2024-05-15 16:30

Most Read: US Breaking News - US CPI Prints Largely in Line with Estimates, USD Dips The U.S. dollar fell sharply on Wednesday, weighed down by a significant drop in U.S. Treasury yields following the release of softer-than-anticipated April U.S. consumer price index data, which revived hopes that the disinflationary trend that began in late 2023 but stalled earlier this year has resumed. For context, headline CPI rose 0.3% on a seasonally adjusted basis, against a forecast of 0.4%, bringing the annual rate to 3.4% from the previous 3.5%. Meanwhile, the core gauge climbed 0.3%, with the 12-month related reading easing to 3.6% from 3.8% previously, in line with estimates in both cases. Although upside inflation risks have not dissipated, today's report suggests that the cost of living is moderating and moving back in the right direction from the central bank's vantage point. With oil prices falling sharply in recent weeks, the May data could also be benign and reassuring, giving the Fed the cover it needs to begin easing monetary policy in the fall. In light of recent developments, the U.S. dollar may find itself in a vulnerable position in the short term, especially with traders growing increasingly confident that the Fed would deliver its first rate cut of the cycle in September. As these expectations firm up, it would not be surprising to see the greenback lose some ground against some of its major peers, such as the euro and the yen. For a complete overview of the U.S. dollar’s technical and fundamental outlook, request your complimentary Q2 trading forecast now! FOMC MEETING PROBABILITIES Source: CME Group EUR/USD FORECAST - TECHNICAL ANALYSIS EUR/USD rallied nearly 0.5% on Wednesday, clearing trendline resistance and a key Fibonacci ceiling at 1.0865. If the breakout is confirmed with a follow-through to the upside, we could soon see a move towards 1.0980. On further strength, the focus will turn to 1.1020, which corresponds to a medium-term trendline extended from last year’s high. Conversely, if sellers mount a comeback and propel prices lower below 1.0865, the pair could start to lose momentum, setting the stage for a possible downward reversal towards 1.0810. Below this technical floor, all eyes will be on the 50-day and 200-day simple moving averages near 1.0790. If weakness persists, a pullback towards 1.0725 cannot be ruled out. EUR/USD PRICE ACTION CHART EUR/USD Chart Created Using TradingView USD/JPY FORECAST - TECHNICAL ANALYSIS USD/JPY sold off sharply on Wednesday following the subdued U.S. inflation report, with the exchange rate down nearly 1% and below the 155.00 handle in early afternoon trading in New York. If losses continue, support emerges at 154.65, followed by 153.15. Further losses from this point would expose the 50-day simple moving average and a key trendline at 152.75. Alternatively, if buyers return and spark a bullish turnaround, resistance could materialize around 156.80, this week's swing high. Bulls will have a hard time taking out this barrier, but if they do, the pair could gravitate towards 158.00 and even 160.00. However, rallies towards these levels may not be sustained for long, given the risk of intervention in the currency market by the Japanese government. For a complete analysis of the Japanese yen’s medium-term prospects, request a copy of our quarterly trading outlook. It is free! USD/JPY PRICE ACTION CHART USD/JPY Chart Created Using TradingView https://www.dailyfx.com/news/forex-eur-usd-breaks-out-usd-jpy-in-tailspin-after-benign-us-inflation-report-20240515.html

2024-05-15 13:14

US Disinflation Process Gets Back on Track but Progress is Minimal Headline and core CPI printed inline with estimates of 3.4% and 3.6%, respectively. The April data sees a return to the disinflation process after a period of stubborn price increases that characterised the first quarter of the year. Learn how to setup ahead of high impact news and data with this easy-to-implement process The last two months have produced hotter-than-expected monthly rises in both core and headline CPI, denting Fed confidence around the timing and magnitude of interest rate cuts in 2024. 3 and 6-month average measures of inflation have also revealed a concerning rise in general price pressures which has forced market participants to withdraw rate cut bets, leaving the dollar vulnerable to a correction. Ahead of the US inflation data, surveys like the University of Michigan Consumer Sentiment survey and New York Fed survey now see 1-year ahead inflation rising compared to prior estimates. In addition, yesterday’s PPI data printed hotter-than-expected. Jerome Powell, the Fed Chairman, commented that he felt the PPI data was ‘quite mixed’ A big theme within the Fed has been the issue of ‘confidence’. Recent, higher inflation prints have dented the Fed’s collective confidence, most likely requiring a number of lower inflation prints before the committee feels confident to make that first rate cut which the market envisions may take place in September, with a second potentially in December, making sure to avoid the November presidential election. Multi-Market Price Reaction US Dollar (DXY) The US dollar eased, continuing the broader bearish trend. The dollar has sold off on the back of the 1st of May FOMC meeting and the softer US labour data that ensued since. Easing in the job market and moderating economic growth have began to set the scene for the rate cut debate but inflation remains the primary target for the Fed. Keep in mind that retail sales data was released at the same time and underperformed rather notably compared to the prior figure. US 2-Year Yield 2-year yields are sensitive to the Fed’s rate setting policy and witnessed a move lower on the softer inflation data. Gold Gold benefitted moderately from a drop in US yields and the dollar. The precious metal is not an interest bearing asset meaning a lowering in yields lowers the opportunity cost of holding gold. Multi-Asset Market Reaction Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/us-breaking-news-us-cpi-prints-largely-in-line-with-estimates-usd-dips-20240515.html

2024-05-15 12:00

Major Indices Analysed FTSE 100 achieves a new all-time high DAX within reaching distance of record high S&P 500 makes gains ahead of US CP Looking for actionable trading ideas? Download our top trading opportunities guide packed with insightful tips for the second quarter! FTSE 100 makes yet another record high The FTSE 100 made yet another record high, getting ever closer to the psychological 8,500 mark as investors are eagerly awaiting the US CPI print. Upside pressure will be maintained while the April-to-May uptrend line at 8,432 underpins on a daily chart closing basis. This uptrend line may be revisited, however. FSTE 100 Daily Chart Source: ProRealTime, prepared by Axel Rudolph DAX 40 nears its record high The DAX 40 once again nears its new record high, made last week around the 18,850 mark, a rise above which would engage the minor psychological 19,000 mark. Immediate upside pressure should remain in play while Tuesday’s low at 18,623 underpins. Minor support above this level can be found at Friday’s 18,712 low and at the previous record high, made in April at 18,636. DAX Daily Chart Source: ProRealTime, prepared by Axel Rudolph S&P 500 is seen heading back up towards its April record high The S&P 500’s rally from its early May low has taken it towards its April record high at 5,274 ahead of Wednesday’s widely anticipated US CPI data release. Above 5,274 lies the 5,300 region. The tentative May uptrend line at 5,216 offers support ahead of Tuesday’s 5,194 low. S&P 500 Daily Chart Source: ProRealTime, prepared by Axel Rudolph https://www.dailyfx.com/news/ftse-100-trades-in-new-record-highs-with-dax-40-and-s-p-500-close-on-its-heels-20240515.html

2024-05-15 11:00

Oil (WTI) Talking Points Prices say early gains after Tuesday’s shock US inventory drawdown But they haven’t lasted There’s more stockpile data still to come Wednesday Get your hands on the Oil Q2 outlook today for exclusive insights into key market catalysts that should be on every trader's radar: US Crude oil prices failed to hold on to early gains in Europe on Wednesday but the market’s recent range held firm. Energy markets had found support into the open thanks to data released in the previous session showing a surprisingly strong drawdown in us crude stockpiles. The American Petroleum Institute said that inventories fell by 3.01 million barrels in the week ending May 10. This was more than double market expectations and a big turnaround from the half-million-barrel stock build seen in the previous week. Still, this market continues to fret about end-demand levels in what looks like a well supplied market despite long-running and ongoing production cuts by the Organization of Petroleum Exporting Countries and its allies. The International Energy Agency cut its 2024 oil-demand forecast on Wednesday. It now sees an average of 1.1 million barrels per day, a reduction of 140,000 barrels. There remains considerable uncertainty about when interest rates could start to fall in the United States, and elsewhere in the industrialized world. Inflation seems to be heading broadly in the direction policy makers would like. But, as US producer prices showed this week, there can be bumps in the road lower, and central banks will need to be certain they have inflicted long-term damage on pricing power before they can relax interest rates. Still, the underlying resilience of the US and other economies isn’t necessarily bad news for energy consumption. Conflict in Ukraine and Gaza sadly continues to put a floor under prices. There’s also a wildfire close to Fort McMurray, a key location or Canadian oil sand production. Worries about continuity of supply from there are also propping up the market. There’s more oil-specific data coming up on Wednesday when the Energy Information Administration releases its own inventory numbers. US Crude Oil Technical Analysis West Texas Intermediate Daily Chart Compiled Using TradingView Prices are struggling to remain above psychological support at $78.00, with the bulls just about pressing their case for now. The market seems to have settled into a range between $79.44 and $76.86, with retracement support above the latter at $7.68 also apparently important. A downtrend line from mid-2022 is also approaching and is likely to provide a tough barrier when it gets nearer. Still, if current range trade endures it might mitigate the risk that a head and shoulders top is forming for this market, capping the rise from the lows of December last year. Bulls’ ability to break above and stay above the 50- and 200-day moving averages in the near-term will probably be key to direction. The uncommitted may want to wait and see how that plays out into the end of this week. --By David Cottle for DailyFX https://www.dailyfx.com/news/us-crude-oil-hands-back-early-gains-as-demand-doubts-resume-control-20240515.html

2024-05-15 08:17

Analysis: USD, Nasdaq 100 and Treasury Yields US CPI is expected to ease slightly – focus is on the monthly measure USD eases ahead of the CPI data Nasdaq continues the risk rally with the all-time high within touching distance The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library US CPI is Expected to Ease Slightly – Focus on the Monthly Measure US CPI has proven stubborn in the first three months of the year, rising 0.4% in the last two months for both headline and core measures of inflation. A lack of progress on the inflation front has been the main source of concern for the Fed and according to Jerome Powell, has lowered confidence within the group in relation to the timing of interest rate cuts, which looked increasingly likely at the beginning of 2024. The consensus estimates point towards a welcomed move lower this month for both headline and core inflation which may prove a relief and continue to see the dollar weaken. Estimates from Large US Banks Source: X via Nick Timiraos, Wall Street Journal Monthly core inflation has printed at 0.4% for the past three months and headline inflation providing the same increase for the last two months. The core measure is expected to drop to 0.3% while headline inflation is expected to remain at 0.4%. Markets have had a greater focus on monthly, 3-month, and 6-month inflation averages which could see a muted reaction if the data prints inline with expectations. Learn how to position ahead of a major data print with an easy-to-implement strategy: US Dollar Softens Ahead of Crucial Inflation Print The US dollar, measured via the US dollar basket (DXY), has eased in the lead up to the inflation data and now approaches the 61.8% Fibonacci retracement of the 2023 decline (104.77) and the 104.70 – the May 2023 spike high. Since the FOMC meeting at the start of the month, the greenback has continued the broader decline since reaching its peak in April. A more dovish Fed, lower interest rate expectations, and softer labour market conditions have outweighed more recent inflation concerns, guiding USD lower. US Dollar Basket Daily Chart Source: TradingView, prepared by Richard Snow US yields have also fallen, particularly after the more dovish Fed meeting on the 1st of May, with a further bearish catalyst emerging via the weaker NFP data that followed on the 3rd of May. US 2-year yields are more sensitive to interest rate expectations and have backed away from the 5% marker, trading around the 4.8% level. US 2-Year Treasury Yields Source: TradingView, prepared by Richard Snow US Tech Stocks Make Another Attempt to Test the All-Time High US stocks generally took advantage of a weaker dollar to make another push towards the all-time high which is now within reach. The direction of travel for riskier assets like stocks continues to be up and to the right as risk sentiment remains in a much better place since the Iran-Israel tensions have subsided and rate cuts appear more likely for major central banks apart from the Fed. Nasdaq (NDX) Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/usd-nasdaq-and-yields-how-are-major-markets-positioned-ahead-of-us-cpi-20240515.html

2024-05-15 00:35

Most Read: Gold Prices Bid Despite Hot PPI, Inflation Data Next - What Now for XAU/USD? The U.S. Bureau of Labor Statistics will release on Wednesday morning April’s consumer price index data – a crucial economic report closely tracked by market participants that could bring heightened volatility due to its significance for the Federal Reserve’s monetary policy path. Following Tuesday's elevated PPI results, there is a slight risk that the upcoming inflation figures could also disappoint, undermining confidence in the disinflationary trend that gained traction in late 2023 but seemed to have stalled this year. Consensus estimates suggest that headline CPI rose 0.4% on a seasonally adjusted basis last month, bringing the annual rate down slightly to 3.4% from 3.5%. Meanwhile, the core CPI is expected to have climbed by 0.3%, resulting in the 12-month reading easing to 3.6% from 3.8% in March. Want to know where the U.S. dollar may be headed over the coming months? Explore all the insights available in our quarterly forecast. Request your complimentary guide today! UPCOMING US DATA While the Fed has signaled it may wait longer than initially envisioned to start dialing back on policy restraint, it hasn’t gone full-on hawkish, with Powell essentially ruling out new hikes. Another upside surprise in the data, however, could change things for the FOMC and lead to a more aggressive stance. In the event of hot inflation numbers, the market may recognize that the recent series of robust CPI readings are not merely seasonal anomalies or temporary setback, but part of a new trend: the cost of living is reaccelerating and settling at higher levels. The scenario previously described could lead traders to reduce bets on a September rate cut, shifting their focus to a potential move in December or no easing at all in 2024. Higher interest rates for longer should exert upward pressure on yields, boosting the U.S. dollar. This should be bearish for gold prices. On the other hand, a benign inflation report, that comes below Wall Street’s projections, should weigh on yields and the greenback, creating a constructive backdrop for precious metals. Such outcome could revive disinflation hopes, increasing the odds of the Fed pivoting to a looser stance at early in the fall. https://www.dailyfx.com/news/us-inflation-preview-how-will-cpi-data-impact-gold-the-us-dollar-yields-20240515.html