2024-06-06 14:30

US Dollar Slips Further, Gold Nudges Higher, Bitcoin Poised for a New ATH US Treasury yields remain in a downtrend and that’s hurting the dollar. Gold continues to recover while Bitcoin eyes a new all-time high. US 2-year yields close in on a two-month low. Gold continues to recoup recent losses. A confirmed break of $72k should see Bitcoin post a new ATH. The yield on the US 2-year government is within a couple of basis points of posting a new two-month low and is dragging the US dollar lower. The recent double-high at 5.05% seems likely to be this cycle’s high, unless the Fed takes an unexpected hawkish turn, and further losses are expected over the next few weeks sheds of the Fed’s first rate cut. Six red candles in a row have pushed two-year yields into oversold territory so a small retrace higher may occur before the sell-off resumes. US 2-Year Yields The dollar index is also looking under pressure and now trades below the 200-day simple moving average, the 38.2% Fibonacci retracement level, and recent trend support. Friday’s US Jobs Report has the ability to send the greenback higher in the short-term, but in the medium-term, the dollar index may drift down to the 50% Fib retracement at 103.44 before testing the early March swing-low at 102.34. The US dollar index is also in oversold territory so a period of consolidation is needed before the next move lower. US Dollar Index Daily Chart Gold is re-testing the $2,360/oz. level and a break above here would see the precious metal above the last simple moving average, adding credence to a further move higher. The recent $2,280/oz. - $2,450/oz. range should hold in the short- to medium-term. Gold Daily Price Chart Bitcoin is closing in on the important $72k level, aided by further heavy spot ETF purchase. In the last two sessions alone, spot ETF providers have bought around $1.37 billion of Bitcoin, dwarfing the 450 Bitcoin now mined daily. A break and open above $72k leaves the $73,778 ATH vulnerable. Bitcoin Daily Price Chart All Charts by TradingView What are your views on the US Dollar, Gold and Bitcoin – 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-slips-further-gold-nudges-higher-bitcoin-poised-for-a-new-ath-20240606.html

2024-06-06 12:50

ECB Follows Through on Plans to Cut Interest Rates by 25 Basis Points The ECB cut all three interest rates by 25 basis points as expected but reiterated it will not follow a predetermined rate path and will remain data dependent in future meetings. The central bank continued to stress that wage growth and services inflation require more attention but achieved the necessary conviction to lower rates given the fact that inflation has fallen 2.5% since September with the outlook improving. Updated staff projections revealed upward revisions to both inflation and growth in 2024 which spurred on the euro in the aftermath of the statement. The all-important medium term measure of inflation (2026) remained unchanged at 1.9% but remains under the 2% marker importantly, which is likely to help anchor inflation expectations. 2024 GDP was revised higher, from 0.6% to 0.9% which will serve as some good news for an economy that has stagnated for the last five quarters. Learn how to prepare for high impact economic data with this easy-to-implement approach: Immediate Market Reaction Markets reduced their rate cut bets after the upward revisions to the inflation and growth forecasts, helping to lift the euro. EUR/USD traded higher, not seeing much additional uplift from the hotter US initial jobs claims. EUR/CAD continued to rise further, on the back of yesterday’s Bank of Canada rate cut. German bund yields firmed slightly but the move remains contained. Multi Asset Reaction (5-minute chart) Source: TradingView, prepared by Richard Snow Recent Lift in EU Data Points to a Staggered but Managed Cutting Cycle The ECB went to great lengths to communicate a preference for Europe’s first rate cut at the June meeting as numerous officials explicitly mentioned that such an outcome would be appropriate. Inflation has, until recently, revealed a steady and consistent decline as restrictive monetary policy has had a desired effect on the level of general prices in the euro zone. However, recent data has propped up, with some corners of the market concerned this may prevent/delay future rate cuts. Both hard and soft data (surveys) point towards an improving economic environment in the euro zone. GDP rose in Q1 after five successive quarters of stagnant and sometimes negative GDP growth. Additionally, services PMI figures push further into expansionary territory while the manufacturing sector lags behind but has also seen an improvement. Economic sentiment indicators have been rising since Q3 last year and consumer sentiment has been on the up in 2024. However, inflation concerns have emerged after EU inflation rose from a steady 2.4% to 2.6% in May (the blue line below). Another risk to the inflation outlook has emerged as negotiated wages (green line) also ticked higher. Officials appeared to brush off the hotter data as the most recent figure was influenced by German wages which are still catching up; and a blog from the ECB mentioned other indicators suggest wages are moderating. Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/ecb-cuts-interest-rates-despite-upward-revisions-to-inflation-growth-forecasts-20240606.html

2024-06-06 07:59

British Pound (GBP) Latest – GBP/USD and EUR/GBP Technical Outlooks Cable set to re-test 1.2818 as the US dollar fades. EUR/GBP is within 25 pips of hitting levels last seen in August 2022. The US dollar, Euro, and the Japanese Yen have all been in the spotlight over the past few weeks while Sterling has been sitting in the background, quietly moving higher. Today’s ECB policy meeting is expected to see the European Central Bank cut rates by 25 basis points, the US dollar remains under pressure as US Treasury yields move lower, while the Japanese Yen is heavily focused on BoJ and MoF rhetoric. The British Pound may soon come under pressure as the July 4th UK General Election comes into focus, but for now Sterling remains in a positive trend. Cable remains in an unbroken uptrend off the April 22nd low print at 1.2300 and is currently testing the 1.2800 level. The daily chart shows the pair comfortably above all three simple moving averages and posting a series of higher highs and higher lows. A break above 1.2818 would leave the March 8th 1.2894 high vulnerable, and that would see cable trading at levels last seen in late July 2023. Tomorrow’s US NFP data may slow any move higher in GBP/USD if the report shows that the US jobs market remains resilient, but the overall positive trend should remain in place. GBP/USD Daily Price Chart IG Retail data shows 34.77% of traders are net-long with the ratio of traders short to long at 1.88 to 1.The number of traders net-long is 10.34% lower than yesterday and 19.83% lower than last week, while the number of traders net-short is 8.63% higher than yesterday and 15.84% higher than last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/USD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBP/USD-bullish contrarian trading bias. EUR/GBP has been testing the 0.8500 area over the last two weeks and is less than 25 pips away from making a new 22-month low. The pair remain below all three moving averages and any move higher will find resistance around 0.8540 and 0.8550 difficult to break. The next move in EUR/GBP will be driven by commentary at today’s post-decision. ECB press conference. EUR/GBP Daily Price Chart What is your view on the British Pound – 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/british-pound-gbp-latest-gbp-usd-and-eur-gbp-technical-outlooks-20240606.html

2024-06-05 17:00

US Dollar Sell-Off Stalls After Strong US ISM Services Report US ISM services data beats market forecasts. US dollar grabs a small bid but remains under pressure ahead of NFPs. The latest ISM services report shows US business activity in robust shape with the headline index beating forecasts and last month’s reading by a margin. According to Anthony Nieves, Chair of the Institute for Supply Management (ISM), “The increase in the composite index in May is a result of notably higher business activity, faster new orders growth, slower supplier deliveries and despite the continued contraction in employment. Survey respondents indicated that overall business is increasing, with growth rates continuing to vary by company and industry. Employment challenges remain, primarily attributed to difficulties in backfilling positions and controlling labor expenses. The majority of respondents indicate that inflation and the current interest rates are an impediment to improving business conditions.” The US dollar picked up a small bid after the ISM data, stemming this week’s losses. The US dollar index has sold off after hitting at two-week high last Thursday, fuelled by slightly better-than-expected US inflation, last Friday’s weak Chicago PMI – 35.4 vs. 41 forecast – and this week’s worse-than-forecast JOLTs and ADP jobs reports. Tuesday June 4th Wednesday June 5th The recent sell-off has pushed the US dollar index below all three simple moving averages and has broken a multi-month series of higher lows. The 200-day sma, the recent uptrend, and the 38.2% Fibonacci retracement are all acting as near-term resistance. Friday’s US Jobs Report (NFP) has now become the main release of note, and any further signs of weakness in the US jobs market could cause the dollar to fall further. US dollar traders should also follow tomorrow’s ECB policy decision, where President Lagarde is expected to announce a 25 basis point interest rate cut. If Ms. Lagarde hints at a second cut at the July meeting, the Euro will weaken, giving the US dollar index a boost. The Euro makes up around 58% of the dollar index. US Dollar Index Daily Chart Chart by TradingView What are your views on the US Dollar – 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-sell-off-stalls-after-strong-us-ism-services-report-nfps-released-on-friday-20240605.html

2024-06-05 14:35

The Bank of Canada (BoC) voted to cut interest rates at its June meeting from 5% to 4.75%, relying on its improved confidence that inflation is heading lower. The BoC highlighted the declining three-month measure of core inflation as one of the indications that CPI is heading lower but Governor Tiff Macklem also issued caution that the further progress is likely to be uneven and risks remain. The main risks to the inflation outlook include rising wage growth, the potential for escalating global tensions and the threat of house prices rising faster than anticipated. Learn how to prepare for major news events and consider this easy-to-implement approach to tope tier economic data: 15 minutes after the rate adjustment, US ISM services PMI data came in stronger than anticipated – a bit of a shock to the system given the streak of softer US data of late. This helped prop up the dollar and shows up more notably in the USD/CAD pair. Markets increased the likelihood of a surprise rate hike this week so while the outcome came somewhat as a surprise, outcome had gained traction in recent days. Last week Wednesday markets priced in 16 basis points (bps), but ahead of the announcement it had risen to 20 bps. Unemployment has picked up; and while GDP growth improved in Q1 compared to Q4, it still disappointed when viewed alongside estimates. Low growth and inflation combined with rising unemployment provides a mix that the committee believed justified a rate cut today. Source: Refinitiv, prepared by Richard Snow Canadian Dollar (CAD) Price Reaction Following the interest rate cut from the Bank of Canada, the Canadian dollar understandably dropped across most G7 currencies, most notably witnessed in the USD/CAD pair which rose after the data. Further gains trickled in after US services PMI defied forecasts and the recent spate of weaker-than-expected data by surprising to the upside – lifting the greenback. AUD/CAD (downside) offered up an interesting prospect in the event the meeting produced a hawkish outcome as this week has seen a tentative approach to risk assets. Looking at the dovish outcome, NZD/CAD comes into focus as the Reserve Bank of New Zealand recently stressed that they are not in a position to cut rates any time soon. Multi-Pair Reaction (FX) Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/boc-cuts-rates-as-inflation-settles-into-target-range-cad-weakens-20240605.html

2024-06-05 10:06

Gold (XAU/USD) Analysis and Chart CCI indicator is at its lowest level since early May. Weaker US Treasury yields should underpin the precious metal. US ISM and the latest US Jobs Report will drive the next move. Gold is slightly better bid in mid-morning trade, aiming to establish a near-term base just below the $2,320 per ounce level. This resilience is partially attributed to the recent decline in US Treasury yields. After peaking at 5% by the end of May, the yield on the rate-sensitive 2-year Treasury note has retreated to 4.80%. A break below the supportive 200-day simple moving average at 4.75% could leave the multi-week low of 4.70%, made on May 16, vulnerable. The recent series of higher highs in Treasury yields have been disrupted, signaling a potential end to this year's yield rally. The Commodity Channel Index (CCI) indicator suggests that the market is currently oversold, indicating a likely short-term period of consolidation before the highly anticipated US Jobs Report (Non-Farm Payrolls) scheduled for this Friday (13:30 UK). UST 2-Year Yield Chart Surprisingly, gold has exhibited resilience in recent days, failing to benefit from the weak US economic data and growing expectations of Federal Reserve rate cuts. In this context, market participants eagerly await the release of the latest ISM services data later today, which will be closely scrutinized. Forecasts suggest the May services figure will come in at 50.5, compared to 49.4 in April. Any downside miss in this crucial economic indicator could provide the catalyst for gold to push higher. However, the highly anticipated Non-Farm Payrolls (NFP) report, scheduled for Friday, will ultimately decide the precious metal's short-term trajectory heading into the weekend. The daily chart reveals gold consolidating within the $2,320 to $2,330 per ounce range ahead of the ISM data release. Significantly, the Commodity Channel Index (CCI) indicator shows gold at a multi-week oversold level, while the precious metal is currently trading below both the 20- and 50-day simple moving averages. Should a further move lower materialize, support is expected to be found at the $2,280 per ounce level. In the short term, gold's performance remains heavily data-dependent, with market participants closely monitoring economic releases and their potential impact on the Federal Reserve's monetary policy stance. Gold Daily Price Chart Chart via TradingView Retail trader data shows 61.47% of traders are net-long with the ratio of traders long to short at 1.60 to 1.The number of traders net-long is 6.53% higher than yesterday and 5.93% lower than last week, while the number of traders net-short is 12.80% lower than yesterday and 4.17% lower 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. What is your view on Gold – 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/gold-xau-usd-looking-technically-oversold-us-data-nfps-key-for-next-move-20240605.html