2024-07-19 13:20

Gold (XAU/USD) – Recent Sell-off May Open Up Opportunities The Fed will cut interest rates by 25 basis points at least twice this year. Any further move lower will likely bring buyers back. Gold posted a fresh multi-decade high earlier this week, breaking out of a range that has held since late March. A break above the 20-day and 50-day moving averages at the start of the month allowed the precious metal to test and then break the mid-May high. The sell-off in the second half of this week has no real fundamental driver and any further move lower is likely to attract buyers back into the market. The US interest rate space looks positive for gold with two, and potentially three, quarter-point rate cuts now priced into the market. The first cut is fully expected at the September 18th FOMC, which coincides with the release of the latest Summary of Economic Projections. Data using Reuters Eikon Gold is trading on either of $2,400/oz. and any further sell-off is likely to be limited. Prior areas of resistance turned support between $2,350/oz. and $2,370/oz. also include the short- and medium-term smas and these should hold and add an extra layer of support. Gold Daily Price Chart Chart via TradingView Client Sentiment is Bearish Retail trader data shows 52.21% of traders are net-long with the ratio of traders long to short at 1.09 to 1.The number of traders net-long is 2.65% lower than yesterday and 1.64% higher from last week, while the number of traders net-short is 11.07% lower than yesterday and 7.53% lower from last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold 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 Gold-bearish contrarian trading bias. What is your view on Gold – 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/gold-xau-usd-recent-sell-off-may-open-up-opportunities-20240719.html

2024-07-18 12:41

Euro (EUR/USD) Unchanged as ECB Leaves Rates Unchanged, September Meeting Now Key European Central Bank (ECB) leaves all interest rates unchanged. ECB remains data dependent, eyes on September’s staff projections The European Central Bank left all three key ECB interest rates unchanged today, fully in line with market expectations. The ECB recognised that some measures of underlying inflation ‘ticked up in May’ but added that ‘most measures were either stable or edged down in June.’ With Europe now approaching their holiday season, the quarterly ECB staff macroeconomics projections at the September 12th meeting will become key. The Euro system and European Central Bank (ECB) staff develop comprehensive macroeconomic projections for both the euro area and the global economy. These projections serve as a crucial input for the ECB Governing Council's evaluation of economic trends and potential risks to price stability. If these projections show price pressures easing further, and growth remaining tepid, the Governing Council may well green light their second 25 basis point cut. Financial markets are currently pricing in a 65% chance of a rate cut in September. Implied ECB Interest Rates EUR/USD has traded in a very tight range today after rallying higher in recent days on US dollar weakness. EUR/USD is within touching distance of making a fresh multi-month high with the March 8th high at 1.0982 the first target ahead of big figure resistance at 1.1000. With the ECB decision out of the way and the traditional August European holiday season near, EUR/USD will likely be driven by US dollar activity. EUR/USD Daily Price Chart Chart using TradingView Retail trader data shows 29.62% of traders are net-long with the ratio of traders short to long at 2.38 to 1.The number of traders net-long is 4.55% higher than yesterday and 19.97% lower than last week, while the number of traders net-short is 5.14% higher than yesterday and 14.07% higher than 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. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EUR/USD-bullish contrarian trading bias. 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-unchanged-as-ecb-leaves-rates-unchanged-september-meeting-now-key-20240718.html

2024-07-18 08:06

UK Unemployment, Sterling Analysis UK unemployment rate remains at 4.4%, data prints largely in line GBP/USD buoyed by stubborn services inflation, helped by recent USD decline The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library UK Unemployment Rate Remains at 4.4%, Data Prints Largely in Line with Estimates The overall takeaway from today’s jobs data is that there is nothing noteworthy to shift conversations when the Bank of England meets again on the 1st of August. The UK labour market has been easing for some time with May’s claimant data providing the only real shock when it was reported last month. The number of people applying for unemployment benefits shot up from 8.4k to 50.4k and was revised to 51.9k at the release of today’s updated data. The statistics for June show that the number of people applying for income relief remains well above the trend. The unemployment rate, however, reveals that the labour market remains in a healthy state but nervousness around the claimant figures is likely to increase if the elevated numbers continue in the months ahead. Pound Sterling Reaction Sterling understandably remains little changed on the data that printed in line with expectations on most measures. Sterling has benefitted from the recent rise in monthly services inflation which has helped to taper rate cut expectations and buoy the pound. In addition, better-than-expected inflation data in the US has flattered GBP/USD, seeing it reach the psychological 1.3000 marker. GBP/USD bullish posture remains intact. With that being said, chasing longs from here does not present a constructive risk to reward setup, with a pullback offering a better potential entry in the direction of the trend, especially now that the pair trades within overbought territory around the psychological 1.3000 mark. GBP/USD Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/uk-unemployment-remains-at-4-4-as-jobs-data-reveals-no-surprises-20240718.html

2024-07-17 15:42

Microsoft’s Q4 Earnings Preview: Growth Momentum on Watch When does Microsoft Corp report earnings? Microsoft Corp is set to release its quarter four (Q4) financial results on 30 July 2024 (Tuesday), after the US market closes. Microsoft’s earnings – what to expect Market expectations are for Microsoft’s upcoming 4Q 2024 revenue to grow 14.5% year-on-year to US$64.4 billion, up from US$56.2 billion in 4Q 2023. This may mark a slowdown in year-on-year growth from the 17.0% delivered in 3Q 2024. Earnings per share (EPS) is expected to increase 9% from a year ago to US$2.931, up from US$2.69 in 4Q 2023. Likewise, this may mark a softer read than the 20% year-on-year growth delivered in 3Q 2023. Cloud segment remains on watch to drive earnings beat Microsoft’s Intelligent Cloud business remains as Microsoft’s highest-growth segment and accounts for 43% of its total revenue. For 4Q 2024, expectations are for the segment to grow 19.5% year-on-year to US$28.7 billion. Previously, stronger-than-expected growth in this segment was one of the key reasons for the surge in Microsoft’s share price. During the quarter, Microsoft managed to improve its market share in the worldwide cloud infrastructure market to an all-time high of 25%, trailing just behind Amazon’s AWS at 31%. That leaves little room for error ahead, given that a series of comments from Microsoft’s management team also seems to anchor expectations for the strong momentum in the adoption of Azure AI services to continue. The management previously highlighted that the number of Azure AI customers continues to grow, average spend continues to increase and there is an “acceleration of revenue from migrations to Azure”. More famously, Chief Financial Officer Amy Hood said then that “near-term AI demand is a bit higher than available capacity”. Source: Refinitiv Product differentiators firing on all fronts previously. Growth momentum on watch. Continued growth in several product offerings will remain on the lookout. Azure Arc, which allows its customers to run Azure services anywhere (across on-premises and multi-cloud platforms), has been up two-fold in the previous quarter to 33,000 customers. New AI features have boosted LinkedIn premium growth, with revenue up 29% year over year previously. GitHub revenue has accelerated to over 45% year-over-year as well, fuelled by a surge in GitHub Copilot adoption. Microsoft Fabric, which is its next-generation analytics platform, has over 11,000 paid customers. Copilot in Windows is also available on nearly 225 million Windows 10 and Windows 11 PCs, up two times quarter-on-quarter. Mass adoption of these features are likely to persist, with investors to keep a lookout on the growth progress ahead. Cost pressures in focus amid cloud and AI infrastructure investments In the previous quarter, Microsoft stated that it expects capital expenditures to increase “materially on a sequential basis” as a result of increased cloud and AI infrastructure investments. However, markets took comfort with the company’s guidance that despite the significant investments, FY 2024 operating margins will still up over 2 points year-on-year while FY 2025 operating margins will only be down only about 1 point year-over-year. Any resilience in the company’s margins will be cheered. Market participants will also want to be assured that the huge investment cost outlay will be able to scale into profitable features quickly, rather than a long-term kind of a move. One may recall how Meta’s share price tumbled as much as 19% in its previous earnings release as investors did not buy into the company’s “long-term” investments in AI and the metaverse. Other key segments may stabilize at double-digit growth Microsoft’s “personal computing” segment has surprised on the upside in 3Q 2024, driven by a better-than-expected performance in gaming and Windows OEM. Year-on-year growth may stabilise at 11.2% in 4Q 2024, with expectations for recovery to continue ahead in the low double-digit growth. Likewise, the “productivity and business processes” segment may offer a stable growth of 10% year-on-year in 4Q 2024, further underpinned by average revenue per user (ARPU) growth from continued E5 momentum and early Copilot for Microsoft 365 progress. Technical analysis – Microsoft’s share price trading within a rising channel On the technical front, Microsoft’s share price has been trading within an upward trend, with a display of higher highs and higher lows since October 2023. A rising channel pattern seems to be in place, with recent interaction with the upper channel trendline at the US$471.00 level finding some near-term resistance. A bearish crossover was also presented in its daily moving average convergence/divergence (MACD), which may raise the odds of a near-term breather. Any deeper retracement may leave the US$434.00 level on watch as a key support confluence to hold. That said, it will probably have to take much more to signal a wider trend change, potentially with a breakdown of the rising channel as an initial indication. Until that happens, the broader upward trend prevails, with immediate resistance to overcome at the US$471.00 level. Source: IG Charts https://www.dailyfx.com/news/microsoft-s-q4-earnings-preview-growth-momentum-on-watch-20240717.html

2024-07-17 13:07

USD/JPY News and Analysis Further intervention suspected amid fresh bout of solid yen appreciation BoJ to weigh a potential hike at the end of the month as markets eye September for the Fed’s first cut USD/JPY remains fraught with uncertainty but the magnitude and frequency of recent suspected intervention could keep USD/JPY largely rangebound The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Yesterday’s report highlighted the drastic and sudden appreciation in the yen towards the end of last week which sent USD/JPY sharply lower – a theme that has continued this week, especially after today’s surge lower which has some parts of the market suspecting another smaller bout of FX intervention. The Japanese Index below is a simple construction applying an equal weighting to the more commonly traded currency pairs, providing an indication of yen performance. The recent move higher has disturbed the otherwise steady downtrend – hinting at large scale yen purchases by Japanese officials, potentially. Officials have preferred not to comment on questions around possible efforts to strengthen the local currency, hoping to dissuade speculators betting on a weaker yen. Japanese Yen Index (equal weighting of USD/JPY, GBP/JPY, AUD/JPY and EUR/JPY) Source: TradingView, prepared by Richard Snow Despite mass yen purchases, Japanese currency officials have been unable to stop the yen’s decline which is more of a structural issue that appears via a large interest rate differential that remains in place to this day. The BoJ hiked earlier this year to pull interest rates out of negative territory but this did very little to overcome the massive gap between near zero rates in Japan and 5.25% in the US. Today’s notable drop in USD/JPY has raised speculation of another round of yen purchases from Tokyo. After trading comfortably above 160.00, the pair now looks to 155.00 as the next level of support with 151.90 following thereafter. Tokyo officials are hoping that the recent dollar decline can help extend the move lower in USD/JPY after lower US inflation has brightened the mood within the Fed’s ranks. Jerome Powell is encouraged by recent data and is looking for more of the same to achieve the necessary confidence to make that all important call to cut rates. Markets now fully price in a 25 basis point cut from the Fed in September – seeing the greenback depreciate against its peers. The outlook for the yen remains precarious as it appears the strategy to keep the yen supported may have shifter to smaller, more frequent purchases instead of a massive, single transaction to sell dollars for yen. This is, of course, provided the recent volatility can be verified to have come at the instruction of Japan’s currency officials. USD/JPY Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/japanese-yen-strengthens-market-speculates-over-fx-intervention-20240717.html

2024-07-17 07:54

UK Inflation Remains Sticky; GBP/USD Sentiment Analysis Hotel prices keep core inflation above BoE’s target. GBP/USD sentiment analysis. UK inflation was little moved in June with core y/y unchanged at 3.5%, while headline inflation remained steady at the Bank of England’s 2% target. According to the Office for National Statistics, ‘The largest upward contribution to the monthly change in both CPIH and CPI annual rates came from restaurants and hotels, where prices of hotels rose more than a year ago; the largest downward contribution came from clothing and footwear, with prices of garments falling this year having risen a year ago.’ Consumer Price Inflation, UK: June 2024 BoE rate cut expectations moved after the data hit the screens, with analysts seeing sticky inflation paring back rate cut expectations. The first UK rate cut has been pushed back to September with two quarter-point cuts seen this year. GBP/USD moved higher after the data release and is back above 1.3000 for the first time since July 2023. UK 2-year gilt yields are back above 4% after trading at 3.97% yesterday, while US dollar weakness is also helping the pair move higher. GBP/USD Daily Price Chart GBP/USD Sentiment Analysis Current Positioning: The latest retail trader data reveals that 29.52% of traders are net-long on GBP/USD, with a short-to-long ratio of 2.39:1. This indicates a significant bearish sentiment among retail traders. Recent Changes: Net-long positions have increased by 3.22% since yesterday but decreased by 8.55% from last week. Net-short positions remain unchanged from yesterday but have risen by 15.16% compared to last week. Contrarian Perspective: Adopting a contrarian view to crowd sentiment, the predominance of net-short positions suggests that GBP/USD prices may continue to rise. This approach is based on the principle that retail sentiment often contrasts with market movements. 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/uk-inflation-remains-sticky-gbp-usd-sentiment-analysis-20240717.html