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2024-04-29 08:10

Japanese Yen (USD/JPY) Analysis USD/JPY registers massive decline, stoking intervention speculation Rate differential explains why FX intervention is largely expected to be ineffective Major risk events ahead: US QRA, FOMC, manufacturing PMI and NFP Get your hands on the Japanese Yen Q2 outlook today for exclusive insights into key market catalysts that should be on every trader's radar: USD/JPY Registers Massive Decline, Stoking Intervention Speculation USD/JPY tagged the 160 mark and immediately dropped towards the 155 level as speculation around possible FX intervention did the rounds on Monday morning. The early surge in the pair came off the back of Friday’s disappointing Bank of Japan (BoJ) meeting where Governor Ueda mentioned that the weak yen has no significant impact on inflation. Japan is currently on holiday for Showa Day, one of the holidays observed during Golden Week. Further holidays will be observed this Friday and Monday next week. The bank holidays naturally present a lower liquidity environment which can help advance a sharp, large move in USD/JPY. Source: TradingView, prepared by Richard Snow Bigger Picture: Why FX Intervention is Likely to be Ineffective FX intervention could provide a short-lived boost for the yen because ultimately, yields and rates matter in the longer run. USD/JPY rose is consistent fashion in the first quarter of 2024 as low volatility conditions favour the ‘carry trade’. The interest rate differential between the US and Japan is over 5%, meaning traders and investors were more than happy to collect the positive carry at a time when hotter US inflation buoyed the greenback. If what we have observed today is, in fact, an effort from Japanese officials to strengthen the yen, then it is likely the market views any sizeable decline in USD/JPY as an opportunity to go long at more attractive entry levels as the US-Japan rate differential is unlikely to narrow any time soon. The issue was made worse by comments from the BoJ Governor Ueda that the yen’s weakness does not have a significant effect on inflation. Therefore, it appears the Bank is not looking to hike simply to defend the local currency. Furthermore, Ueda mentioned he does not have a predetermined timeline for the next hike, which has been perceived as dovish. USD/JPY Daily Chart Source: TradingView, prepared by Richard Snow Learn the ins and outs of trading USD/JPY - a pair crucial to international trade and a well-known facilitator of the carry trade The weekly chart helps portray the longer-term bull trend and reveals the confluence area of resistance around the 160 mark. The pair approached channel resistance and the important 160 mark before reversing sharply lower. 155 remains a key level, if prices can close below it on the daily candle today. USD/JPY Weekly Chart Source: TradingView, prepared by Richard Snow Major Risk Events Ahead: US Treasury QRA, FOMC and NFP Perhaps the biggest risk to the recent lower move in USD/JPY is the FOMC meeting on Wednesday. However, there are several high importance US events/data that can impact USD/JPY. On Monday, the US Treasury will detail how it plans to fund the government, detailing a mix of shorter and longer-term issuances (mix of T-bills, notes and bonds). Then on Wednesday, markets will be on the lookout for a greater acknowledgement of re-accelerating inflation from the Fed but the committee could also downplay recent inflation surprises as disinflation is broadly observed. US ISM manufacturing PMI data is likely to attract more attention than usual after the S&P Global survey now sees the sector as having dipped into a contraction. Friday ends the week off with non-farm payrolls, where it is expected that the US economy would have added another 243k jobs for the month of April. Therefore, the prospect of growth concerns, combined with hot inflation and a strong labour market provides the Fed with a lot to think about as high interest rates risk weighing on economic growth but is also necessary to calm resurgent price pressures. https://www.dailyfx.com/news/usd-jpy-plummets-after-speculation-of-fx-intervention-20240429.html

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2024-04-28 17:00

Markets Week Ahead - W/C April 29th - FOMC, Apple, Amazon, USD/JPY, Gold, and USD Outlooks FOMC and NFPs will drive the US dollar next week. Apple and Amazon are the next Mag 7s to report. USD/JPY pushing further into the danger zone. Navigating Volatile Markets: Strategies and Tools for Traders It was a risk-on week for most markets as hostilities between Israel and Iran took a back seat for the Passover holiday. Iran’s recent drone attack on Israel now seems in the rearview mirror although with Israel still talking about further retribution, the current calm may not last for too much longer. The daily VIX chart highlights last week’s risk-on sentiment with the Friday 19th multi-month high of 21.36 sold off heavily. The VIX ended the week at 15.03. VIX Daily Chart The tech reporting season is in full flow and next week sees both Amazon and Apple open their books. Last week’s reports produced some volatile price action. Tesla missed expectations and its share price rallied 10%+, Meta beat forecast but slumped by over 12%, Amazon jumped by 10% while the world’s largest company, Microsoft, added nearly 3%. Along with Amazon and Apple, other notable companies releasing their earnings include AMC, Pfizer, Moderna, Block and Coinbase. You can see all company earnings dates on the DailyFX Earnings Calendar The Japanese Yen continues to weaken and is trading at uncomfortable levels for the Bank of Japan and a host of other central banks. It is very likely that the current level around 158.30 will soon push the MoF and BoJ into action to strengthen their currency. Friday’s sharp rally could be reversed before 160 becomes a reality next week. USD/JPY Daily Price Chart The FTSE is up over 5% since April 19th, driven higher by a weak Sterling, increased M&A activity, and a general re-rating of the index. With all three drivers unlikely to change over the coming weeks, the UK 100 is set to push higher. Learn how to trade USD/JPY like a pro with our free guide: Chart of the Week – FTSE 100 All Charts using TradingView Technical and Fundamental Forecasts – w/c April 29th British Pound Weekly Forecast: GBP/USD Perks Up, Downtrend Still Dominant. The British Pound heads into what promises to be a fascinating new trading week in stronger form against the United States Dollar. Euro Weekly Forecast – EUR/USD, EUR/GBP Fundamental, Technical and Sentiment Analysis The Euro is drifting lower going into the weekly close. Next week, economic data and events may see EUR/USD and EUR/GBP resistance and/or support levels tested again. Gold Weekly Forecast: XAU/USD Bullish Drivers Dissipate Gold rose last week but the size of the recent gains have tapered off as risk sentiment recovered. Will elevated rates weigh on gold or will growth concerns provide support? US Dollar Forecast: Focus Shifts from Risk Rally to the Fed, NFP US PCE data provided the catalyst to help the dollar end the week flat. Will concerns around re-accelerating inflation emerge in the FOMC statement, buoying USD? https://www.dailyfx.com/news/markets-week-ahead-fomc-apple-amazon-usd-jpy-gold-and-usd-outlooks-20240428.html

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2024-04-27 22:10

Gold (XAU/USD) Weekly Forecast: Bullish Gold volatility subsides ahead of high importance US data Gold nudges higher despite lack of major bullish drivers Risk events ahead: US quarterly refunding announcement, FOMC, NFP Elevate your trading skills and gain a competitive edge. Get your hands on the Gold Q2 outlook today for exclusive insights into key market catalysts that should be on every trader's radar: Gold Volatility Subsides Ahead of High Importance US Data Gold volatility has subsided drastically now that the risk of a broader conflict between Israel and Iran have been greatly reduced. Riskier assets like the S&P 500 and high-beta currencies like the Aussie dollar and British pound managed to claw back prior losses as risk sentiment improved. As a result, gold’s former safe haven bid has had the wind taken out of its sails. In the coming week, the US Treasury is set to update the public on details of its funding needs and will provide specifics around whether bond issuance is likely to favour shorter or longer duration - which is likely to affect the shorter and longer dated yields and potentially, gold. Gold Volatility Index (GVZ) Source: TradingView, prepared by Richard Snow Gold Nudges Higher Despite Lack of Major Bullish Drivers The precious metal may soon have to face the reality of the Fed funds rate remaining higher for longer after inflation data proved worrisome on Friday. A string of hotter-than-expected price data culminated in Friday’s PCE print where both headline and core inflation beat expectations. Increasing attention has been placed on shorter-term measures of price trends like the month-on-month comparisons, which has been rising – which hasn’t gone unnoticed at the Fed. Jerome Powell acknowledged the undesirable uptick in inflation but reiterated that policy is poised to react to any outcome and the Vice Chairman of the Fed, John Williams even made mention of another hike is needed. The prospect of higher inflation has forced markets to backtrack on ambitious rate cuts initially eyed for 2024, extending the dollars longer-term strength. A stronger dollar and rising yields have had little effect on the precious metal when geopolitical uncertainty was at its peak, but with the recent de-escalation and in the absence of any further catalysts, gold bulls may soon run out of momentum. Gold bounced off of support at $2320 – a prior swing low. If prices remain above this level, the bullish continuation remains constructive. However, in the absence of a catalyst, the upside potential may be greatly reduced. Gold Daily Chart Source: TradingView, prepared by Richard Snow Gold market trading involves a thorough understanding of the fundamental factors that determine gold prices like demand and supply, as well as the effect of geopolitical tensions and war. Find out how to trade the safe haven metal by reading our comprehensive guide: Major Risk Events in the Week Ahead Risk events next week include both scheduled and geopolitical events to be aware of. On the geopolitical front, despite the Israel-Iran tensions subsiding, news of Russia striking power facilities on Ukraine could slow the risk on sentiment that transpired in the trading week gone by. Scheduled risk events include the FOMC meeting where there is no realistic expectation of a change to interest rates but markets will be focused on how concerned officials are regarding the re-acceleration of inflation that has emerged since the start of the year. Thereafter, non-farm payroll data is likely to inject more volatility – even if this is short-lived - into dollar denominated markets like gold. The labour market continues to show resilience, further delaying the first rate cut from the Fed. Another point to note is that US ISM manufacturing data will draw more attention than usual after Q1 GDP disappointed massively on Thursday, showing early signs of vulnerability for the world’s largest economy. https://www.dailyfx.com/news/gold-weekly-forecast-xau-usd-bullish-drivers-dissipate-20240427.html

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2024-04-26 13:06

PCE Price Index Beats Expectations, Delaying Fed Cuts Headline PCE for March beat expectations of 2.6%, coming in higher at 2.7% while core PCE also surprised to the upside, printing in line with the 2.8% number witnessed for February but rising above consensus expectations of 2.6%. The March PCE data is the latest in a string of hotter than anticipated inflation readings which have emerged in 2024, propping up the US dollar and forcing the Fed to recalibrate their forecasts. Markets now price in less than two 25 basis point cuts in the remainder of the year, with the first cut delayed until September and even November. However, due to the presidential elections, a November cut can essentially be ruled out as the Fed prefer not to move on rates that close to elections in a show of their independence from politics. Implied Fed Rate Cuts (Measured in Basis Points) for Each Remaining Meeting in 2024 Source: Refinitiv, prepared by Richard Snow Economic Growth Becoming a Concern but the Fed Remains Focused on Price Pressures US consumption remains strong, the labour market is robust but yesterday revealed a sharp drop in growth (1.6%) when compared to estimates (2.5%) and the forecast from the Atlanta Fed (2.7%). The concerning data followed just days from a surprisingly disappointing PMI number for US manufacturing which narrowly entered into a contraction, although, it is the flash data so markets will be looking out for any upward revisions to the final print. Still, early signs have now emerged that the US economy is perhaps not as impervious to restrictive rates as was once thought. The quarter-on-quarter (QoQ) PCE prices that are released alongside US GDP yesterday revealed a notable surprise – continuing the ongoing theme of stubborn inflation, which some may argue, is re-accelerating. The actual GDP print revealed a sizeable miss, initially sending the dollar lower but the move was short-lived due to the effect of the higher price data. Immediate Market Response to US PCE Data The market response in the moments following the data revealed a minor move lower for the greenback, with many having priced in the potential of a higher inflation number. A broad measure of USD performance, the US Dollar Basket (DXY), dropped a tad – continuing this week’s theme involving a risk rally which has benefitted the likes of AUD and GBP. Shorter-term US yields declined as well but the moves have been contained as we look ahead to the FOMC rate decision on Wednesday next week. S&P 500 futures rose ahead of what is expected to be a slightly lower open this morning despite news of Alphabet announcing its first dividend. Multi-Asset Reaction (US Dollar Index, US-2 Year Treasury Yields, S&P 500 Futures) Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/us-pce-data-beats-expectations-price-pressures-delay-rate-cut-plans-20240426.html

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2024-04-26 07:51

Japanese Yen Prices, Charts, and Analysis Tokyo inflation fell sharply in April, adding to the BoJ’s problems. Japanese Yen weakness is seen across the board, when will the BoJ step in? The Japanese Yen has touched new multi-decade lows against a basket of currencies following the Bank of Japan's expected decision to keep its monetary policy unchanged. The latest catalyst for the Yen's decline was weaker-than-expected inflation data from Tokyo, which has further solidified the central bank's accommodative stance. Tokyo CPI is seen as an important leading indicator for national inflation. As the BoJ diverges from other major central banks in policy tightening, the Yen remains vulnerable to further volatility and depreciation. The next data release for traders to follow is US Core PCE at 13:30. Yesterday’s BEA inflation readings showed inflation remaining elevated and at levels that will prevent the Federal Reserve from cutting rates in Q3. Market probabilities now show one 25 basis point rate cut, most likely at the November 7th FOMC meeting, with a total of 34 basis points of cuts now predicted in 2024. On the back of reduced rate cut expectations, the dollar's ongoing strength is also acting as a tailwind for USD/JPY. USD/JPY is now above 155.00, seen by the market as the level at which the BoJ will start seriously considering FX intervention to prop up the Yen. This line in the sand has now been breached and brings into question if coordinated FX intervention is being talked about by the BoJ with other major central banks. The weakness of the Yen makes Japanese exports more competitive globally, and may soon spark calls from other central bankers and finance ministers for this advantage to be reined in. The charts below show the relentless weakening of the Yen and bring official intervention ever closer. The longer the BoJ remains on the sidelines, the more markets will force them into action. The longer the BoJ waits, the more violent the subsequent Yen appreciation will be. The Japanese Yen used to be seen as a safe currency to trade, aided by the carry trade. That is no longer the case and strict risk management is a must when trading any Japanese Yen crosses. Looking at three monthly Yen charts highlights the weakness in the Japanese currency. USD/JPY now trades around 156.75, a 34-year high…. USD/JPY Monthly Price Chart Retail trader data shows 15.39% of traders are net-long with the ratio of traders short to long at 5.50 to 1.The number of traders net-long is 2.82% higher than yesterday and 8.10% higher than last week, while the number of traders net-short is 2.56% higher than yesterday and 7.20% higher than 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. GBP/JPY is at levels last seen in September 2008 and is within touching distance of 200… GBP/JPY Monthly Price Chart …while EUR/JPY is at levels last seen in August 2008. EUR/JPY Monthly Price Chart 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 contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/japanese-yen-slumps-to-fresh-multi-decade-lows-usd-jpy-eyes-us-pce-report-20240426.html

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2024-04-25 17:00

Gold, Silver Analysis Now that the risk of a broader conflict in the Middle East has subsided, gold attempts bulls look to a softer dollar to prop up prices Gold (XAU/USD) attempts to lift off of support at $2320 Silver (XAG/USD) tests Fibonacci level currently acting as resistance Elevate your trading skills and gain a competitive edge. Get your hands on the Gold Q2 outlook today for exclusive insights into key market catalysts that should be on every trader's radar: Gold Bulls Looks for Inspiration in the Dollar after Tensions Subside Implied gold volatility (GVZ) has experienced a notable drop now that the risk of a broader conflict in the Middle East has subsided massively. As a natural result, gold prices have pulled back but remain at elevated levels. Gold bulls may be looking to a slightly weaker dollar in anticipation of a bullish continuation for the metal but in recent weeks, gold has appeared detached from its usual inverse relationship with the greenback as the two have risen together. Gold 30-Day Implied Volatility Source: TradingView, prepared by Richard Snow Gold Attempts to Lift Off Support at $2320 Gold, after spending a significant amount of time in overbought territory, has cooled and declined towards the $2320 level where it has oscillated. With a reduced safe haven appeal, the gold market appears to be in search of the next bullish, or even bearish, catalyst. US data has revealed early signs of vulnerability which could affect US yields and the dollar if major data points follow suit but for now the dollar still remains strong, with rate cut bets being pushed further and further out. $2320 may offer a launchpad for gold if price action unfolds in a similar way to what developed back in March after printing a new all-time high and consolidating along $2146.80 (prior all-time high) before the next leg higher. However, should bears take over from here, $2222 appears as the nearest level of support before the 50-day simple moving average (SMA) emerges around $2200 flat. Today’s GDP miss and the disappointing flash PMIs have opened the door to weaker US data. Something to keep an eye on in the future. Gold Daily Chart Source: TradingView, prepared by Richard Snow Gold market trading involves a thorough understanding of the fundamental factors that determine gold prices like demand and supply, as well as the effect of geopolitical tensions and war. Find out how to trade the safe haven metal by reading our comprehensive guide: Silver (XAG/USD) Tests Fibonacci Level Currently Acting as Resistance Silver, similarly to gold, has also dropped sharply as risk sentiment recovered. The rise in risk tolerance provided an opportunity for Indices and high-beta currencies like the Aussie dollar and the pound to claw back losses. Speaking of risky assets, Meta’s forward guidance sent the S&P 500 lower but the magnitude is of the drop is unlikely to prompt a panicked switch to safer assets like gold and silver. Silver hovers around the 78.6% Fibonacci retracement of the 2021 to 2022 decline at $27.40, with the level appearing to provide resistance to a possible bullish continuation. A move to the downside from here would highlight the 61.8% Fib level at $25.30 (coinciding with the 50 day SMA). Silver Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/gold-silver-price-outlook-precious-metals-seek-directional-cue-20240425.html

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