2024-08-14 07:28

UK Headline Inflation rises by Less Than Expected, GBP/USD Eyes US CPI UK headline inflation – 2.2% in July vs expectations of 2.3%. Cable consolidates above 1.2800, helped by US dollar weakness. US inflation data is released at 13:30 UK today. UK headline inflation CPI) rose in July but at a slower rate than expected. CPI rose by 2.2% in the 12 months to July 2024, up from 2.0% in June 2024. On a monthly basis, CPI fell by 0.2% in July 2024, compared with a fall of 0.4% in July 2023. Core inflation fell from 3.5% to 3.3%, below expectations of 3.4%. ‘The largest upward contribution to the monthly change in both CPIH and CPI annual rates came from housing and household services where prices of gas and electricity fell by less than they did last year; the largest downward contribution came from restaurants and hotels, where prices of hotels fell this year having risen last year,’ according to the ONS. The closely followed CPI all services index rose by 5.2% in July compared to 5.7% in June and 7.4% in July 2023. UK rate expectations currently show a 45% chance of a second 25 basis point interest rate cut at the September 19th BoE meeting with the central bank seen cutting a total of 50 basis points between now and the end of the year. The yield on the rate-sensitive UK 2-year gilt fell after the ONS data and is now closing in on the August 5th low at 3.475%. Below here the 2-year gilt yield would be back at levels last seen in April last year. UK 2-Year Gilt Yield Cable (GBP/USD) is trading comfortably back above 1.2800 today, aided partly by yesterday’s bout of weakness in the US dollar. GBP/USD tested and rejected the 1.2863 to 1.2896 zone yesterday and today with the market waiting for the US inflation data at 13:30 UK today before deciding on the next move for the pair. Short-term support at 1.2800 followed by 1.2787 (50-dsma) with further upside limited at 1.2896. GBP/USD Daily Price Chart Charts using TradingView Retail trader data shows 42.40% of traders are net-long with the ratio of traders short to long at 1.36 to 1.The number of traders net-long is 15.32% lower than yesterday and 19.26% lower from last week, while the number of traders net-short is 19.79% higher than yesterday and 36.48% higher from 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. https://www.dailyfx.com/news/uk-headline-inflation-rises-by-less-than-expected-gbp-usd-now-eyes-us-cpi-20240814.html

2024-08-13 13:00

Euro (EUR/USD) Latest – German Economic Outlook Slumps in August German economic sentiment for August slumps. Euro steady against the US dollar, EUR/GBP slips. The economic outlook for Germany is breaking down, according to the latest ZEW survey, showing ‘the strongest decline of the economic expectations over the past two years.’ According to today's report, ‘It is likely that economic expectations are still affected by high uncertainty, which is driven by ambiguous monetary policy, disappointing business data from the US economy and growing concerns over an escalation of the conflict in the Middle East. Most recently, this uncertainty expressed itself in turmoil on international stock markets,’ comments ZEW President Professor Achim Wambach, PhD on the survey results. ZEW Indicator of Economic Sentiment – Expectations Break Down EUR/USD moved marginally lower against the US dollar but remains in a tight, short-term range. Initial support is seen off last Thursday’s low at 1.0881 and the 50-day sma at 1.0883, while initial resistance at 1.0950. EUR/USD Daily Price Chart Retail trader data shows 37.51% of EUR/USD traders are net-long with the ratio of traders short to long at 1.67 to 1.The number of traders net-long is 2.42% higher than yesterday and 14.11% higher from last week, while the number of traders net-short is 0.42% lower than yesterday and 2.32% higher from last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/USD 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 EUR/USD price trend may soon reverse lower despite the fact traders remain net-short. EUR/GBP fell to a fresh one-week low on a combination of Euro weakness and Sterling strength. Earlier today data showed UK unemployment falling unexpectedly – from 4.4% to 4.2% - dialing back UK rate cut expectations. UK Unemployment Rate Falls Unexpectedly, Major Concerns Reappear After making a four-month last week, EUR/GBP has faded lower and is now trading on either side of an old area of importance at 0.8550. Below here 0.8500 comes into focus. Short-term resistance is seen at 0.8580 and 0.8600. EUR/GBP Daily Chart Charts using TradingView https://www.dailyfx.com/news/euro-eur-usd-latest-german-economic-outlook-slumps-in-august-20240813.html

2024-08-13 08:30

UK Jobs, GBP/USD News and Analysis UK unemployment rate drops unexpectedly but it’s not all good news GBP receives a boost on the back of the jobs report UK inflation data and first look at Q2 GDP up next UK Unemployment Rate Drops Unexpectedly but its not all Good News On the face of it, UK jobs data appears to show resilience as the unemployment rate contracted notably from 4.4% to 4.2% despite expectations of a rise to 4.5%. Restrictive monetary policy has weighed on hiring intentions throughout Britain which has resulted in a gradual rise in the unemployment rate. Average earnings continued to decline despite the ex-bonus data point dropping a lot slower than anticipated, 5.4% vs 4.6% expected. However, it’s the claimant count figure for July that has raised a few eyebrows. In May we witnessed the first unusually high number as those registering for unemployment related benefits shot up to 51,900 when previous figures were under 10,000 on a consistent basis. In July, the number has shot up again to a massive 135,000. In June, employment rose by 97,000, trumping conservative expectations of a meagre 3,000 increase. UK Employment Change (Most Recent Data Point is for June) Source: Refinitiv, LSEG prepared by Richard Snow The number of people applying for unemployment benefits in July has risen to levels witnessed during the global financial crisis (GFC). Therefore, sterling’s shorter-term strength may turn out to be short-lived when the dust settles. However, there is a strong probability that sterling continues to climb as we look ahead to tomorrow's CPI data which is expected to rise to 2.3%. Source: Refinitiv Datastream, prepared by Richard Snow Sterling Receives a Boost on the Back of the Jobs Report The pound rose off the back of the encouraging unemployment statistic. A tighter jobs market than initially anticipated, can have the effect of bringing back inflation concerns as the Bank of England (BoE) forecasts that price levels will rise again after reaching the 2% target in May. GBP/USD 5-minute chart Source: TradingView, prepared by Richard Snow The cable pullback received impetus from the jobs report this morning, seeing GBP/USD test a notable level of confluence. The pair immediately tests the 1.2800 level which kept bullish price action at bay at the start of the year. Additionally, price action also tests the longer-term trendline support which now acts as resistance. Tomorrow’s CPI data could see a further bullish advance if inflation rises to 2.3% as anticipated, with a surprise to the upside potentially adding even more momentum to the bullish pullback. GBP/USD Daily Chart Source: TradingView, prepared by Richard Snow Keep an eye out for Thursday’s GDP data in light of renewed pessimism of a global slowdown after US jobs data took a hit in July, leading some to question whether the Fed has maintained restrictive monetary policy for too long. https://www.dailyfx.com/news/uk-unemployment-rate-falls-unexpectedly-but-major-concerns-reappear-20240813.html

2024-08-12 15:00

China slowdown weighs on Alibaba Alibaba reports earnings on 15 August. It is expected to see earnings per share rise to $2.12 from $1.41 in the previous quarter, while revenue is forecast to rise to $34.71 billion, from $30.92 billion in the final quarter of FY 2024. China's economic growth has been sluggish, with GDP rising just 4.7% in the quarter ending in June, down from 5.3% in the previous quarter. This slowdown is due to a downturn in the real estate market and a slow recovery from COVID-19 lockdowns that ended over a year ago. Moreover, consumer spending and domestic consumption remain weak, with retail sales falling to an 18-month low due to deflation. Competitors nibbling at Alibaba’s heels Alibaba's core Taobao and Tmall online marketplaces saw revenue growth of just 4% year-on-year in Q4 FY'24, as the company faces mounting competition from new e-commerce players like PDD, the owner of Pinduoduo and Temu. Chinese consumers are becoming more value-conscious due to the weak economy, benefiting these discount e-commerce platforms. Slowdown in cloud computing hits revenue growth Alibaba's cloud computing business has also seen growth cool off considerably, with revenue rising by only 3% in the most recent quarter. The slowdown is attributed to easing demand for computing power related to remote work, remote education, and video streaming following the COVID-19 lockdowns. Lowly valuation pricing in a gloomy future? Despite the headwinds, Alibaba's valuation appears compelling at under 10x forward earnings, compared to Amazon's 42x. The company has also been doubling down on share repurchases and plans to increase merchant fees. However, the uncertain macroeconomic environment and mounting competition pose risks to Alibaba's future performance. Despite the low valuation, Alibaba has an ‘outperform’ rating on the IG platform, utilising data from TipRanks: BABA TR Source: TipRanks/IG Meanwhile, of the 16 analysts covering the stock, 13 have ‘buy’ ratings, with three ‘holds’: BABA BR Source: Tipranks/IG Alibaba stock price under pressure Alibaba's stock has suffered a sharp decline of 65% from levels of $235 in early January 2021 to around $80 now, while the S&P 500 has increased by about 45% over the same period. The company has underperformed the broader market in each of the last three years. Despite this, there are signs of bullishness in the short term. The price has risen from its April lows, forming higher lows in late June and at the end of July. Notably, it rapidly shrugged off weakness at the beginning of August. The price remains above trendline support from the April lows and has also managed to hold above the 200-day simple moving average (SMA). Recent gains have stalled at the $80 level, so a close above this would trigger a bullish breakout. BABA Price Chart Source: ProRealTime/IG https://www.dailyfx.com/news/alibaba-stock-price-faces-headwinds-ahead-of-earnings-20240812.html

2024-08-12 11:00

Nasdaq 100 looks for more gains The index finished up on the week, having rallied back above 18,000 as well as holding above the 200-day SMA.For the moment the buyers remain in control, having lifted the index from its lows. Further gains target 19,000 and then the late July high at 19,500. A close back below 18,000 might signal that a new leg lower has begun. Nasdaq100 Daily Chart Dow claws back losses A bullish view prevails here too, after the index rebounded from the lows of the week around 38,500. A close back above the 50-day SMA would help to bolster the bullish view, and open the way to 40,000 and higher. Sellers will need a close back below 39,000 to suggest a retest of the recent lows. Dow Jones Daily Chart Dax pushes higher Having nearly hit 17,000 last week the index has recovered well, moving back above the 200-day SMA. It has recovered the April low, and now looks poised to test 18,000. A close above this helps to support a view that the index will retest the July highs. Sellers will want to see a close back below 17,500 to put it back below the 200-day SMA. DAX Daily Chart https://www.dailyfx.com/news/nasdaq-100-dow-and-dax-continue-to-rebound-20240812.html

2024-08-12 08:06

British Pound (GBP) Latest – GBP/USD Analysis BoE hawk Catherine Mann is concerned about wage growth. Sterling's recent revival continues, 200-dsma provides support. Bank of England MPC policy member Catherine Mann, one of four rate-setters who voted to leave interest rates unchanged at the last central bank meeting, warned this weekend that inflation may rise again in the coming months. Speaking to the Financial Times, Ms Mann said recent surveys suggest that, ‘There is an upwards ratchet to both the wage setting process and the price process and . . . it may well be structural, having been created during this period of very high inflation over the last couple of years” she added. “That ratchet up will take a long time to erode away.” Ms Mann’s warning comes ahead of a busy economic release schedule with the latest UK employment, wages, inflation, and GDP data all set to be released over the coming days. GBP/USD touched a multi-week low of 1.2665 last week based on Sterling weakness and US dollar strength. The pair has pushed higher since, helped by a supportive 200-day simple moving average, and currently trades around 1.2770. Cable is trying to break out of a sharp one-month downtrend after printing a 13-month high of 1.3045 on July 17, and this week’s economic data will decide the pair’s future. Support remains around 1.2665, bolstered by the 200-dsma at 1.2661, while near-term resistance is around 1.2863. GBP/USD Daily Price Chart Retail trader data shows 51.94% of traders are net-long with the ratio of traders long to short at 1.08 to 1.The number of traders net-long is 0.92% higher than yesterday and 13.53% higher from last week, while the number of traders net-short is 0.44% higher than yesterday and 4.78% lower from last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBP/USD-bearish contrarian trading bias. https://www.dailyfx.com/news/british-pound-gbp-latest-boe-policymaker-warns-on-inflation-gbp-usd-analysis-20240812.html