2024-06-10 10:21

Pound Sterling (GBP/USD, GBP/AUD) Analysis UK jobs and growth data to take a back seat as US CPI, FOMC steal the spotlight GBP/USD shows signs of stress but will ultimately be decided upon top tier US data GBP/AUD eases at the start of the week but the recent bullish move remains constructive for now The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library UK Jobs and Growth Data to Take a Back Seat as US CPI, FOMC Steal the Spotlight This week is shaping up to be another busy one as UK jobs and growth data is due but so is US inflation and the FOMC meeting. The UK labour market has shown clear signs of easing with the unemployment rate rising steadily to 4.3% where it is expected to remain for the month of April. The shock rise in US NFP on Friday proved that the Fed does not have the luxury of deciding when to cut rates as a resilient labour market threatens to reignite inflation concerns – providing a bullish lift for the greenback which sent GBP/USD sharply lower. On Wednesday, US inflation data and the FOMC statement are due. The Fed will update its economic projections with plenty of eyes on the dot plot. Back in March the Fed signaled it would likely cut rates three times this year but stickier monthly inflation data coupled with the recent NFP print may force the Fed to trim its rate outlook by one 25 basis point cut. UK price increases dropped in April but by less than anticipated, keeping sterling buoyed but growth is the one metric where the UK is really struggling. The three-month GDP average started rising off the 0 mark in February but has remained aneamic on the whole. The year-on-year comparisons stagnated from December to February, lifting by 0.7% in March. However, cable (GBP/USD) has managed to make inroads against the US dollar during this time, mainly due to softer US data that emerged and GDP continued to moderate. Learn how to prepare for high impact economic data or events with this easy to implement approach: Sterling has performed well in 2024, almost unchanged since the start of the year. It remains the top performing of the G7 currencies against the dollar. Global Currencies vs the Dollar (2024 Performance) Source: Reuters, prepared by Richard Snow Cable trades lower at the start of the week, continuing the momentum from last week’s shock NFP data. The pair trades below the 1.2736 swing high and approaches channel support. This week’s UK data could see a continuation of the sell-off if the labour market eases further or growth remains subdued. The Bank of England is expected to pave the way for a likely cut in August at next week’s meeting but until then markets will be sensitive to incoming data; particularly that in the US GBP/USD Daily Chart Source: TradingView, prepared by Richard Snow Sterling longs have also been rising sharply in the last few weeks with shorts dropping off. GBP Commitment of Traders Report Source: TradingView, prepared by Richard Snow GBP/AUD appears to have pulled back ahead of the descending trendline resistance but the shorter-term bullish move remains in place. The broader triangle pattern provides an well-defined level of support around the 200-day simple moving average (SMA) which coincides with trendline support around 1.9185. GBP/AUD Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/sterling-outlook-uk-jobs-growth-data-considered-in-a-busy-us-focused-week-20240610.html

2024-06-10 07:52

Euro, CAC 40 Sink on French Snap Election Call; EUR/USD and EUR/GBP Latest The Euro is under pressure after a surprise French election call. CAC 40 drops sharply on renewed political uncertainty. EUR/GBP hits a near two-year low. The Euro is weakening across a range of EUR-pairs in early trade after this weekend’s European elections saw a marked shift to the right. After being heavily defeated by Marine Le Pen’s National Party, French President Emmanuel Macron called a snap election, while in Germany Chancellor Olaf Scholz saw his Social Democrat Party beaten by the far-right Alternative for Germany (AFG) party. France will go to the polls on June 30th, while Chancellor Scholz is now under pressure also to call an election. The renewed political uncertainty can be seen across a range of assets Monday, with the French CAC 40 currently trading over 1.7% lower, while the Euro is weak against a range of currencies. The CAC 40 is trading at a fresh multi-month low after breaking support around the 7,900 level. The next zone of support is seen between 7,703 and 7,658. CAC 40 Daily Chart Recent changes in sentiment warn that the current France 40 price trend may soon reverse lower despite the fact traders remain net short. EUR/USD fell through all three simple moving averages and prior horizontal support in early trade before finding stability around 1.0750. The next level of support is seen just below 1.0700. EUR/USD Daily Price Chart EUR/GBP is now back at lows seen 22 months ago after support around the 0.8500 area fell with ease earlier today. This area now turns into short-term resistance. The next level of support is seen at around 0.8340, the early August 2022 swing-low. EUR/GBP Daily Chart All charts using TradingView Retail Trader Sentiment Analysis: EUR/GBP Bias Remains Mixed According to the latest IG retail trader data, 79.17% of traders are net-long with the ratio of traders long to short at 3.80 to 1.The number of traders net-long is 0.41% higher than yesterday and 3.78% higher than last week, while the number of traders net-short is 4.84% higher than yesterday and 7.80% lower than last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/GBPprices may continue to fall. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed EUR/GBP trading bias. What is your view on the EURO – 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/euro-cac-40-sink-on-french-snap-election-call-eur-usd-and-eur-gbp-latest-20240610.html

2024-06-08 08:00

Markets Week Ahead: Fed, BoJ Rate Decisions, Nasdaq, Gold, Bitcoin Fed and BoJ will keep rates unchanged; commentary is key Nasdaq remains in record high territory despite fading rate expectations. Gold sinking into support, Bitcoin pressing against resistance. A week full of high-impact economic data and events including UK employment data, US inflation, Australian employment, US PPI, along with the latest monetary policy decisions from the Federal and the Bank of Japan. The Fed will leave all policy levers untouched but the accompanying release of the latest summary of economic projections will likely give the market something to work with. The BoJ will also leave rates unchanged but may signal that they will let bond yields drift higher, the first step towards tightening monetary policy. USD/JPY will be an active pair in the second half of next week. The US dollar pulled back all of this week’s losses on Friday after the release of the latest US Jobs Report (NFPs). This stronger-than-forecast release sent the US dollar back towards 105.00, wiping out all of this week’s losses, and next week’s FOMC meeting will drive action over the next few weeks. The US dollar index remains in a downtrend but a move above 105.21 would break a recent series of higher lows and take the index back above the last of the three simple moving averages. US Dollar Jumps After NFPs Thump Expectations, Gold Hits a One-Month Low US Dollar Index Daily Chart Early Friday gold dropped $20/oz. in a few minutes after a Bloomberg report said that China had stopped buying the precious metal. China has been a big buyer of gold over the last few months and the report caused a buyer’s strike. The precious metal fell further after the release of the US Jobs Report as US Treasury yields spiked higher. Gold currently trades around $2,310/oz. and is closing in on an important level of support at $2,280/oz. This level needs to be held to bring buyers back to market. Gold Daily Price Chart The Nasdaq 100 is currently posting a fresh record high, driven higher by the world’s second-largest company, Nvidia. The AI chip giant overtook Apple this week, in terms of market cap, and is nipping at the heels of Microsoft. The Nasdaq remains in a long-term uptrend and short-term sell-offs may offer new opportunities. The concentration risk however remains high with the ‘Magnificent Seven’ dominating the move higher. Nasdaq 100 Daily Chart Bitcoin is finding it tough to break above the important $72k level but remains in a positive trend. If the May 21 high is broken and opened above, a new all-time high is likely to be made. Bitcoin Daily Price Chart All Charts using TradingView https://www.dailyfx.com/news/markets-week-ahead-fed-boj-rate-decisions-nasdaq-gold-bitcoin-20240608.html

2024-06-07 13:04

US Dollar Jumps After NFPs Thump Expectations, Gold Hits a One-Month Low NFPs beat by a wide margin. US dollar index jumps by over half-a-point Gold testing a fresh one-month low. The latest US Jobs Report showed 272k new roles created in May, dwarfing expectations of 185K and April’s 165k (revised lower from 175k). The unemployment rate rose to 4.0%, from 3.9%, while monthly average earnings rose to 0.4% from 0.2% last month. Today’s release contrasts weak ADP and JOLTs jobs data released this week, which has boosted the dollar as US rate cut expectations fade further. The market is implying that the first cut may happen in November although this isn’t fully priced. The dollar index has been under pressure this week from the weak ADP and JOLTs data but regained all of this week’s losses after the NFP numbers hit the screens. The dollar index has broken back above the 200-dsma and the 38.2% Fib retracement and is currently testing the multi-month trend support. US Dollar Index Daily Chart Gold is now posting a fresh one-month low and gold bulls have endured a difficult day. Earlier today a Bloomberg report noted that China had stopped buying gold, sending the precious metal down $20/oz. in quick order. A confirmed break and open below the $2,315/oz. would bring $2,280/oz. back into play. Gold Daily Price Chart All Charts by TradingView Retail trader data shows 58.32% of gold traders are net-long with the ratio of traders long to short at 1.40 to 1.The number of traders net-long is 1.24% higher than yesterday and 10.13% lower from last week, while the number of traders net-short is 1.85% lower than yesterday and 0.09% higher from 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. What are your views on the US Dollar and Gold – 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/us-dollar-jumps-after-nfps-thump-expectations-gold-hits-a-one-month-low-20240607.html

2024-06-07 08:39

NFP Preview and US Dollar Analysis Non-farm payroll data expected to drop in May This week’s jobs data leans towards a softer print US dollar snapshot ahead of NFP: weekly low comes into sharp focus The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Non-Farm Payroll Data Expected to Drop in May The main event for the week is upon us as non-farm payroll is expected to bounce back slightly from last month’s disappointing print. In April, US jobs came in way below what was expected – providing the first real sign of weakness in the labour market despite months of restrictive monetary policy filtering through the economy. The April data was the first real shock to the labour market as all prior data beat market estimates this year. As always, keep an eye on any revisions to last months print when May’s NFP figures are released this afternoon. US NFP Actual (yellow) vs Estimate (blue) Source: Refinitiv, prepared by Richard Snow The expectation is for 185 thousand jobs to have been added in May, which is some way off the 315k jobs added in the month of March but represents a marginal recovery from April. The unemployment rate is expected to remain steady at 3.9%. Learn how to prepare for high impact economic data or events with this easy to implement approach: This Week’s Jobs Data Leans Towards a Softer Print If this week’s labour data is anything to go by, NFP could lean slightly towards the lower side of the 185k estimate with the range of potential outcomes rather wide, between 120k and 258k. Naturally, markets will be on the lookout for a any sizeable deviation from the forecast as this tends to spur speculative activity on the back of the implications the data may have for interest rates or the wider economy. Private payroll data disappointed Job openings were trimmed back, nearer to the 8 million mark – suggesting businesses have tapered their demand for labour – while job quits rose slightly. Job quits usually provide a gauge of nervousness within the labour market as workers tend to quit when they feel their prospects of finding suitable employment elsewhere are manageable and tend to stay in their current position when companies institute hiring freezes. In addition, the National Federation of Independent Business (NFIB) survey continues to show a declining willingness of firms to hire additional workers: NFIB Percentage of Firms Planning to Increase Employment Source: Refinitiv, prepared by Richard Snow On a broader macro level, US data appears to have turned the corner with ‘US exceptionalism’ well and truly a narrative of the past. US GDP growth for Q1 was revised lower after already massively missing the mark. Q1 GDP stands at a meagre 1.3% after initial estimates of 2.6% and the Atlanta Fed recently tracked Q2 growth at 1.8% (annualized). Other data points like manufacturing PMI and inflation have all turned lower. One standout continues to be the services sector as those PMI figures suggest a continued expansion in the most important sector in the US. US Dollar Snapshot Ahead of NFP: Weekly Low Comes into Sharp Focus The US dollar got off to a bad start at the beginning of this week and yesterday’s hawkish ECB rate cut lifted the euro – placing the dollar index on the back foot once again. Disappointing US data continues to weigh on upside potential but markets still don’t fully price in two rate cuts this year but should the data worsen, that is still very much a possibility. Ahead of NFP, this week’s low comes into focus at 104 flat. The US dollar index carries a high weighting in EUR/USD meaning the hawkish cut yesterday has weighed on the greenback with the move maintaining the potential of an extended move lower is the NFP figure misses the mark or the unemployment rate rises to 4% or above. 103 naturally becomes the next level of support but the decline may not be a fast one since inflationary pressures have dented the Fed’s confidence that we are on the path to 2%. A beat in the NFP number would need to be sizeable to propel the dollar higher, given recent disappointing data but the 200 SMA at 104.43 remains as resistance followed by 104.70. US Dollar Basket (DXY) Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/nfp-preview-is-the-us-job-market-finally-weakening-20240607.html

2024-06-06 17:00

South African Rand (USD/ZAR, GBP/ZAR) Analysis The ruling ANC relies on other parties for parliamentary majority USD/ZAR surges towards the 2020 high despite a generally weaker dollar GBP/ZAR experiences sharp rise but momentum indicator nears oversold levels The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Liberation Government (ANC) Relies on Others for Parliamentary Majority The African National Congress (ANC) saw its share of the national vote drop to 40.18% according to the Independent Electoral Commission (IEC), marking its worst showing at the polls since rising to power in 1994. Typically, the ANC has achieved the large share of the national vote anywhere around the 60% mark. The large drop-off is mainly attributed to ousted ANC stalwart and former President Jacob Zuma and his new ‘MK’ party which took a large portion of ANC voters. For the first time since Nelson Mandela led the organization, the party will have to enlist the help of other parties to govern. The problem is there is no clear candidate for the ANC. The white-led, business friendly Democratic Alliance (DA) received 21.81% of the vote but it is clear that there are dissenting voices within the ANC as anti-DA protests got underway outside the venue where the ANC’s National Executive Committee (NEC) was meeting to discuss possible options. Other options include the populist uMkhonto we Sizwe (MK) led by Zuma (14.58% of the vote) or the hard-left Economic Freedom Fighters (EFF) with 9.52% of the vote. MK refuses to join forces with the ANC as long as the current President Cyril Ramaphosa remains in office. Just to make things more complicated, the DA will not work with the ANC if it brings MK and the EFF into its coalition government. According to the constitution, a new parliament has to convene within two weeks of the declared results, which highlights the 16th of June. Markets therefore, may have to endure an extended period of uncertainty. Are you new to FX trading? The team at DailyFX has curated a collection of guides to help you understand the key fundamentals of the FX market to accelerate your learning The rand has depreciated against the US dollar this year by around 3.4% and has experienced a sharper decline in the runup to the election and in the days that followed. Selected Currencies and Their Performance Against the US Dollar in 2024 Source: Reuters, prepared by Richard Snow USD/ZAR Surges Towards the 2020 High Despite a Generally Weaker Dollar The rand has lost a lot of ground to the dollar since the swing low at 18.044. USD/ZAR has since headed higher, rising above both the 50 and 200-day simple moving averages where the pair remains currently. The effect may have been worse had the US not been on the receiving end of weaker data that has trickled in over recent weeks as inflation appears to be heading lower again and economic growth is looking vulnerable. US real GDP growth for the first quarter (annualized) was revised lower, to 1.5% in the second estimate of the data. Estimates from the initial (advance) figure were originally as high as 2.5%. South African GDP also missed estimates on Monday, aiding the decline. The 19.35 marker represents the nearest level of resistance in the event the rand continues to depreciate, while the 200 SMA and the swing low of 18.044 present the relevant levels of support should markets regain confidence in the political stability of the Southern African nation. USD/ZAR Daily Chart Source: TradingView, prepared by Richard Snow GBP/ZAR Experiences Sharp Rise but Momentum Indicator Nears Oversold Levels The British Pound advances against the rand and trades above the familiar 24.00 mark once more. Much like USD/ZAR, the pair trades above the 200 SMA and approaches the swing high of 24.59 back in Feb. However, when looking at the RSI indicator, the recent move higher could come under pressure as the pair pulled back at the prior two instances the indicator neared oversold territory. It may be prudent to weigh up the technical signals with the unfolding coalition talks as a ‘bad’ outcome could see the rand depreciate further from here. Resistance appears at the swing high of 24.59 with support at the 200 SMA around 23.54. GBP/ZAR Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/zar-update-anc-seeks-broad-unity-government-as-coalition-talks-continue-20240606.html