2024-08-29 13:22

US GDP, US Dollar News and Analysis US Q2 GDP edges higher, Q3 forecasts reveal potential vulnerabilities Q3 growth likely to be more modest according to the Atlanta Fed US Dollar Index attempts a recovery after a 5% drop US Q2 GDP Edges Higher, Q3 Forecasts Reveal Potential Vulnerabilities The second estimate of Q2 GDP edged higher on Thursday after more data had filtered through. Initially, it was revealed that second quarter economic growth grew 2.8% on Q1 to put in a decent performance over the first half of the year. The US economy has endured restrictive monetary policy as interest rates remain between 5.25% and 5.5% for the time being. However, recent labour market data sparked concerns around overtightening when the unemployment rate rose sharply from 4.1% in June to 4.3% in July. The FOMC minutes for the July meeting signalled a general preference for the Fed’s first interest rate cut in September. Addresses from notable Fed speakers at this month’s Jackson Hole Economic Symposium, including Jerome Powell, added further conviction to the view that September will usher in lower interest rates. The Atlanta Fed publishes its very own forecast of the current quarter’s performance given incoming data and currently envisions more moderate Q3 growth of 2%. Source: atlantafed.org, GDPNow forecast, prepared by Richard Snow The US Dollar Index Attempts to Recover after a 5% Drop One measure of USD performance is the US dollar basket (DXY), which attempts to claw back losses that originated in July. There is a growing consensus that interest rates will not only start to come down in September but that the Fed may be forced into shaving as much as 100-basis points before year end. Additionally, restrictive monetary policy is weighing on the labour market, seeing unemployment rising well above the 4% mark while success in the battle against inflation appears to be on the horizon. DXY found support around the 100.50 marker and received a slight bullish lift after the Q2 GDP data came in. With markets already pricing in 100 bps worth of cuts this year, dollar downside may have stalled for a while – until the next catalyst is upon us. This may be in the form of lower than expected PCE data or worsening job losses in next week’s August NFP report. The next level of support comes in at the psychological 100 mark. Current USD buoyancy has been aided by the RSI emerging out of oversold territory. Resistance appears at 101.90 followed by 103.00. US Dollar Basket (DXY) Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/upward-revision-to-q2-gdp-aids-the-us-dollar-s-vulnerable-recovery-20240829.html

2024-08-28 13:00

Gold (XAU/USD) and Silver (XAG/USD) Analysis and Charts Gold remains positive in the coming weeks Silver’s technical break higher remains in place. The US dollar Index (DXY) is around 0.4% higher in European trade after steadying around a 9-month low this week. This slight move higher lacks any conviction and a further move lower is expected in the coming weeks as US interest rate cuts come into play. The next driver of price action, and sentiment, is likely to be Nvidia’s quarterly earnings released after the US market close today. US Dollar Index (DXY) Daily Chart The outlook for gold remains positive for the weeks ahead after the precious metal reached another multi-decade high last week. The demand for gold remains at, or close to, the highest level in 14 years, driven higher by Middle East tensions and a dovish US interest rate outlook. Initial support is around $2,485/oz. followed by $2,450/oz. Gold Daily Price Chart Retail trader data shows 53.66% of traders are net-long with the ratio of traders long to short at 1.16 to 1.The number of traders net-long is 10.14% higher than yesterday and 13.05% higher from last week, while the number of traders net-short is 5.69% lower than yesterday and 9.76% 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. Silver broke through a bullish flag pattern on August 16th and posted a fresh six-week high at the start of this week. This bullish pattern remains in control of silver’s outlook and a clear break above $29.82/oz. should bring the July 11th high at $31.75/oz. into play. Silver Daily Price Chart https://www.dailyfx.com/news/gold-xau-usd-and-silver-xag-usd-drift-as-us-dollar-pares-recent-losses-20240828.html

2024-08-27 13:30

Brent, WTI Oil News and Analysis Geopolitical uncertainty and supply concerns have propped up oil Oil prices settle ahead of technical area of confluence resistance WTI respects major long-term level but geopolitical uncertainty remains The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library External Factors have Propped up the Oil Market Oil prices gathered upward momentum on the back of reports of outages at Libya’s main oilfields – a major source of income for the internationally recognized government in Tripoli. The oilfields in the east of the country are said to be under the influence of Libyan military leader Khalifa Haftar who opposes the Tripoli government. According to Reuters, the Libyan government led by Prime Minister Abdulhamid al-Dbeibah is yet to confirm any disruptions, but clearly the threat of impacted oilfields has filtered into the market to buoy oil prices. Such uncertainty around international oil supply has been further aided by the continuing situation in the Middle East where Israel and Iran-backed Hezbollah have launched missiles at one another. According to Reuters, a top US general said on Monday that the danger of broader war has subsided somewhat but the lingering threat of an Iran strike on Israel remains a possibility. As such, oil markets have been on edge which has been witnessed in the sharp rise in the oil price. Oil Prices Settle Ahead of Technical Area of Confluence Resistance Oil bulls have enjoyed the recent leg higher, riding price action from $75.70 a barrel to $81.56. External factors such as supply concerns in Libya and the threat of escalations in the Middle East provided a catalyst for lowly oil prices. However, today’s price action points to a potential slowdown in upside momentum, as the commodity has fallen short of the $82 mark – the prior swing high of $82.35 earlier this month. Oil has been on a broader downward trend as global economic prospects remain constrained and estimates of oil demand growth have been revised lower as a result. $82.00 remains key to a bullish continuation, especially given the fact it coincides with both the 50 and 200-day simple moving averages – providing confluence resistance. In the event bulls can sustain the bullish move, $85 becomes the next level of resistance. Support remains at $77.00 with the RSI providing no particular assistance as it trades around middle ground (approaching neither overbought or oversold territory). Brent Crude Oil Daily Chart Source: TradingView, prepared by Richard Snow WTI crude oil trades in a similar fashion to Brent, rising over the three previous trading sessions, only to slow down today, thus far. Resistance appears at the significant long-term level of $77.40 which can be seen below. It acted as major support in 2011 and 2013, and a major pivot point in 2018. WTI Oil Monthly Chart Source: TradingView, prepared by Richard Snow Immediate resistance remains at $77.40, followed by the November and December 2023 highs around $79.77 which have also kept bulls at bay more recently. Support lies at $72.50. WTI Oil Continuous Futures (CL1!) Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/libya-outages-and-middle-east-tensions-spark-supply-concerns-wti-nears-key-77-40-resistance-20240827.html

2024-08-23 08:20

Japanese Yen (USD/JPY) Analysis BoJ encouraged to stick to the plan as inflation continues above target Japanese CPI remains at 2.8% - the same as last month and beats estimate of 2.7% USD/JPY gains prove short-lived ahead of Powell’s address at Jackson Hole BoJ Encouraged to Stick to the Plan as Inflation Continues above Target The Japanese currency strengthened, with the Yen gaining as much as 0.7% against the US dollar, following comments from Bank of Japan (BoJ) Governor Kazuo Ueda suggesting further interest rate increases. This development coincided with a recovery in Asian markets, buoyed by improved performance in Chinese stocks. In Japan, government bond futures experienced a decline while the Topix index saw gains. Addressing lawmakers, the central bank governor maintained that the BoJ's stance remained unchanged, provided that inflation and economic data aligned with their projections. These remarks followed reassurances from Ueda's deputy that future rate hikes would be contingent on market conditions, an attempt to calm investors after the central bank's July rate increase sparked a significant global equity selloff earlier this month. Adding to the economic picture, Japan's inflation data for July exceeded forecasts. The consumer price index showed a 2.8% year-on-year increase, matching the previous month's figure and surpassing the 2.7% rise predicted by economists. A recent Reuters poll revealed that 57% of surveyed economists expect another rate hike from the BoJ before the end of the year, with those voting for the increase seeing this most likely in December. With the interest rate differential narrowing, albeit slowly, markets have already started to cover large carry trades that sought to take advantage of cheap money at a time when yen interest rates were in negative territory. The trend is likely to continue as long as inflation and wage growth unfold as anticipated by the BoJ. Higher interest rates in Japan contrast the market’s expectations around incoming rate cuts from the Federal Reserve Bank, likely starting in September. Intra-day Currency Performance Source: FinancialJuice, prepared by Richard Snow USD/JPY Witnesses a Modest Decline Ahead of Jackson Hole Event USD/JPY trades a tad lower ahead of Jerome Powell’s Jackson Hole address on the economic outlook. He and other prominent central bankers will provide their insights on current conditions and monetary policy in general. Given we have already perused the FOMC minutes from July where the majority of the committee agreed that a rate cut in September is appropriate, there could be very little new information being shared today. Under such a scenario it wouldn’t be unusual to see the dollar breathe a sigh of relief and trade a little higher heading into the weekend. The pair has attempted a pullback after the massive downtrend, which culminated after a softer US CPI print encouraged Japanese officials to intervene in the FX market to strengthen the yen. USD/JPY now trades lower while markets attempt to assess the next move. If the Fed adopt a bearish outlook while the BoJ continue to move forward with one more rate hike in December, it is possible there will be further weakness heading into the end of the year. Support lies at the spike low of 141.70, followed by 140.25 – a prior swing low from December last year. Resistance lies at the recent swing high of 149.40. USD/JPY Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/japanese-cpi-and-ueda-s-comments-prop-up-the-yen-ahead-of-powell-s-address-20240823.html

2024-08-22 08:34

EUR/USD Underpinned by Better-Than-Expected Euro Area PMIs, Weak US Dollar Euro Area composite PMI beats expectations but caution needed German manufacturing woes continue Can Powell support an ailing US dollar? Economic activity in the Euro Area picked up in August, according to the latest HCOB PMIs, but a closer look at the numbers ‘reveals that the underlying fundamentals might be shakier than they appear,’ according to HCOB chief economist Dr. Cyrus de la Rubia. ‘It’s a tale of two worlds. The manufacturing sector remains mired in recession, while the services sector still appears to be growing at a decent clip. But with the temporary Olympic boost in France fading and signs of waning confidence across the Eurozone’s service industry, it’s likely only a matter of time before the struggles of the manufacturing sector start weighing on services too.’ The Euro posted a fresh 13-month high against the US dollar on Monday and remains within touching distance of posting another high today. The US dollar remains weak as the Federal Reserve prepares a series of interest rate cuts that are expected to start in September. Friday’s appearance by Fed chair Jerome Powell at the Jackson Hole Symposium may give the market a better understanding of the central bank’s current thinking and the expected tempo of rate cuts going forward. Today’s EUR/USD price action is likely to remain within Monday’s range – 1.1099-1.1174 – with yesterday’s high the more likely to be tested. EUR/USD Daily Chart Chart Using TradingView Retail trader data shows 22.77% of traders are net-long with the ratio of traders short to long at 3.39 to 1.The number of traders net-long is 5.47% lower than yesterday and 23.95% lower from last week, while the number of traders net-short is 1.73% higher than yesterday and 7.93% higher 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. 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. https://www.dailyfx.com/news/eur-usd-underpinned-by-better-than-expected-euro-area-pmis-weak-us-dollar-20240822.html

2024-08-21 13:01

EUR/USD and GBP/USD Rallies Fuelled by Ongoing US Dollar Weakness EUR/USD and GBP/USD Latest The US dollar is sliding lower as US rate cuts near EUR/USD and GBP/USD post multi-month highs The minutes of the last FOMC meeting are released later in today’s session and will show a more detailed picture of why the Fed decided to keep rates unchanged at 5.25%-5.5%. Since the July meeting, a string of data releases has pointed to growing weakness in the US economy, suggesting that the Fed will start to trim interest rates in September. Financial markets currently price in a 67.5% chance of a 25-basis point and a 32.5% chance of a 50-basis cut. With today’s FOMC minutes already priced into the market, trader’s attention will turn to chair Powell’s appearance at this year’s Jackson Hole Symposium on Friday. Chair Powell is expected to acknowledge that conditions, and data, are now right for a series of interest rate cuts to start in September. Markets will be keen to see if Powell agrees with current market pricing of 100 basis points of cuts this year, or if he pushes back against current assumptions. With only three FOMC meetings left this year, 100 basis points of cuts would require a 50bp move at one of these meetings. The US dollar index (DXY) has moved sharply lower over the last two months as traders price in a more dovish Fed. The technical outlook for DXY remains negative with two bearish flag formations on the daily chart keeping downward pressure on the dollar. US Dollar Index (DXY) Daily Chart The Euro and Sterling have benefited from this weak dollar backdrop with EUR/USD and GBP/USD making fresh multi-month highs yesterday. EUR/USD has made a strong recovery after posting a five-month low of 1.0600 in mid-April and Monday’s bullish 50-day/200-day simple moving average crossover suggests that the pair are likely to move higher in the coming weeks. EUR/USD Daily Chart The GBP/USD daily chart also looks positive with an unbroken series of higher lows and higher highs made since late-April. While Sterling has strengthened in its own right recently, further gains in the pair will be dictated by the US dollar outlook. GBP/USD Daily Chart Charts usingTradingView https://www.dailyfx.com/news/eur-usd-and-gbp-usd-rallies-fuelled-by-ongoing-us-dollar-weakness-20240821.html