2024-06-05 08:09

Aussie GDP, AUD Analysis Aussie growth stalls in Q1, growing just 0.1% during the quarter Household spending dominated by essentials as discretionary purchases flatline AUD/USD appears unperturbed but the currency has sold-off notably in recent times The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Aussie Growth Stalls in Q1, Growing Just 0.1% over the Quarter Aussie growth has been under pressure, with annualized real GDP declining, or remaining flat, every quarter since the start of 2023. The annualized figure missed estimates of 1.2% to come in at 1.1%, while the quarter on quarter figure rose a meagre 0.1%. Household spending, which accounts for roughly 50% of Australian GDP was fractionally stronger at 1.3% but the majority of spending was channeled to essentials like electricity and healthcare as discretionary spending flattened out. The economy is taking strain with interest rates at 4.35% but Michele Bullock expressed that policy needs to remain restrictive to bring demand and supply into greater balance. Markets do not anticipate another rate hike but equally, they do not anticipate a rate cut any time soon either. There is a little under 50% chance of a 25 basis point (bps) cut in December but a full cut is only priced in for July next year – suggesting in the absence of a drastic drop in inflation or seriously adverse economic conditions, rates will remain where the are for an extended period. Market-Implied Basis Point Adjustments Going Forward Source: TradingView, prepared by Richard Snow AUD/USD Finds Resistance but a Softer USD May Underpin Price Action AUD/USD appears unperturbed by the lackluster growth but the currency registered a minor decline against the Kiwi dollar (at the time of writing). AUD/USD now tests the 0.6644 level which capped prices between March and May and offers support for the pair. The market serves as a potential tripwire for a bearish continuation but conviction in recent moves lacks conviction. With both central banks looking to eventually cut interest rates, the timing of such a decision remains elusive. Although, weakening US data places the Fed in pole position when it comes to the two nations. US services PMI data today could see further weakness for the greenback following from the manufacturing sector extending the contraction further. US NFP data will be the next major piece of relevant data but ADP private payroll data always carries the potential to provide intra-day volatility but tends not to see massive moves ahead of the more closely watched US jobs data on Friday. Resistance remains at the swing high of 0.6714 with 0.6730 not far away. AUD/USD Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/aud-usd-outlook-aussie-growth-stagnates-currency-resilient-amid-weaker-us-data-20240605.html

2024-06-04 17:20

US Dollar Setups: (EUR/USD, AUD/USD, USD/CHF) A path for a lower dollar comes into view as data deteriorates EUR/USD in focus ahead of ECB cut Dollar bulls look for a lower AUD/USD as risk appetite wanes, iron ore prices ease Swiss franc advances at pace but overheating warnings flash red A Path for a Lower USD Comes into View as Data Deteriorates There’s been a notable decline in fortunes for the US as far as economic data is concerned. Economic growth has moderated and now looks unlikely to make a comeback after the Atlanta Fed’s GDPNow forecast revealed a massive turnaround in second quarter growth, from a prior 4+ percent to a measly 1.8%. The 1.8% projection is not much of an improvement from the Q1 print of 1.6% - which was a shocking print given the estimate anticipated 2.5% growth for the same period. Source: Atlanta Federal Reserve Bank Additionally, after analysing April’s CPI and PCE inflation data it would appear that the disinflation narrative is back on track, allowing the Fed to breathe a slight sigh of relief as it looks to pinpoint the most appropriate time to lower the interest rate. In fact, as data trickles in we’re seeing an accumulation of weaker-than-expected hard data as well as ‘soft data’ like opinion surveys. The most recent being yesterday’s ISM manufacturing PMI survey which placed the sector further into contraction as the ‘new orders’ and ‘prices paid’ sub-indexes disappointed. The accumulation of softer data can be observed via the US economic surprise index which has continued the longer-term trend after dipping lower this week. US Economic Surprise Index Source: Refinitiv, prepared by Richard Snow Markets still anticipate at least one rate cut this year with the possibility of a second. The difficulty lies in the timing of the meetings as the November tends not to attract any movement from the Fed in an elections year as a showing of its independence from the political arena. This leaves September and December as more likely dates for interest rate adjustments. Market-Implied Basis Point Cuts into Year End Source: Refinitiv, prepared by Richard Snow 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 EUR/USD in Focus Ahead of the Highly Anticipated Rate Cut The ECB is gearing up to deliver its first rate cut after hiking borrowing rates at record pace to calm inflation. However, the market reaction after the event could be rather muted given numerous officials have targeted June as a preferable date to start lowering rates. Therefore, more attention is likely to be placed on the path of rate cuts to come but again, ECB officials have cautioned against a view that there will be rate cuts at successive meetings. Instead, a more measured approach has been communicated meaning there may not be a whole lot of new information this Thursday. EUR/USD has risen off the back of softer US data, attempting a bullish breakout. This far conviction has been lacking. A test of channel resistance (now immediate support) could provide an indication if the move has the desired momentum to follow through. For a sustained move higher, US data needs to soften further, something that could be aided by a hawkish cut from the ECB - which is very tricky to pull off – but the committee will in all likelihood look to deliver a balanced and cautious message regarding further cuts. EUR/USD downside has a number of challenges. First, the dollar shows little bullish impetus and secondly, markets have already priced in a 25 basis point cut in Europe and still the pair heads higher. Nevertheless, a return to 1.0800 and channel support remains a key area for bears. EUR/USD Daily Chart Source: TradingView, prepared by Richard Snow Swiss Franc Advances at Pace but Overheating Signals Flash Red Continuing with bearish USD setups, USD/CHF provides another example for bears. USD/CHF has plummeted over the last three days, with today looking likely to extend the run. The 200-day simple moving average (SMA) presents an immediate threat to the recent momentum along with the RSI which has entered oversold territory. With this pair moving a long way within a short amount of time, it may be prudent to wait for better entries – something that the 200 SMA may provide if respected. The Swiss franc has gathered strength after comments from the Swiss National Bank Chairman Thomas Jordan after he identified a weaker franc as a risk to the inflation outlook. The SNB were first to act out of the major developed central banks, cutting the interest rate in March already which left the currency to depreciate against G7 currencies. USD/CHF Daily Chart Source: TradingView, prepared by Richard Snow Dollar Bulls Eye Lower AUD/USD as Risk Appetite Wanes, Iron ore Prices Ease In the event of a stronger USD, AUD/USD may provide a pair worth analysing. The Aussie dollar may soon run out of steam as risk appetite appears lackluster at the start of the week. The ‘high-beta’ currency preceded a lower start to the day for the S&P 500 – which it tends to be positively correlated to over time. This may be due to markets adopting a wait and see approach ahead of NFP data on Friday. Metals have also struggled to find bullish momentum as gold, silver, copper and iron ore have all traded lower over the last couple of weeks. Iron ore is Australia’s main export which is typically destined for China. Worryingly, the economic powerhouse has revealed a lower appetite for the commodity as it seeks to recover from its own economic troubles. AUD/USD failed to retest the recent swing high of 0.6714 and subsequently eased lower. The next test of downside potential rests at 0.6644 which previously capped the pair on numerous occasions. Thereafter, 0.6580 comes into view. AUD/USD Daily Chart Source: TradingView, prepared by Richard Snow Major Risk Events Ahead US services PMI will provide crucial insight into the sector contributing the most to US GDP. On Thursday we will hear from the ECB and most likely see the first rate cut. Friday is the main event however, with US NFP and average hourly earnings. https://www.dailyfx.com/news/us-dollar-price-action-setups-eur-usd-aud-usd-usd-chf-levels-to-watch-20240604.html

2024-06-04 14:24

Bitcoin (BTC), Ethereum (ETH) - Prices, Charts, and Analysis: BTC/USD - A break above short-term resistance may lead to a longer-term move higher. Ethereum – The technical setup is looking increasingly positive. Bitcoin has been treading water for the last three weeks with little to suggest either a move higher or lower. The daily BTC/USD chart looks positive with all three simple moving averages in a bullish set-up and supporting a move higher, with a short-term series of higher lows and higher highs since the start of May adding to positive momentum. A break and open above $70k should quickly see $72k tested, leaving the ATH at $73,778 vulnerable. With demand from a range of global spot Bitcoin ETFs outpacing post-halving new Bitcoin supply, the medium-to-longer outlook for Bitcoin looks constructive. Bitcoin Halving – What Does It Mean? Bitcoin Daily Price Chart Recent SEC approval for a range of spot Ethereum ETFs has seen the second-largest cryptocurrency by market cap perform strongly since late May. The near 20% bullish candle on May 20th, and the subsequent period of consolidation, is setting up a rough bullish flag pennant, again pointing to higher prices. The March 12th high at $4,095 should be tested when the May 27th high at $3,974 is broken, leaving the November 2021 ATH at $4,860 the longer-term target. Pennant Patterns: Trading Bearish and Bullish Pennants Ethereum Daily Price Chart All charts via TradingView What is your view on Bitcoin and Ethereum – 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/bitcoin-btc-ethereum-eth-technical-outlooks-20240604.html

2024-06-04 10:13

Commodity Analysis: Gold Silver and Oil Commodities start the week on the backfoot with US jobs in focus Gold consolidates within narrow range, silver continues its decline Oil market takes a hit after OPEC+ plans to steadily reintroduce supply Discover the nuances behind trading gold and oil, two complex markets which remain sensitive to macro and geopolitical events Commodities Start the Week on the Backfoot with US Jobs in Focus Markets appear to have leaned towards a more cautious stance at the start of the week, with equities trading lower, bonds rising (yields falling) and the dollar struggling to show any signs of bullish potential. Therefore, appetite for precious metals has waned despite a softer dollar and gold buyers appear to be sat on the sidelines awaiting crucial jobs data this week. Today, JOLTs data will get things underway as markets eagerly await further insight on the US labour market. Job openings, hires and the quitting rate will inform speculative bets on the dollar, inflation and by extension gold. The quitting rate has links to inflation; if fewer people are quitting each month, this implies that workers are less optimistic in finding another suitable position and decide to stay in their current job. The result is there if less turnover in the job market which workers used to their advantage after the pandemic to secure higher salaries. In short, fewer quits means less inflationary pressure from salaries/wages which could see the dollar consolidate or even ease further. However, the main event of the week remains NFP on Friday which is likely to have the greatest market impact. Gold Consolidates within its Narrow Range Gold prices have come off the most recent spike high after revealing negative divergence in May. More recently, gold has been stuck in a narrow range formed by the $2,320 support and $2,360 resistance which is the 1.618 extension of the major 2020 – 2022 decline. The 50 day simple moving average has appeared to provide dynamic support and will also need to watched for a close beneath it if a bearish breakout is brewing. $2,277 is the next level of support with $2,431 the next upside level of resistance. Gold (XAU/USD) Daily Chart Source: TradingView, prepared by Richard Snow Silver Drops Lower after Solid Rejection at Spike High Silver has dropped more significantly over the past few trading sessions, ever since failing to retest the May spike high. Prices have been coming off overbought territory and exhibiting a pullback which may turn into a retracement but $29.80 is holding strong for now. Further weakness from here opens up the 50 SMA and prior swing low at $26.00. Upside levels of interest include 32.00 and the spike high at $32.50. Silver (XAG/USD) Daily Chart Source: TradingView, prepared by Richard Snow Oil Market Takes a Hit after OPEC+ Plans to Steadily Reintroduce Supplies Oil began to selloff yesterday afternoon as markets came to grips with the reality that OPEC+ intends to slowly unwind supply restrictions. Despite OPEC+ announcing that the majority of supply cuts will remain in force until the end of 2025, markets decided to concentrate on the fact that a smaller portion of voluntary cuts would slowly be unwound from October this year. OPEC+ plan to reintroduce oil back into the market at a modest pace but the quotas for such are yet to be decided as this is likely to be the topic of much debate. The news helped extend the bearish move which ensued after a rejection around the 200 SMA at $85 a barrel. Prices have dipped slightly below the 50% retracement of the 2020 – 2022 major advance with little in the way of an extended move towards the swing low of $72.33 and $71.50 – an influential level of support that held between March and July last year. The commodity has entered oversold territory however, meaning a partial pullback may soon emerge. Much later tonight (21:30) US API crude oil stock changes will be released for the week ending 31 May. Brent Crude Oil Daily Chart Source: TradingView, prepared by Richard Snow Are you new to commodities trading? The team at DailyFX has produced a comprehensive guide to help you understand the key fundamentals of the oil market and accelerate your learning: https://www.dailyfx.com/news/commodity-update-gold-silver-and-oil-decline-despite-a-softer-us-data-20240604.html

2024-06-04 07:55

Japanese Yen Prices, Charts, and Analysis US ISM PMI highlights weak manufacturing activity Japan spent over $62 billion propping up the Japanese Yen. The latest Institute for Supply Management (ISM) data released yesterday reveals that manufacturing activity in the United States continues to contract for the second consecutive month and the 18th in the last 19 months. The May reading of 48.7 missed the previous month's print of 49.2 and the market forecast of 49.6, indicating a further slowdown in the manufacturing sector. This contraction in manufacturing activity has contributed to a decline in US Treasury yields, as expectations for a rate cut by the Federal Reserve in November have solidified. The market is now fully pricing in a 25 basis point rate reduction at the upcoming Federal Open Market Committee (FOMC) meeting, reflecting concerns over the weakening economic conditions. The US dollar experienced a broad-based decline against major currencies yesterday and remains subdued in early European trade today. In a separate development, the Japanese Finance Ministry has disclosed that a record Yen 9.8 trillion (USD 62.2 billion) was spent between April 26 and May 29 to prop up the Japanese Yen in the foreign exchange market. This unprecedented intervention came after the USD/JPY exchange rate touched a high of 160.21 at the end of April, prompting the Bank of Japan to intervene and sending the pair back down to 151.92 on May 3rd. However, the recent climb in USD/JPY to near 158.00 underscores the challenges Japanese authorities face in defending the Yen's value. The USD/JPY pair is now trading below 156.00 after yesterday's weaker US data release, and further downside may be in store. This week, market participants eagerly await the release of the monthly US Jobs Report on Friday, which could prove to be a significant market mover. A weaker-than-expected jobs market would reinforce the narrative of a slowing US economy and provide the Federal Reserve with additional flexibility to loosen monetary policy. If the jobs data disappoints, technical support levels for the USD/JPY pair around 151.92 could come into play, as a softer employment situation may increase the likelihood of a rate cut by the Fed. USD/JPY Daily Price Chart Retail trader data show 30.08% of traders are net-long with the ratio of traders short to long at 2.32 to 1.The number of traders net-long is 38.88% higher than yesterday and 11.38% higher from last week, while the number of traders net-short is 6.92% lower than yesterday and 7.71% lower from 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-below-156-00-on-us-dollar-weakness-us-jobs-data-remains-key-20240604.html

2024-06-03 16:30

Euro (EUR/USD, EUR/CHF) News and Analysis Euro positioning, cooler US inflation and rate expectations in focus EUR/USD benefits from weaker dollar - further upside in view if US data disappoints SNB Chairman Jordan’s inflation comments prop up the Swiss franc The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Euro Positioning, Cooler US Inflation and Rate Expectations in Focus At this point, anything other than a 25 bps cut from the ECB will be a massive surprise as multiple committee members have expressed their preference for such a move. The European economy has been in need of a boost for since Q4 2022 when growth began to stagnate. Multiple quarters of zero or near-zero GDP growth and encouraging progress on inflation have allowed the ECB room to consider dropping interest rates for the first time since 2019. Euro zone inflation hit a bit of a snag in April, coming in hotter than expected but the beat is unlikely to threaten the recent progress in getting prices back to 2%. Market expectations reveal a 96.7% chance of a 25 basis point cut later this week when the governing council is scheduled to determine interest rates but the key piece of information will be whether the ECB provides any clues on future rate cuts and timings. Prior comments from ECB officials suggest that the cutting process is likely to be conducted in a gradual manner, with early indications pointing towards a hold in July to assess the impact of the first cut and analyse incoming data. Markets will be eagerly following the press conference Market Implied Interest Rate Cuts Source: Refinitiv, prepared by Richard Snow Recent euro positioning has improved, with speculative money managers reporting a sharp drop in euro shorts, while longs have appear to be ticking higher again. Such a turnaround in positions may suggest that the euro is due for further upside as the net positioning swings positive once more. Commitment of Traders Report (CoT) for Euro Positioning with EUR/USD Price Action Source: CBOE, Refinitiv, prepared by Richard Snow EUR/USD Benefits from Weaker Dollar – Further Upside in View if US Data Disappoints The economic surprise index for the US suggests that incoming data is likely to remain on the softer side as restrictive monetary conditions continue and the disinflation process appears to be back on track. Softer US data has helped EUR/USD head higher, despite the massively anticipated rate cut from the ECB later this week. The medium-term outlook has seen the pair strengthen 2.8% since marking the low in April. However, since the middle of May, the pair has meandered within a gentle, downward sloping channel. Support emerges at channel support and the 200 SMA around 1.0800. Levels to the upside remain at channel resistance, followed by 1.0942/1.0950. EUR/USD Daily Chart Source: TradingView, prepared by Richard Snow SNB Chairman Jordan’s Inflation Comments Prop up the Swiss Franc The departing Chairman of the Swiss National Bank (SNB), Thomas Jordan, communicated his thoughts on upside risks to the inflation outlook, which he sees as coming from a weaker Swiss franc potentially. His comments naturally inspired the franc to recover lost ground, sending EUR/CHF lower. The SNB was the first among the major central banks to cut interest rates back in March. The decision set in motion a broader depreciation in the franc which appears to have come to an end in the latter stages of May with the appearance of an evening star. The formation of the evening star marked the recent top in EUR/CHF which appeared before Jordan’s comments. The pair shows a bias towards the downside and recently broke below the 50-day simple moving average (SMA) ahead of channel support which naturally becomes the next level of interest. Additional levels to the downside include 0.9694, followed by the 200 SMA or 0.9565. EUR/CHF Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/euro-outlook-ahead-of-the-ecb-rate-decision-eur-usd-eur-chf-setups-20240603.html