2024-02-22 10:38

GBP/USD Analysis and Charts UK business activity continues to expand. GBP/USD buoyed by Sterling strength and US dollar weakness. Most Read: US Dollar Trims Losses After Fed Minutes Caution Against Early Cuts The latest S&P UK PMIs (February) showed UK private sector growth expanding ‘for the fourth consecutive month and at the fastest pace since May 2023.’ Global Composite PMI - Actual 53.3 vs. Prior 52.9 Global Manufacturing PMI - Actual 47.1 vs. Prior 47 Global Services PMI Actual - 54.3 vs. Prior 54.3 Commenting on today’s release, S&P chief business economist Chris Williamson said that the survey pointed to 0.2-0.3% growth in Q1 2024 and that the ‘upturn in growth has been accompanied by a surge in optimism about year-ahead prospects to the highest for two years.’ This positive outlook chimed with recent commentary from the UK central bank. Bank of England governor Andrew Bailey, speaking at the Treasury Select Committee on Tuesday said, that the current UK recession may already be over and that there were ‘distinct signs of an upturn.’ Mr. Bailey added that if you look at recessions going back to the 1970s, the range for all previous recessions was ‘something like 2.5% to 22% in terms of negative growth’, making the current 0.5% contraction look pale in comparison. Wednesday’s US FOMC minutes had something for everyone with some members believing that interest rates have peaked, while others members saw risks ‘of moving too quickly’ on rate cuts. The latest Fed implied rates show the first 25 basis point cut nearly fully priced-in at the June meeting, with around 88 basis points of cuts seen in 2024. This is now close to the Fed’s ongoing narrative that rates will be cut slightly less and slightly later than the market’s more dovish pricing seen over the prior few months. Cable (GBP/USD) is currently changing hands around 1.2675 after having touched a three-week high of 1.2710 earlier in the session. If today’s high can be reclaimed then a cluster of prior highs between 1.2750 and 1.2800 come into play. See How IG Client Sentiment Can Help Your Trading Decisions: 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 you can contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/british-pound-gbp-latest-gbp-usd-boosted-by-positive-uk-pmis-weak-us-dollar-20240222.html

2024-02-22 09:19

German, EU PMI Analysis German PMI contracts sharply in February EU PMI data Mixed as France posts impressive numbers German PMI Contracts Sharply in February German PMI data was always going to be under the microscope this week amid weak fundamentals and comments from the Bundesbank that Germany is likely already in a recession and the data supported that view. Flash German manufacturing PMI data for February sank to 42.3 from 45.5 but the surprise came via the fall from the lofty 46.1 expectation. The manufacturing sector has attempted a recovery since the sub-40 low in July of 2023 but the latest data for February stops that in its tracks. In addition, forward-looking metrics like ‘new business’ and ‘new orders’ deteriorated further, with new export business also on the decline. Surveyed firms highlighted a general reluctance among customers to transact provided continued economic uncertainty and difficult financial conditions. One bit of positive news is that the services sector saw a modest gain during the same time period and there is little evidence of cost pressures emanating from the Red Sea attacks that have forced shipping companies to reroute vessels away from the major corridor. EU PMI Data Mixed EU PMI data appears much better than Germany’s, with the composite reading edging forecasts despite a dip in the manufacturing print. Services witnessed a welcomed lift to hit the 50 mark – a level that typically separates contraction form expansion. French data appeared to recover and fared much better than its German counterpart, posting improvements on all three measures with a notable rise in manufacturing from 43.1 to 46.8. The euro’s reaction was mixed but mainly had a positive impact, seeing a move higher in EUR/USD and EUR/JPY but the Euro turned sharply lower against the pound ahead of UK PMI data at 09:30 GMT. Look out for the ECB minutes relating to the January meeting. https://www.dailyfx.com/news/german-pmi-data-slumps-after-decent-run-broader-eu-pmi-data-mixed-20240222.html

2024-02-22 07:56

Crude Oil Analysis and Charts Crude Oil Prices are sliding once again. Traders remain worried about demand if inflation proves resilient and interest rates stay up. Still the broad price uptrend is not yet under serious threat. Crude oil prices wilted again on Wednesday as worries about final demand levels trumped concerns about conflict in the Middle East and its effects on supply. Those worries are certainly well founded. Western economies are likely stuck with ‘higher for longer’ interest rates, with inflation slow to die even as recession haunts many of them. China’s brand of economic malaise also seems deep-rooted even as Beijing battles to stimulate some growth Indeed, the largest cut to benchmark mortgage rates in that country’s history failed to lift oil prices this week, suggesting few in the energy markets believe President Xi Jinping has any quick fixes at his disposal. The International Energy Agency set the broad tone last week when it revised its 2024 oil-demand growth forecast lower. It’s now looking for a million fewer Barrels Per Day than the Organization of Petroleum Exporting Countries, tipping growth of 1.2 million BPD to OPEC’s 2.25 million. Still, the market remains underpinned by news flow from Ukraine and Gaza. The knock-on effects of the latter war in the Persian Gulf and the Red Sea, where Yemeni militants continue to disrupt shipping are all too clear. The Energy Information Agency’s snapshot of US stockpiles is coming up on Thursday. It will attract a lot of focus after the previous week’s big crude inventory build, which isn’t expected to be repeated. US Crude Oil Prices Technical Analysis The US West Texas Intermediate crude benchmark remains well within the broad uptrend established in mid-September. That looks safe enough for now as it would take a failure of channel-base support at $74.24 to threaten it and that’s a long way below the current market. Major support closer to hand comes in at the retracement prop of $76.79 and that is in more jeopardy. Keep an eye on this on a daily and weekly closing basis as a durable slide below it might put further weakness on the cards. There’s resistance at Tuesday’s top of $78.45 ahead of Jan 29’s one-month peak of $79.25. If the bulls can get above that and stay there, they’ll eye the trading band from October 2023 between $80.40 and $83.67 as the next barrier to progress. Still the current cautious market might well see sellers emerge at the psychological $80 handle, should it come up. --By David Cottle For DailyFX https://www.dailyfx.com/news/crude-oil-heavy-as-global-demand-worries-win-out-over-geopolitics-20240221-20240222.html

2024-02-21 20:35

Will the U.S. dollar extend higher or begin to retreat? Request our Q1 USD trading forecast to find out! Most Read: US Dollar Muted Ahead of Fed Minutes; Setups on EUR/USD, USD/JPY & USD/CAD The U.S. dollar (DXY index) sustained small losses in late afternoon trading in New York on Wednesday despite the advance in U.S. Treasury yields following the release of the minutes of the Jan. 30-31 FOMC conclave. According to the summarized record of the proceedings, policymakers felt it would be inappropriate to begin lowering interest rates until they had a stronger conviction that consumer prices would move sustainable toward the 2.0% target. The fact that the central bank needs to see more evidence of disinflation before removing policy restriction suggests that the easing cycle is unlikely to begin soon and could even be delayed to the second half of the year. If the Federal Reserve decides to postpone its interest adjustments, we could see U.S. bond yields nudge upwards in the near term, boosting the U.S. dollar in the process. This could result in the DXY index hitting fresh yearly highs moving into March. With the greenback biased to the upside for the time being, currency pairs such as EUR/USD and GBP/USD may struggle to gain upward traction in the coming days and weeks. Meanwhile, pairs like USD/JPY and USD/CAD may find less resistance in their ascent. Feeling discouraged by trading losses? Take control and improve your strategy with our guide, "Traits of Successful Traders." Access invaluable insights to help you avoid common trading pitfalls and costly errors. https://www.dailyfx.com/news/forex-usd-dollar-trims-losses-after-fed-minutes-caution-against-premature-rate-cuts-20240221.html

2024-02-21 10:30

Local CPI Key Takeaways: 1. Consumer inflation in South Africa increased in January 2024, driven by rising prices for food, housing, utilities, transport, and miscellaneous goods and services. 2. The annual consumer price inflation rate was 5.3% in January 2024, up from 5.1% in December 2023. 3. The main contributors to the annual inflation rate were food and non-alcoholic beverages, housing and utilities, miscellaneous goods and services, and transport. 4. Food and non-alcoholic beverages saw a year-on-year increase of 7.2% and contributed 1.3 percentage points to the overall inflation rate. 5. The inflation rate for goods was 6.6% in January 2024, while for services it was 4.0%, both showing an increase compared to December 2023. Economic data has the potential to drive FX markets, particularly when the actual figure differs greatly from what was anticipated. Learn how to prepare and take advantage of such occurrences via our comprehensive guide below: In January 2024, South Africa faced a notable rise in consumer inflation. The inflationary pressure was largely attributed to the increased costs of essential commodities such as food, housing, utilities, transport, and miscellaneous goods and services. The annual consumer price inflation rate climbed to 5.3%, which was a slight but significant uptick from the 5.1% recorded in December 2023. The rand’s initial reaction to the CPI news was a slight depreciation, although the domestic currency trades well off yesterdays lows, which correlates to a broader moves in the dollar. USD/ZAR – technical view Source: IG charts, Prepared by Shaun Murison The USD/ZAR continues to trade within a short-term range between levels 18.80 (support) and 19.15 (resistance). The price has now formed a bullish reversal off the support of this range. Range traders who are long off the reversal might target a move towards the 19.15 level, while using a close below 18.80 as a stop loss consideration. A tight stop level is considered in lieu of upcoming data in the form of the National Budget Speech and US FOMC meeting minutes. https://www.dailyfx.com/news/usd-zar-price-forecast-rand-marginally-weaker-after-local-cpi-inflation-20240221.html

2024-02-21 09:30

Japanese Yen Prices, Charts, and Analysis Japan’s exports hit a record high in January. USD/JPY back in the danger zone. A weak Yen helped Japanese exports boom in January with the latest trade data showing overseas sales soaring to a record high. Exports increased by 11.9% to 7.33 trillion Yen, while imports fell by 9.6%. Today’s data revealed that the country’s deficit is now half the level seen one year ago, down from JPY 3.51 trillion to JPY 1.76 trillion. In January 2023, USD/JPY traded around the 128 level compared to 150 today. Japan’s export sector has benefitted from a weak Yen over the last year but this is set to change in the coming months. The US Federal Reserve is seen cutting interest rates by around 93 basis points this year – probabilities suggest either three or four25 basis point cuts – while in Japan, interest rates are seen rising by around 27 basis points throughout 2024. A net swing of around one and a quarter points in favour of the Japanese Yen will see USD/JPY move lower this year as the rate differential between the Yen and the USD narrows. Later today we have the release of the latest FOMC minutes that will give a bit more colour about the future path of US interest rates. The Fed has successfully pushed back backed aggressive market interest rate cut outlooks and now seems to have the market in line with their thinking. On the other side of the pair, Japanese officials will be looking at the current level of the Yen and may be called upon to step in and prevent the Yen from weakening further. While a weak currency helps promote export sales – as seen in today’s data – other countries may soon balk at the competitive advantage Japan is getting from a weak currency. On the daily chart, the late October/early November double high just under 152 stands out as an area of interest. If USD/JPY approaches this multi-decade high then the market will be on high alert for any signs of official intervention, either verbal or actual. If Japanese officials effectively cap USDJPY around this level, and with rate differentials between the currencies narrowing in the months ahead, USD/JPY may have a way to fall this year. Initial support is seen around 149 before the 145-146 area comes into play. USD/JPY Daily Price Chart Retail trader data show 27.24% of traders are net-long with the ratio of traders short to long at 2.67 to 1.The number of traders net-long is 3.98% lower than yesterday and 24.50% higher than last week, while the number of traders net-short is 0.40% higher than yesterday and 4.73% 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. 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/japanese-yen-latest-exports-hit-record-levels-usd-jpy-testing-150-again-20240221.html