swing low at 1.0635. A clear break and open below the 200-dsma leaves the pair vulnerable to a move lower. EUR/USD DAILY PRICE CHART – AUGUST 29, 2023 Chart via TradingView In contrast to EUR/USD, the latest EUR/JPY chart sees the pair looking to re-test a multi-year high. A break above 159.65 would see the pair back at highs last seen in September 2008. All three simple moving averages continue to support the move higher. The main sticking point is the Bank of Japan and whether they will step in and try to support the Yen. The Bank’s normal modus operandi is to try and talk the market down before they actually make a policy change. This leaves the Yen vulnerable to a sharp move higher against a range of currencies, especially the ones where multi-year levels are seen. EUR/JPY may move higher but caution is warranted. EUR/JPY DAILY PRICE CHART – AUGUST 29, 2023 https://www.dailyfx.com/news/euro-eur-latest-eur-usd-struggles-continue-eur-jpy-eyes-a-fresh-multi-year-high-20230829.html

2023-08-30 01:12

USD/ZAR NEWS AND ANALYSIS US consumer confidence takes a hit as labour market shows slight signs of easing ZAR technical outlook eyes 200-simple moving average (SMA) ZAR looking ahead to Chinese manufacturing PMI as the sector contracts US CONSUMER CONFIDENCE TAKES A HIT, JOB OPENINGS DECLINE – USD/ZAR LOWER A US consumer confidence report missed expectations and US job openings (JOLT) posted the largest decline in job openings since the pandemic began – offering the slightest indication that the job market may be showing signs of easing. The resulting USD drop and lift in gold has seen USD/ZAR continue to selloff. Keep an eye on US non-farms on Friday as job additions in August are expected to continue the steady downward trend. ZAR TECHNICAL OUTLOOK HIGHLIGHTS 200-SIMPLE MOVING AVERAGE USD/ZAR has continued the selloff that has ensued since tagging the April 2020 high at 19.3533, now heading towards the 200 simple moving average and 18.0440. With few ZAR drivers, particularly now that the SARB appears to be on hold, USD/ZAR price action is likely to be determined by Chinese and US data flow. A further deterioration in Chinese fundamentals could pose a challenge for the ZAR, while US PCE data and the second estimate of Q2 GDP are likely to impact the pair. USD/ZAR Daily Chart Source: TradingView, prepared by Richard Snow The longer-term chart doesn’t bode well for ZAR bulls as the long-term ascending channel naturally limits USD/ZAR downside, currently testing the 23.6% Fibonacci retracement of the 2021 – 2023 major advance in the pair. USD/ZAR Weekly Chart Source: TradingView, prepared by Richard Snow The South African Reserve Bank (SARB) hiked local interest rates 10 consecutive times before the July meeting, where it decided to hold rates steady. Progress not just on headline CPI but also the stickier, core CPI allows the Bank more flexibility in future meetings. With the Bank effectively on hold (or pause), interest rate expectations for the ZAR have decreased and are no longer seen as a driver of the emerging market currency. South African Inflation Evolution Source: TradingView, prepared by Richard Snow CHINESE MANUFACTURING DATA DUE THIS WEEK China accounts for around 15% of total SA exports and therefore, developments in the Asian nation have an indirect impact on the rand. Next week Chinese manufacturing PMI (NBS) data is due. The manufacturing sector is in a contraction and estimates of 49.4 keeps the sector in decline despite the marginal improvement from last month’s print. https://www.dailyfx.com/news/usd-zar-outlook-zar-buoyed-by-declining-us-sentiment-job-openings-20230829.html