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Tue, Jun 18, 2024

AUDUSD Analysis

AUDUSD is moving in the Falling wedge pattern and the market has fallen from the lower high area of the pattern.

Today at the RBA Meeting, the rate increased by 25 basis points to 3.60% from the prior level of 3.35%. Inflation is at a three-decade high in the Australian economy, according to the RBA, so additional tightening steps are required to control inflation and keep it within a target range of 2-3%.

Since China is Australia’s largest export market and the Australian Dollar declines in response to interest rate increases, the future performance of the Australian Dollar may be improved.

After the Reserve Bank of Australia increased the benchmark cash rate by 25 basis points to combat three-decade high inflation and kept the door open for future rate increases, the AUD/USD fell, fueling worries that the central bank might become overly restrictive. The Reserve Bank of Australia tightened monetary policy further and increased the cash rate by a quarter of a percentage point to 3.60%. After inflation reached a three-decade high last quarter, well above the central bank’s goal range of 2%-3%, the move was widely anticipated. The bank announced last month that it would no longer be pausing at 3.35% and that additional increases would be required. The RBA has also issued warnings about further easing. The US Fed and the European Central Bank, among other central banks, have stated that more needs to be done to combat inflation.

At its annual National People’s Congress meeting on Sunday, China set a growth goal of roughly 5%, which is lower than the target of roughly 5.5% from the previous year. The goal was below the lower limit of the analysts’ expected range, which weighed on the AUD/USD. However, last week’s stronger-than-anticipated manufacturing and services activity data from China suggest that the effects of the economy’s reopening are starting to appear in activity data. China is Australia’s largest export market, so any improvement in China’s outlook for development could enhance Australia’s growth prospects. The semi-annual testimony of US Fed Chair Powell before legislators later today and tomorrow is the main focus right now. His comments will be carefully scrutinised as the financial markets search for additional monetary policy direction in light of recent strong US data. Markets will be paying close attention for clues about the Fed’s rate increase trajectory, especially if policymakers are considering using aggressive rate hikes. Following a strong US employment report, Powell used his previous appearance to stress the “disinflation” theme while refraining from adopting an aggressive tone. The Fed’s target rate is expected to increase from its present range of 4.50% to 4.75% in September, according to US rate futures, up from a low of 5% at the end of January.

The Economic Surprise Indices (ESI) show that Australia’s macroeconomic statistics have been disappointing since the beginning of March; the Australian ESI is hovering around 2020 lows, while its US counterpart is at the highest level in ten months. In recent weeks, the AUD/USD has suffered from the divergent growth forecasts.

GOLD Analysis

XAUUSD Gold price is moving in an Ascending channel and the market has reached the higher low area of the channel 1

XAUUSD Gold price is moving in an Ascending channel and the market has reached the higher low area of the channel.

In light of Powell’s testimony today and tomorrow, gold values have decreased. US 2-year Treasury yields increased to 0.60% yesterday, depressing gold values. Investors may stop purchasing gold and switch to cash-yielding assets like US Treasury bonds as interest rates rise.

If FED Powell confirms any future rate increases, non-yielding commodities like gold may experience market declines.

The experts’ and institutions’ perspective is that the FED will have a rate of 5.5% by year’s end.

On Monday, gold prices took a hesitant step downward. Treasury yields were negatively correlated with the anti-fiat yellow metal. The yield on 2-year Treasury bonds increased by 0.6%. Treasuries, which partially represent expectations for monetary policy, have the potential to have a significant impact on XAU/USD. This is a result of the precious metal’s inherent absence of yield when held. XAU typically declines as the yield on cash increases and vice versa.

The testimony of Federal Reserve Chair Jerome Powell before the Senate and House committees, which will begin later today, is avidly anticipated by the financial markets. The focus of the market will be on him to learn more details about how restrictive monetary policy will be in the immediate future. Markets have raised their forecasts for rate hikes recently, raising the anticipated rate to 5.5% by year’s end.  Latest inflation statistics, including the preferred PCE gauge of the Fed and the CPI, surprised higher, suggesting stickier price pressures. For longer, that might necessitate a stricter central bank. A situation like that would probably not be favourable for metal. Gold was trying to move higher in the early Asian trading period on Tuesday. However, action may need to wait until after Jerome Powell’s initial round of evidence.

USDCHF Analysis

USDCHF is moving in the Descending channel and the market has reached the lower high area of the channel

USDCHF is moving in the Descending channel and the market has reached the lower high area of the channel.

US Dollar index is consolidating ahead of the FED’s testimony, and FED policymakers have repeatedly stated that we will see continuous rate increases from the FED in the coming months. The 10-year and 2-year US Treasury bonds climbed higher, boosting the USD Dollar.

As markets wait impatiently for FOMC Chairman Jerome Powell to appear before the Senate Banking Committee at 1500 GMT on Tuesday, the US dollar maintains its early gains. Following a two-day decline, the US Dollar Index moves sideways above 104.00, and the 10-year US Treasury bond rate varies within a small range below 4%. The IBD/TIPP Economic Optimism Index for March and the Consumer Credit Change for January will also be included in the US economic agenda. The markets remained unsteady on Monday, and the major indexes on Wall Street ended practically unchanged after sharply rising at the start of the day. US market index futures show modest daily gains early on Tuesday, indicating participants’ willingness to hold back.

EURUSD Analysis

EURUSD is moving in the Descending channel and the market has reached the lower high area of the channel 2

EURUSD is moving in the Descending channel and the market has reached the lower high area of the channel.

In a statement, Robert Holzmann, an ECB policymaker and the governor of the Austrian Central Bank, predicted that there could be 50 basis point increases in the coming meetings, which would be supportive for EURUSD buyers. Yesterday, the market became enthused about buying Euros against other currencies.

Before Federal Reserve Chair Jerome Powell’s statement to the Senate Banking Committee in Washington on Tuesday and Wednesday, the EUR/USD spiked higher to start this week. The Wednesday GDP data for the entire Eurozone may also contain additional event risk. When Robert Holzmann said in remarks made overnight that he could anticipate a 50 basis point increase in interest rates at the next four European Central Bank (ECB) sessions, it helped the euro. Mt. Holzmann is the Governor of Austria’s Oesterreichische Nationalbank and a policymaker for the European Central Bank (OeNB).

Looking ahead, it would appear that central bank officials’ remarks could influence not only the EUR/USD market but also other currency markets and asset markets in general. Prior to the Fed’s meeting, which is scheduled to begin on March 22, the ECB will meet on Thursday, March 16.

GBPUSD Analysis

GBPUSD is moving in the Descending triangle pattern and the market has fallen from the lower high area of the pattern

GBPUSD is moving in the Descending triangle pattern and the market has fallen from the lower high area of the pattern.

The expected monthly decline in industrial production is 0.20 percent, compared to a 0.30 percent increase in December. This would have a negative effect on the GBP Pound. Before FED testimony and FED’s NFP, the UK Pound is set to Weak or Strong based on FED Powell’s testimony comments.

During the Asian session, the GBP/USD pair is exhibiting a lacklustre performance in an extremely narrow range around 1.2020. Since Monday, the Cable has fluctuated within a range of 1.2000-1.2050 as investors appear more eager to take aggressive building positions following Federal Reserve (Fed) chair Jerome Powell’s testimony. After a directionless Monday, S&P500 futures have added some gains, indicating a modicum of optimism among market participants. As investors await Fed Powell’s testimony for additional impetus, the US Dollar Index (DXY) is displaying a lacklustre performance. The yield on 10-year US Treasury bonds has decreased marginally to 3.97 percent.

The reaction of the market to Fed Chairman Powell’s testimony is divided. One school of thought holds that Fed Chairman Powell will not endorse higher interest rates because January’s robust consumer spending may not continue. The Fed’s decision to raise interest rates has rendered the United States economy extremely vulnerable. The other school of thought, however, believes that the Fed will adopt a hawkish posture because the fight against persistent inflation is still quite complicated. Aside from that, labour market data will be the most significant event of the week. The Automatic Data Processing (ADP) Employment data for the United States is expected to rise to 195K on Wednesday, up from 105K the previous week. Fears that the Fed will increase interest rates could be fueled by a robust labour market. And, could spark concerns of an economic recession in the United States.

Friday’s data will be intensely scrutinised in terms of the British Pound. Industrial Production (Jan) for the United Kingdom is expected to decrease by 0.2% compared to the 0.3% increase recorded in December. Monthly Manufacturing Production is anticipated to decline by 0.2% in the coming months.

GBPJPY Analysis

GBPJPY is moving in the Box pattern and the market has reached the horizontal support area of the pattern

GBPJPY is moving in the Box pattern and the market has reached the horizontal support area of the pattern.

The Japanese Yen remains feeble because the Bank of Japan has no plans to raise interest rates in the near future. The Bank of Japan stated in a previous statement that a liberal monetary policy would be maintained on the market for an extended period of time until inflation declines. This demonstrates the Significant distinction between the Bank of Japan and other central banks.

As current inflationary pressures in Japan are the result of international forces, and as the economy struggles to accelerate wage growth and domestic growth, the BoJ is anticipated to maintain its dovish stance.

GBPCAD Analysis

GBPCAD is moving in an Ascending channel and the market has reached the higher low area of the channel 2

GBPCAD is moving in an Ascending channel and the market has reached the higher low area of the channel.

This week’s Bank of Canada Monetary Policy Meeting is scheduled for Wednesday, and as was announced at the previous meeting, future rate increases will be halted.

Therefore, policy difference could be seen in the central banks’ Bank of Canada and FED Path rates.

Crude oil Analysis

Crude oil is moving in an Ascending channel and the market has reached the higher high area of the channel

Crude oil is moving in an Ascending channel and the market has reached the higher high area of the channel.

The latest optimism about a recovery in Chinese fuel consumption drives Crude Oil prices to their highest level since last January, supporting the commodity-linked Loonie.

On the other hand, the Bank of Canada (BoC) had hinted in January that its tightening cycle was likely to halt, and it is now anticipated that it will hold rates steady at the upcoming policy meeting on Wednesday. And, the Fed-BoC policy divergence indicates that the path of least resistance for spot prices is upward, and any significant dip is likely to be bought into.

AUDNZD Analysis

AUDNZD is moving in the Descending channel and the market has fallen from the lower high area of the channel

AUDNZD is moving in the Descending channel and the market has fallen from the lower high area of the channel.

The relationship with China is now good, according to Australian Prime Minister Anthony Albanese, and he plans to visit China in the future months, he said today at the Australian Financial Summit. We want China’s economy and market to be more stable, and I believe that we have a strong relationship with China.

If the China deal is changed, I believe Australia would escape going into recession.

Tuesday at the Australian Financial Review (AFR) summit, Australian Prime Minister (PM) Anthony Albanese discussed Australian-Chinese relations and the outlook for the economy. Would accept a trip to China if invited. I believe it is a positive development that the relationship has become more secure. We desire a more secure and stable region. The relations with China have strengthened. I believe Australia will be able to avoid a recession.

CADCHF Analysis

CADCHF is moving in the Descending channel and the market has fallen from the lower high area of the channel

CADCHF is moving in the Descending channel and the market has fallen from the lower high area of the channel.

The Swiss unemployment percentage fell to 2.1% in February 2023, down from 2.2% in January. According to this data, the number of unemployed individuals decreased by 2324 from the previous month to 98452. Men have a higher unemployment percentage (57.7%) than women (42.3%). Unemployment ranged from 1-6 months for 67.6% of the population to 7-12 months for 19.1%.

The number of unemployed persons in Switzerland decreased by 2,324 from the prior month to 98,452 as the unemployment rate dipped from 2.2% to a non-seasonally adjusted 2.1% in February 2023. The number of people looking for work between the ages of 15 and 24 is used to calculate the juvenile unemployment rate, which fell by 0.9% to 8,958. Men had a higher unemployment percentage than women, at 57.7% compared to 42.3%. In addition, 19.1% of those without jobs for more than seven months and 67.6% of those for less than six months both experienced unemployment.


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