2024-07-31 13:00

Gold, Oil Rally Sharply as Middle East Tensions Escalate: US FOMC, NFPs Near Gold rallies on haven bid as Middle East tensions escalate. Oil jumps on supply fears. FOMC meeting later today may cement a September rate cut. The reported death of Hamas leader Ismail Haniyeh in Iran, allegedly from an Israeli missile strike, significantly escalates tensions in the Middle East. This event is likely to trigger retaliatory attacks soon. Iran's leadership has responded with strong statements: President Masoud Pezeshkian warns that Iran will "make the occupiers (Israel) regret this cowardly act." Supreme Leader Ayatollah Ali Khamenei declares, "We consider it our duty to avenge his blood." These provocative statements raise concerns about the region's potential for a wider conflict. The prospect of an all-out war in the Middle East creates uncertainty in the oil market, as regional instability often impacts oil production and distribution. The situation remains volatile, with potential implications for global energy markets and international relations. Markets are closely monitoring developments for signs of further escalation or diplomatic efforts to defuse tensions. While the political scene looks uneasy at best, upcoming US events and data may underpin the higher oil and gold moves. Later today the latest FOMC meeting should see US borrowing costs remain unchanged, but Fed chair Jerome Powell is expected to outline a path to a rate cut at the September FOMC meeting. On Friday the monthly US Jobs report (NFP) is forecast to show the US labor market slowing with 175K new jobs created in July, compared to 206k in June. Average hourly earnings y/y are also seen falling to 3.7% this month compared to last month’s 3.9%. US oil turned over 2% higher on the news but remains within a multi-week downtrend. Weak Chinese economic data and fears of a further slowdown in the world’s second-largest economy have weighed on oil in recent weeks. Chinese GDP slowed to 4.7% in Q2, compared to an annual rate of 5.3% in Q1, recent data showed. US Oil Daily Price Chart Retail trader data shows 86.15% of traders are net-long US Crude with the ratio of traders long to short at 6.22 to 1.The number of traders net-long is 5.20% higher than yesterday and 15.22% higher than last week, while the number of traders net-short is 10.72% lower than yesterday and 31.94% lower than last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggestsUS Crude 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 Oil - US Crude-bearish contrarian trading bias. Gold has pulled back around half of its recent sell-off and is heading back towards an old level of horizontal resistance at $2,450/oz. This level was broken in mid-July before the precious metal fell sharply and back into a multi-month trading range. Any increase in Middle East tensions or a dovish Jerome Powell tonight could see the precious metal not just test prior resistance but also the recent multi-decade high at $2,485/oz. Gold Price Daily Chart Charts using TradingView What is your view on Gold and Oil – 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/gold-oil-rally-sharply-as-middle-east-tensions-escalate-us-fomc-nfps-nears-20240731.html

2024-07-31 08:30

Bank of Japan, Yen News and Analysis Bank of Japan hikes rates by 0.15%, raising the policy rate to 0.25% BoJ outlines flexible, quarterly bond tapering timeline Japanese yen initially sold off but strengthened after the announcement BoJ Hikes to 0.25% and Outlines Bond Tapering Timeline The Bank of Japan (BoJ) voted 7-2 in favour of a rate hike which will take the policy rate from 0.1% to 0.25%. The Bank also specified exact figures regarding its proposed bond purchases instead of a typical range as it seeks to normalise monetary policy and slowly step away form massive stimulus. Bond Tapering Timeline The BoJ revealed it will reduce Japanese government bond (JGB) purchases by around Y400 billion each quarter in principle and will reduce monthly JGB purchases to Y3 trillion in the three months from January to March 2026. The BoJ stated if the aforementioned outlook for economic activity and prices is realized, the BoJ will continue to raise the policy interest rate and adjust the degree of monetary accommodation. The decision to reduce the amount of accommodation was deemed appropriate in the pursuit of achieving the 2% price target in a stable and sustainable manner. However, the BoJ flagged negative real interest rates as a reason to support economic activity and maintain an accommodative monetary environment for the time being. The full quarterly outlook expects prices and wages to remain higher, in line with the trend, with private consumption expected to be impacted by higher prices but is projected to rise moderately. Source: Bank of Japan, Quarterly Outlook Report July 2024 Japanese Yen Appreciates after Hawkish BoJ Meeting The Yen’s initial reaction was expectedly volatile, losing ground at first but recovering rather quickly after the hawkish measures had time to filter to the market. The yen’s recent appreciation has come at a time when the US economy has moderated and the BoJ is witnessing a virtuous relationship between wages and prices which has emboldened the committee to reduce monetary accommodation. In addition, the sharp yen appreciation immediately after lower US CPI data has been the topic of much speculation as markets suspect FX intervention from Tokyo officials. Japanese Index (Equal Weighted Average of USD/JPY, GBP/JPY, AUD/JPY and EUR/JPY) Source: TradingView, prepared by Richard Snow One of the many interesting takeaways from the BoJ meeting concerns the effect the FX markets are now having on inflation. Previously, BoJ Governor Kazuo Ueda confirmed that the weaker yen made no significant contribution to rising price levels but this time around Ueda explicitly mentioned the weaker yen as one of the reasons for the rate hike. As such, there is more of a focus on the level of USD/JPY, with a bearish continuation in the works if the Fed decides to lower the Fed funds rate this evening. The 152.00 marker can be seen as a tripwire for a bearish continuation as it is the level pertaining to last year’s high before the confirmed FX intervention which sent USD/JPY sharply lower. The RSI has gone from overbought to oversold in a very short space of time, revealing the increased volatility of the pair. Japanese officials will be hoping for a dovish outcome later this evening when the Fed decide whether its appropriate to lower the Fed funds rate. 150.00 is the next relevant level of support. USD/JPY Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/boj-hikes-rates-to-0-25-and-outlines-bond-tapering-yen-strengthened-20240731.html

2024-07-30 16:00

When does Coinbase Inc report earnings? Coinbase is set to release its quarter two (Q2) 2024 financial results on 1 August 2024, after the US market closes. Coinbase’s 2Q 2024 results – what to expect Source: Refinitiv Expectations are for Coinbase’s Q2 revenue to almost double to US$1.4 billion, up from the previous US$708 million. This will be the fourth straight quarter of positive revenue growth, which will be once again supported by a more than twofold increase in its transaction revenue from a year ago. Earnings per share is expected to come in at US$0.94. This will mark the third straight quarter of profitability, extending its continued turnaround from its losses a year ago. Traction in crypto market may be supported by ongoing fund launches With the rapid growth of spot Bitcoin exchange-traded funds (ETFs) since the US Securities and Exchange Commission (SEC) approval at the start of the year, more fund launches may continue to underpin traction for the crypto market. Year-to-date, Bitcoin and Ethereum prices have stayed resilient, up 54% and 43% respectively, reflecting strong underlying demand. Both account for the bulk of Coinbase’s transaction revenue. The recent SEC approval of Ethereum ETFs in July also marked another significant milestone for the crypto space, reflecting further expansion of crypto products as the ongoing direction. A look at the Crypto Fear & Greed index showed some dampening in optimism in June this year, but sentiments were quick to rebound into July, seemingly setting the stage for bullish sentiments to persist. Source: Crypto Fear & Greed Index Crypto space may be more sensitive to odds of Trump’s presidency Traction in the cryptocurrencies space may now be also tied to the odds of a Trump presidency, with the Republican nominee recently announcing plans to establish a presidential advisory council on cryptocurrency, create a national "stockpile" of Bitcoin and make the US a ‘Bitcoin superpower’. His stance points to potential easing in regulations for the cryptocurrency sector and an uplift in demand upon his successful election, which is well-received by the crypto community. With that, any higher odds of a Trump presidency could see further traction for the crypto space, which could be beneficial for Coinbase. Forward guidance in focus, with expectations for growth momentum to continue through rest of 2024 Refinitiv estimates suggest that expectations are for Coinbase’s growth momentum to continue through the rest of 2024, which will leave any positive tone from management guidance on watch for validation. Its subscription and services revenue is expected to remain resilient from higher stable coin revenue and blockchain rewards revenue. Its institutional share remains in focus, with its earlier move to reduce fees aggressively for high-volume traders. 1Q 2024 witnessed a more than two-fold jump in its institutional revenue, but it could be tied to strong traction following the approval of Bitcoin ETFs. The degree of any taper-off ahead may offer greater clarity on the success of its fee-reduction plan. Technical analysis – Coinbase’s share price trading on near-term higher lows Since February this year, Coinbase’s share price has been trading within a broader ranging pattern, with base support at the US$193.60 level while upper resistance may be found at the US$272.90 level. Near-term, an ascending channel formation may seem to be in place, with a trendline connecting higher lows leaving immediate support at the US$224.68 level on watch. Failure to defend this level may pave the way for a retest of the US$193.60 level. On the upside, Coinbase’s share price has rejected the US$272.90 on two occasions since June 2024, leaving it as a crucial level for buyers to overcome. For now, buyers seem to be largely holding on, with its daily moving average convergence/divergence (MACD) forming higher lows and share price trading above various moving averages (MA). Source: IG charts https://www.dailyfx.com/news/coinbase-s-2q-earnings-preview-another-blowout-quarter-expected-20240730.html

2024-07-30 08:43

Euro (EUR/USD) Remains Under Pressure as German Economy Contracts in Q2 The ECB may need to act to reboot the German economy. German inflation data out later today is now key. The German economy contracted in the second quarter of the year, missing expectations of a small expansion. Initial data from Destatis showed the economy contracting by one tenth of a percentage point in Q2, compared to expectations of 0.1% growth and 0.2% growth in Q1. As the Federal Statistical Office (Destatis) further reports, ‘investments in equipment and buildings, adjusted for price, seasonal and calendar effects, in particular decreased.’ Destatis will announce revisions to the GDP data on August 27th. Later today, the latest look at German inflation will need to be closely monitored for any signs of weakening price pressures. Financial markets are currently showing a 66% probability of a rate cut on September 12 and any further weakening of German inflation will boost these odds. Preliminary German inflation data is released at 13:00 UK. EUR/USD is trying to claw back some of Monday’s losses, but today’s German GDP release is putting renewed downward pressure on the pair. Short-dated German bond yields are back at lows last seen in early February, adding to the pressure on the Euro. German 2-Year Daily Yield Chart Chart using TradingView EUR/USD currently trades around 1.0830, below the 20-day sma and just above both the 50- and 200-day smas. A break below the two smas and Monday’s 1.0803 low would leave the pair vulnerable to a move back to the 1.0750 area before 1.0700 comes into play. A move higher would see EUR/USD run into resistance around recent highs, and the 23.6% Fibonacci retracement around 1.0866. EUR/USD Daily Price Chart Chart using TradingView Retail trader data shows 47.20% of traders are net-long with the ratio of traders short to long at 1.12 to 1.The number of traders net-long is 14.81% higher than yesterday and 15.95% higher from last week, while the number of traders net-short is 9.23% lower than yesterday and 23.48% lower 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. What is your view on the EURO – 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/euro-eur-usd-remains-under-pressure-as-german-economy-contracts-in-q2-20240730.html

2024-07-29 13:14

British Pound (GBP) Latest – Will the Bank of England Cut Rates This Week? Expectations are growing that the BoE will start cutting rates this week. GBP/USD may have already put in its medium-term high. The Bank of England will release its latest monetary policy report this week with financial markets now seeing a 60%+ chance that the BoE will start cutting interest rates on Thursday at noon UK. At the June meeting the decision to keep rates unchanged was seen as ‘finely balanced’ while annual inflation fell to 2% in May, hitting the central bank’s target. UK services inflation remained elevated at 5.7% - down from 6% in March - but this strength ‘in part reflected prices that are index-linked or regulated, which are typically changed only annually, and volatile components’, according to the MPC. If the UK Bank Rate is not cut this week, the market has fully priced in a cut at the September 19 meeting. The hardening of rate cut expectations can be seen in short-dated UK borrowing costs, with the yield on the 2-year Gilt falling steadily since early June to its lowest level in 14 months. UK 2-Year Gilt Daily Gilt Yield Chart using TradingView GBP/USD touched a one-year high of 1.3045 in mid-July, driven by a renewed bout of US dollar weakness. Since then, GBP/USD has given back around two cents on lower bond yields and rising rate cut expectations. The US Federal Reserve will announce its latest monetary policy settings this week, one day before the BoE, with markets only assigning a 4% chance that the Fed will cut rates. If this plays out, GBP/USD is unlikely to see 1.3000 in the coming weeks. A UK rate cut and a US hold will see the 1.2750 area come under short-term pressure, followed by 1.2667 and the 38.2% Fibonacci retracement area at 1.2626. GBP/USD Daily Price Chart Chart using TradingView GBP/USD Sentiment Analysis Retail trader data shows 42.09% of traders are net-long with the ratio of traders short to long at 1.38 to 1.The number of traders net-long is 10.30% higher than yesterday and 1.57% lower than last week, while the number of traders net-short is 7.86% lower than yesterday and 19.09% lower 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. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBP/USD price trend may soon reverse lower despite the fact traders remain net short. 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 contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/british-pound-gbp-latest-will-the-bank-of-england-cut-rates-this-week-20240729.html

2024-07-29 08:31

Bitcoin (BTC/USD) and Ethereum (ETH/USD) News and Analysis Presidential candidate Donald Trump champions Bitcoin and vows to create a government “stockpile” Bitcoin rose after Trump’s speech but resistance zone comes strongly into view Ethereum continues broader consolidation pattern Presidential candidate Donald Trump threw his weight behind the world’s largest cryptocurrency on Saturday despite being a critic of the digital currency in the past. Republican nominee, Donald Trump spoke at a bitcoin conference in Nashville on Saturday where he announced that if he were to assume office, he would establish a crypto presidential advisory council and create a national “stockpile” consisting of crypto already held by the U.S. government – largely due to seizures. Trump is looking to apply a lighter touch when it comes to regulating the crypto sector and would like to see more mining activity up and down the country. Also over the weekend, a group of nearly 30 Democratic lawmakers and Congressional candidates sent a letter to the Democratic National Committee and Kamala Harris, proposing a forward-looking approach to digital assets. Trump’s proposal has been well received by the crypto community and is largely being seen as a massive vote of confidence to further legitimize the digital asset. Earlier this year spot bitcoin ETFs got the vote of approval with spot Ethereum ETF’ receiving the same approval. However, when it comes to Ethereum, analysts expect a lower uptake compared to Bitcoin. Bitcoin Rose after Trump’s Speech but Resistance Zone Come into View Bitcoin prices closed flat on Saturday but witnessed a fairly typical daily range (daily high – daily low) consistent with what has been witnessed over the previous trading days. Since then, the cryptocurrency has continued the bullish move that ensued from early July, trading above both the 50 and 200-day simple moving averages. BTC/USD now tests trendline resistance within a rising wedge formation. The rising wedge is typically a bearish pattern, however, price action nears the upper side of the formation. Keep an eye for possible bullish fatigue, especially with the RSI knocking on the door of oversold territory. The upcoming zone of resistance suggests the world’s largest cryptocurrency will require more than just a shot in the arm to overcome this next hurdle which is likely to test bull’s resolve. The zone of resistance appears around $71,820 with support at $64,000. Bitcoin (BTC/USD) Daily Chart Source: TradingView, prepared by Richard Snow Ethereum (ETH/USD) reveals more of a longer-term consolidation pattern as bulls have failed to make higher highs and higher lows on a consistent basis. Shorter-term price action tells the same story, with ETH failing to capitalize on the same upward momentum experienced in bitcoin ahead of last weekend. The 200-day simple moving average comes in as immediate support, with the 50 SMA and $3,375 presenting resistance. Ethereum Daily Chart (ETH/USD) Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/bitcoin-rallies-on-trump-support-how-do-btc-and-eth-shape-up-20240729.html