2023-08-17 03:36

AUSTRALIAN DOLLAR VS US DOLLAR, AUSTRALIA JOBS – TALKING POINTS: AUD fell after Australia job data missed expectations. AUD/USD is now testing key support. What is the outlook for AUD/USD and what are the key levels to watch? The Australian dollar dropped against than the US dollar after the Australian economy created fewer-than-expected jobs last month. The Australian economy created 14.6k jobs in July, compared with forecasts of 15k, well below 32.6k in June. The unemployment rate rose marginally to 3.7% compared with expectations of 3.6%, Vs 3.5% in June. AUD/USD 5-minute Chart Chart Created by Manish Jaradi Using TradingView The Australian jobs market has been strong with the unemployment rate hovering around five-decade lows. Today’s data could be an early sign that the jobs market could be cooling, lowering the bar for further tightening. The Reserve Bank of Australia (RBA) Governor Philip Lowe said Friday that the worst is over for inflation, though some further tightening might be needed. Markets are now showing a high chance that the cash rate will stay at 4.1% for a third month in September, but a small chance of another rate hike in November and stable rates thereafter for a year. In contrast, minutes of the June FOMC meeting showed most participants saw fighting inflation as their top priority, echoing San Francisco Fed President Mary Daly's remarks last week there is more work to be done by policymakers. A resilient US economy – further reinforced by this week’s stronger-than-expected US retail sales and industrial output – and a tight labour market has pushed up expectations for a November Fed rate hike. Higher for longer US rates, the outperformance of the US economy, and neutral speculative USD positioning point to continued support for the greenback. AUD/USD Daily Chart Chart Created by Manish Jaradi Using TradingView Furthermore, underwhelming China macro data have added to AUD woes. Data published earlier in the week showed retail sales, industrial output, and fixed asset investment came in below expectations, reflecting the trend in recent months - the China Economic Surprise Index is just off mid-2020 (Covid levels). China is Australia’s largest export destination. On technical charts, AUD/USD’s fall below the June low of 0.6600 has triggered a double top pattern (the June and July highs), pointing to a drop toward 0.6300. For now, though, the pair looks deeply oversold on the daily charts as it tests a vital cushion on a downtrend line from early 2023 (see the daily chart). https://www.dailyfx.com/news/australian-dollar-falls-after-jobs-data-miss-how-much-more-downside-for-aud-usd-20230817.html

2023-08-17 03:35

GBP/USD PRICE, CHART, AND ANALYSIS GBP/USD rose and stayed up after the latest official UK consumer price numbers Headline CPI is decelerating but remains hugely above target The prospect of higher rates next month remains The British Pound rose against the United States Dollar on Wednesday as the latest official inflation report did nothing to allay suspicions that the Bank of England will be raising interest rates yet again, probably as soon as next month. While July’s headline 6.8% annualized Consumer Price Index rise was much lower than June’s 7.9%, it was exactly as markets had expected and, crucially, still more than three times the BoE’s 2% target rate. That hasn’t been hit since 2021. For sure there were crumbs of comfort in the numbers. That headline rate was a seventeen-month low and the nightmare days of late last year, when inflation was printing double digits, seem to be over. However, the ‘core’ inflation rate, which strips out the volatile effects of food and fuel prices, was stickier than the headline. It came in at 6.9%, a tick above forecasts and unchanged from June. The message in the data seemed clear enough for a country that has already struggled longer and harder with inflation than most comparable economies: price-rises are decelerating, but they’re not doing so fast enough. That in turn strongly suggests that the monetary screws will have to be tightened again, after fourteen consecutive monthly interest-rate increases so far which have taken the key Bank Rate up to 5.25%. Moreover, the figures followed extremely strong wage data released on Tuesday. They suggest that ‘cost push’ inflation remains a huge factor in overall price rises, even as past inflationary bugbears such as fuel prices relax a little. The BoE’s Monetary Policy Committee expects to see inflation falling to 4.9% by the end of this year, according to its last forecasts, but markets will be very interested to see how the latest numbers fit with that view. They’ll have a bit of a wait to find out, as UK borrowing costs won’t be reviewed again until September 21. Still, hopes for another increase have kept Sterling bid, with the UK economy’s surprising resilience also helping. The Pound has risen quite consistently against the greenback since last September, largely on the thesis that the BoE has more heavy-lifting work ahead of it than the Fed if it’s going to bring inflation to heel. It’s safe to say that thesis has survived Wednesday’s inflation figures. It's been a busy week for UK data, but GBP/USD is likely to be dominated by economic events across the Atlantic, at least until Friday when official retail sales numbers will shine more light on the Pound’s domestic economy. GBP/USD TECHNICAL ANALYSIS GBP/USD Daily Chart Compiled Using TradingView GBP/USD remains well short of July’s fifteen-month highs and, perhaps more worryingly for Sterling bulls, below an important trend line previously in place since the lows of September last year. However, the Pound hasn’t fallen very far from those peaks, and it remains comfortably above even the first Fibonacci retracement of the rise up from those September lows to that July peak. That comes in at 1.24837. In the near term the pair faces resistance at 1.2770. It will take a convincing and sustained break of that to power it back above that trend line which now provides resistance at 1.29816. The outlook for this pair is a little ill-defined at present, but the fact that it’s below both its 50 and 100-day moving averages suggests that some caution is due for sterling bulls, at least in the near term. The Pound could also be very close to forming a ‘head and shoulders’ on the daily chart, which would suggest that it had topped out significantly with that July rise. The uncommitted may be well advised to wait and see whether the pair can hold above its retracement levels as convincingly in the week ahead. https://www.dailyfx.com/news/gbp-usd-rises-sticky-uk-inflation-says-boe-has-more-to-do-20230816.html

2023-08-17 03:32

It was another down day in Wall Street, as statements from the Federal Open Market Committee (FOMC) minutes did not reflect the level of unity among policymakers to pause rates as what was initially expected. Particularly, the key takeaway that “most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy” was somewhat perceived to carry a hawkish tilt. The Fed funds futures still showed firm expectations for a rate pause in September (88% probability) but doubts have surfaced for the November meeting. A 35% probability of a November hike is currently priced, up from the 28% a week ago. Given that the Fed reiterated its data-dependent stance in the minutes, it may still have to take a series of upside surprises in inflation to anchor down views of additional tightening, but for now, the minutes were tapped on as a catalyst for the risk rally to further unwind, alongside jitters in the Chinese space. US Treasury yields largely held firm, with the two-year yields hovering at the 5% mark as a reflection for a high-for-longer rate outlook while the 10-year yields head for its October 2022 peak. The US dollar firmed, crossing its 200-day moving average (MA) for the first time since November 2022. That kept the pressure on gold prices overnight (-0.5%), which touches a new low since March this year. Its weekly relative strength index (RSI) has headed further below the 50 level, with further downside potentially leaving the US$1,850 level on watch next. Source: IG charts Asia Open Asian stocks look set for a negative open, with Nikkei -0.88%, ASX -0.90% and KOSPI -1.21% at the time of writing. Weak showing in trade data across the region continue to point to the prevailing headwinds in global demand, partly weighed by the low-for-longer growth conditions in China. Japan’s exports registered its first year-on-year decline (-0.3%) in 2.5 years and along with a lower-than-expected read in machinery orders for June (-5.8% versus -5.5% consensus), that may support the Bank of Japan (BoJ) on its more gradual path of policy normalisation. Similarly, Singapore’s non-oil domestic exports (NODX) for July tumbled, with a larger 20.2% contraction year-on-year way underperforming the 14.4% contraction expected. Given the headwinds to China’s growth conditions with property sector risks likely to drag for longer, while spillover default risks has reached the shadow banking sector, there are rising doubts on the country’s 5% growth target for this year. The current bias is that the worst is yet to come for China, with a more subdued growth outlook across the export-dependent region likely to stay for the rest of the year. A firmer US dollar overnight has pushed the USD/SGD to a new year-to-date high. The daily RSI in overbought territory may call for some cooling, but given that the pair has reclaimed its 200-day MA for the first time since November 2022, buyers still remain in greater control. The pair is heading past its 1.360 level of resistance this morning, where a 38.2% Fibonacci retracement level stands from its September 2022 peak to February 2023 bottom. Further upside may potentially pave the way to retest the 1.376 level next. Source: IG charts On the watchlist: US dollar back above its 200-day MA for first time since November 2022 The 4.2% gain in the US dollar over the past month has seen the index overcome several key resistance in the likes of a downward trendline in place since September 2022, along with its 200-day MA. Sustaining above the MA-line will be key ahead. For now, the US dollar is back at its 103.12 level, where it faced strong resistance from the previous Fed minutes release. Reclaiming the 103.12 level may potentially pave the way to retest the 105.00 level next, as its weekly RSI attempts to head above the key 50 level as a reflection of buyers in greater control. Source: IG charts Wednesday: DJIA -0.52%; S&P 500 -0.76%; Nasdaq -1.15%, DAX +0.14%, FTSE -0.44% https://www.dailyfx.com/news/hawkish-tilt-in-fed-minutes-while-trade-data-in-asia-weakened-gold-usd-sgd-us-dollar-20230817.html

2023-08-16 09:06

GOLD PRICE FORECAST: Gold (XAU/USD) At a Key Area Around the $1900 Mark with the First Daily Candle Close Below the 200-Day MA since December 2022. Fed Minutes Ahead. Dollar Index (DXY) Holds the High Ground as Retail Sales Kept the Dollar Supported. Ongoing Risk-Off tone Around China Could See the DXY Continue to Advance Thanks the Dollars Safe Haven Appeal. Gold prices continue to hover around the $1900 support handle following a brief push lower yesterday. Sellers were unable to maintain the momentum however, with the precious metal closing just above the $1900 mark but more importantly closing below the 200-day MA for the first time since December 2022. DOLLAR INDEX AND FEDERAL RESERVE (FOMC) MINUTES The Dollar Index which has had a huge say in Golds recent struggles finds itself at a key inflection point ahead of the Fed minutes later today. Upbeat retail sales data yesterday helped keep the Greenback supported just as it appeared to be on its way down from the confluence area around the 103.00 handle. As global markets face renewed concerns around the economic recovery in China it is the Dollar which continues to attract the safe haven bids rather than Gold which is understandable given the current rates on offer. The Dollar Index (DXY) remains at a key confluence around the 103.00 handle as it ran into the 200-day MA. I still think there is scope for Dollar downside after the Fed minutes with downside toward the 50 and 100-day MA. More uncertainty around China however, and a continued battle between risk-on and risk-off sentiment could see the Dollar remain supported due to its ongoing safe haven appeal with a break of the descending trendline coming into focus. Dollar Index (DXY) Daily Chart – August 16, 2023 Source: TradingView, Chart Prepared by Zain Vawda Looking ahead to the rest of the day and we have quite a bit of data out of the US. I do not expect too much volatility from these events ahead of the FOMC meeting and we could be in for rangebound price action throughout the day as market participants reposition ahead of the Fed Minutes release. TECHNICAL OUTLOOK AND FINAL THOUGHTS Form a technical perspective, Gold prices have closed below the 200-day A on a daily timeframe for the first time since December 2022. This is a strong indication that the longer-term trend may be shifting as gold loses its shine with attractive yields also weighing on the precious metal. Further downside definitely remains a possibility, however the RSI (14) is approaching overbought territory which s=means a short-term bounce may occur before the selloff continues. At this stage any bounce will need to a daily close above the $1925-$1930 (pink rectangle on the chart) for me to be convinced of a change in momentum. Markets do appear to be largely driven by the fundamental and macro pictures at the moment and thus my initial thoughts are that any move will likely be dependent on the risk tone today as well as how market participants perceive the FOMC minutes later in the day. Gold (XAU/USD) Daily Chart – August 16, 2023 Source: TradingView, Chart Prepared by Zain Vawda https://www.dailyfx.com/news/gold-xau-usd-flirts-with-1900-support-as-fed-minutes-loom-20230816.html

2023-08-16 09:04

POUND STERLING ANALYSIS & TALKING POINTS Elevated inflation combined with higher average earnings making things tough for BoE. 25bps hike in September an almost certainty! Descending triangle keeps bears hungry. GBP FUNDAMENTAL BACKDROP Before addressing the UK CPI report, lets cast our minds back to yesterday’s jobs data that revealed higher than expected average earnings figures despite moderating employment and unemployment readings. Services sector wage growth has been a major concern for the Bank of England (BoE) as a key contributor to core inflation. Today’s CPI remained elevated on both core and headline inflation as well as various PPI metrics that could point to sustained inflationary pressures to come. According to the Office for National Statistics (ONS) report, the MoM CPI read fell by 0.4% relative to the 0.6% growth in the previous month with the highest upside contributor coming from Hotels and passenger transport by air. GBP/USD ECONOMIC CALENDAR (GMT +02:00) Source: DailyFX Economic Calendar What does this mean for the BoE and their interest rate cycle? Looking at implied rates shown in the table below, little has changed pre and post-announcement. Markets are expecting with an almost 92% probability that the BoE will hike by 25bps in September. Taking into account the recent upside inflation report, the central bank may look to maintain this rate in November or hike further depending on incoming economic data between now and then. For now, the British pound may find some support after a recent bout of weakness against the greenback. Later today, EUR/GBP and GBP/USD crosses will look to eurozone GDP and US building permit data respectively and should provide some short-term volatility. BANK OF ENGLAND INTEREST RATE PROBABILITIES TECHNICAL ANALYSIS GBP/USD DAILY CHART Chart prepared by Warren Venketas, IG Price action on the daily cable chart naturally pushed higher on additional interest rate hikes to come. The 1.2680 support handle has been tested several times of recent but has yet to be breached. That being said, the candlestick pattern being exposed seems to echo that of a descending triangle which traditionally points to subsequent downside (bearish continuation pattern). A confirmation close below 1.2680 could spark this move. Key resistance levels: 1.2848 50-day moving average (yellow) Key support levels: 1.2680 1.2592 1.2500 https://www.dailyfx.com/news/forex-gbp-breaking-news-uk-inflation-remains-sticky-september-hike-likely-wv-20230816.html

2023-08-16 09:00

Crude Oil, LNG, WTI, China, PBOC, Fed, Kashkari, US Dollar, RBNZ - Talking Points Crude prices are under the pump after US Dollar resumed strengthening The Fed reminded markets of their intention and markets appear a touch spooked If China is unable to reignite its economy, where will that leave WTI? Crude oil slid lower again on Wednesday as it continues to retreat from the 10-month high seen last week. A combination of China’s growth woes and a potentially hawkish-for-longer Fed supporting the US Dollar appears to have underpinned the energy commodity for now. This is despite liquified natural gas (LNG) prices catching a bid yesterday on the prospect of industrial action in the gigantic gas fields in the northwest of Australia. Woodside Petroleum (WDS.AU) and Chevron (CVX.US) are in negotiations with unions to avoid disruption to just over 10% of global LNG supply. China’s new home prices were marginally softer in July but there is expanding concern that contagion emanating from property developers missing debt repayments could spread to other sectors. Zhongrong International Trust Co., a major player in China’s trust sector, has missed several obligations to its clients over the past week. The Peoples Bank of China set the Yuan at 7.1986 for the reference rate. A much stronger setting than had been anticipated by the market. It is being reported that State Banks have been directed to buy the Yuan. Australian mining stocks are notably lower on the concerns that their exports could be impacted by a continual sluggish economic performance from their best customer. Sentiment toward risk and growth-orientated assets had been already soured going into today’s APAC session following on from the North American session. Wall Street tumbled over 1% on all the major indices. The negative perspective emanated from strong US retail sales leading to fears of a more hawkish Fed than previously thought. These notions were reinforced by comments from Minneapolis Federal Reserve President Neel Kashkari. He questioned the prospect of whether or not the Fed had done enough to get inflation down to the target of 2%. Treasury yields are slightly lower going into Wednesday’s trade after adding a few basis points across the curve yesterday. Spot gold is treading water above US$ 1,900. The RBNZ left its cash rate on hold today at 5.50%, but the language in the accompanying statement was interpreted as hawkish by the market. The Kiwi rallied in the aftermath. GBP/USD is steady near 1.2700 ahead of inflation data while EUR/USD traders will be eyeing Euro-wide GDP data. The full economic calendar can be viewed here. WTI CRUDE OIL TECHNICAL ANALYSIS SNAPSHOT The WTI futures contract broke below the lower bound of an ascending trend channel yesterday. For more information on breakout trading, click on the banner below. The selloff paused at the 21-day simple moving average (SMA) and it may provide support ahead of the 260-, 200-, 100- and 55-day SMAs at 79.11, 76.68, 75.06 and 74.90 respectively. Support may also lie at the recent lows of 79.90 and 78.69. Further down, support could be at the breakpoint of 77.33 and the prior low at 73.82. On the topside, resistance might be at the breakpoints near 83.40 ahead of the recent peak at 84.89. https://www.dailyfx.com/news/crude-oil-collapses-as-china-woes-the-us-dollar-strength-take-its-toll-20230816.html