Tue, Jun 18, 2024

GOLD Analysis

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

The gold price (XAU/USD) is still under pressure near the intraday low of $1,828 as markets prepare for the release of the US employment report. Earlier on Friday, the markets experienced a wild swing due to the Bank of Japan’s inaction. It’s important to note that despite recently rebounding, the US Treasury bond yield and the US Dollar are both in the red, suggesting that the valuable metal’s recent weakness is more closely related to the risk-off sentiment. When discussing the mood, the BoJ emphasizes concerns about inflation and joins the New York Fed in opposing the policy dovishness by calling into question economic growth and proposing additional rate hikes, which teases gold sellers.

Despite this, the BoJ maintains its short-term interest rate goal of -0.1% while maintaining a +/-0.50% range for 10-year Japanese Government Bond (JGB) yields. The New York Fed, on the other hand, noted in its most recent report that recent upward revisions to inflation statistics, along with higher-than-expected levels of inflation, had altered the picture of what had initially appeared to be a cooling in price pressures. It should be noted that the US Dollar was able to stay weak due to the conflicting signals from the previous day’s US employment statistics, which in turn appeared to give the price of gold a floor.

SILVER Analysis

XAGUSD is moving in Descending channel and the market has reached the lower low area of the channel.

XAGUSD is moving in Descending channel and the market has reached the lower low area of the channel.

An article from Bloomberg indicating that China’s consumer spending is showing signs of a strong rebound, joining expectations for additional stimulus from the country of the dragon and the US preparedness for more spending, may also be helpful for the price of gold. However, the geopolitical concerns are added to the recent risk-off attitude and cautious sentiment advance of the Nonfarm Payrolls (NFP). The budget plan for 2024 from US President Joe Biden and US cooperation with the UK and Australia on nuclear submarines are among the factors that influence risk appetite and the XAU/USD. In the near future, traders will pay close attention to the February US employment report because the market has recently reduced its bets on the March 50 basis point rate increase.

USDCHF Analysis

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

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

Due to investors’ disregard for the potential consequences of larger rate announcements and higher terminal rates, as advocated by Federal Reserve (Fed) chair Jerome Powell in his speech before Congress, the USD/CHF pair has shown a sharp decline to close to 0.9270. In the absence of a decline in the downward momentum, the Swiss Franc asset is anticipated to continue its downside move to close to the round-level support of 0.9300. The characteristics of reducing a deficit of almost $3 trillion by the next decade and a significant increase in taxes on companies, billionaires, and wealthy investors deterred investors, and this led to significant selling pressure on S&P500 futures on Thursday. Pressure was also felt on the US Dollar Index (DXY), which gradually corrected to 105.25 as a result of the fiscal imbalance, which will also prevent inflation from flexing its muscles.

In addition, an 11% increase in the number of people applying for unemployment benefits for the first time indicated that the US labor market may not be as strong as it seems. According to Reuters, the number of scheduled layoffs for February increased fourfold on an annual basis. Demand for US government bonds was bolstered by indications of labor market slowdown, which significantly reduced 10-year US Treasury rates to 3.90%.

The dangers, according to Rabobank economists, point to a stronger for longer USD in the upcoming months. The release of US payrolls and Consumer Price Index (CPI) data is expected to play a significant role in determining the direction of the USD Index in the near future. However, the dangers of inflation becoming persistent imply that the trend toward higher interest rates for extended periods of time may last for months. Investors will be paying close attention to next week’s Producers and Import Prices statistics when it comes to the Swiss Franc. Monthly decline of 0.1% is anticipated. The annual statistics could increase from the previous release of 3.3% to 3.4%. The Swiss National Bank (SNB), which has already acknowledged that the country’s inflationary pressures are out of its control, may be pleased with a monthly drop.

EURGBP Analysis

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

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

As the UK’s Office for National Statistics issues the monthly Gross Domestic Product (GDP) early on Friday, the EUR/GBP declines 10 pip to retest intraday low near 0.8860. It should be mentioned that the cross-currency pair appears to be under additional downward pressure due to the optimism regarding the British economy’s transition, mixed sentiment, and potential difficulties for the Euro. The British Pound (GBP) is rising despite mixed data on other fronts as a result of the UK GDP growing by 0.3% MoM in January as opposed to the 0.1% expected and -0.5% previous. This helps to stave off recession-related problems. In contrast, the UK Manufacturing Production growth fell to -0.4% compared to -0.1% market expectations and 0.0% prior, while UK Industrial Production numbers reversed the 0.3% previous expansion with -0.3% MoM marks.

In other places, optimism about the economy’s revival and an increase in stock market listings appear to support the Cable pair despite a light week’s schedule. According to Reuters, the British Chambers of Commerce (BCC) predicted on Wednesday that the economy of the nation was on pace to contract less than anticipated this year and avoid the two consecutive quarters of negative growth that signify a technical recession. Further, following UK chip designer Arm Ltd’s choice to only list in New York, the British finance ministry announced on Wednesday that it will review how investor research on businesses can be improved to attract more listings. To minimize the impact on multinational corporations, Britain’s financial services minister Andrew Griffith said on Thursday that the country’s revised financial market rules will largely be in line with U.S. and European Union laws, according to Reuters.

Wednesday, Bank of England (BoE) policymaker Swati Dhingra cautioned against interest rate increases, stating that overtightening poses a greater threat at this time. On the other hand, the Euro appears to be dragged down by worries about the union experiencing further economic hardship in the face of geopolitical tensions with Russia, sticky inflation, and higher rates. It should be mentioned that the risk-off sentiment supports the demand for the US Dollar as a safe haven and lowers the demand for its main rival, the EUR. Following the market’s early response to the UK’s data dump, traders of the EUR/GBP pair may focus on Christine Lagarde, president of the European Central Bank (ECB), for guidance. A plethora of excellent data from the US and Canada will also be crucial to keep an eye on because it can amuse momentum speculators worldwide.

GBPUSD Analysis

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

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

On Friday, the GBP/USD pair builds on this week’s rebound from the 1.1800 level, or its lowest level since November 2022, and gets some follow-through traction for the third day in a row. Spot prices reach a three-day high during the first half of the European session, with bulls now looking for sustained strength above the 1.2000 psychological level before placing new bets. The British Pound gains ground on the final day of the week after the monthly UK GDP report revealed that the economy grew by 0.3% in January. The reading exceeded market forecasts for a 0.1% increase and represents a significant rebound from the 0.5% contraction reported in December. The US Dollar, on the other hand, continues on the defensive as bets on a jumbo 50 bps rate hike at the March FOMC meeting fall, lending additional support to the GBP/USD pair.

Nevertheless, the pervasive risk-off environment, which is reflected by a sea of red across the world’s equity markets despite looming recession risk, helps prevent the safe-haven Greenback from suffering further losses. Traders appear hesitant to make aggressive bets and prefer to sit on the sidelines ahead of the release of the US NFP report later in the early North American session. This, in turn, may prevent the GBP/USD pair from further appreciating, at least for the time being. Technically, the intraday positive move pushes spot prices above the 23.6% Fibonacci retracement level of the recent corrective drop from the mid-1.2450 area, or a multi-month high reached in January. Furthermore, oscillators on 4-hourly charts have gained significant favorable traction. This, in turn, strengthens the case for an expansion of the upward trend towards the 38.2% Fibo level, which corresponds to the 1.2050-1.2060 supply zone.

Despite the fact that daily technical indicators have been recovering, a favorable outlook has not yet been confirmed. Furthermore, the Relative Strength Index (RSI) on the 1-hour chart is indicating overbought conditions, indicating that bulls should exercise caution as they approach the major data risks. On the other hand, the 23.6% Fibo. level, located around the mid-1.1900s, appears to be protecting the immediate decline. The next relevant support is located near a technically significant 200-day Simple Moving Average (SMA), which is presently located near the 1.1900 round-figure mark. A convincing break below the latter will shift the near-term bias back in favor of bearish traders, making the GBP/USD pair susceptible to further declines towards the 1.1800 level.

GBPCHF Analysis

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

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

In January, the UK economy grew by 0.3%, exceeding expectations of 0.1% and the minus 0.5% of December. Growth was unchanged for the three months leading up to January 2023. According to the Office for National Statistics (ONS), The services sector grew by 0.5% in January 2023, after falling by 0.8% in December 2022, with the largest contributions to growth in January 2023 coming from education, transport and storage, human health activities, and arts, entertainment and recreation activities, all of which have rebounded after falls in December 2022.

According to Commerzbank experts, the Bank of England (BoE) won’t do much to support the pound. Sterling is likely to continue to be mainly under depreciation pressure as long as the BoE maintains its relatively cautious communication, in contrast to the Fed and ECB. Additionally, the BoE will always seem to be lagging behind advancements.

Instead of aggressively tackling high levels of inflation, the BoE will always seem to be following events in terms of its communication, which raises concerns that it may lag behind with its monetary policy. This suggests that monetary policy is still having an impact on the value of the pound.

CHFJPY Analysis

CHFJPY is moving an Ascending channel and the market has reached the higher high area of the channel.

CHFJPY is moving an Ascending channel and the market has reached the higher high area of the channel.

Given that the Japanese central bank had just modified the yield band in December, BOJ Governor Haruhiko Kuroda maintained the status quo in his final meeting. Kazuo Ueda, the incoming governor of the BOJ, has stated that the institution must continue to follow its current ultra-easy policy until there are indications that inflation has sustained above the 2% goal set by the BOJ.

NZDJPY Analysis

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

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

Ueda has made an effort to quell rumors of an earlier-than-anticipated normalization of policy rates, but given the anomalies brought on by the yield curve control policy and inflation at a four-decade high, policy adjustments may be made sooner rather than later for the financial markets. The next BOJ meeting, which will be Ueda’s first as head, will be on April 27 and 28. Ueda claimed to have suggestions for how the central bank could end its extensive stimulus program, but monetary tightening would only be feasible if Japan’s “trend inflation” significantly improved.

NZDUSD Analysis

NZDUSD is moving in Descending channel and the market has rebounded from the lower low area of the channel.

NZDUSD is moving in Descending channel and the market has rebounded from the lower low area of the channel.

The round-level support of 0.6100 was proving difficult for the NZD/USD pair to hold above. In the Asian session, the Kiwi asset gave up the aforementioned resistance as the US Dollar Index  tried to recoup following a corrective move to close to 105.13. Investors frequently experience anxiety before important events, so a recovery move from the USD Index was eagerly expected. Prior to the publication of the United States Nonfarm Payrolls  statistics, the FX market is anticipated to continue to be on edge. According to expectations, the US economy saw a 203K increase in payrolls in February. At 3.4%, the unemployment rate is still the same. Aside from them, the statistics on average hourly earnings can affect the mood of the market.

The impact of the Federal Reserve’s rate increases is being offset by higher wages given by US businesses to attract new talent due to a labor shortage. (Fed). The economic statistics is anticipated to pick up speed going forward and reach 4.7% from the previous release’s 4.4%. An increase in the labor cost index will demonstrate that Jerome Powell, the Fed chair, was correct in expressing concerns about persistent inflation, and that more aggressive rates are on the horizon to further reinforce monetary tools.

On the New Zealand front, weak Consumer Price Index statistics from China suggest that, despite the reopening measures, internal demand in the Chinese economy has not shown the anticipated recovery. It should be noted that New Zealand is one of China’s top trading partners, and a decline in Chinese demand could weaken exports from that country and ultimately have an effect on the New Zealand Dollar.

AUDCAD Analysis

AUDCAD is moving in Descending channel and the market has rebounded from the lower low area of the channel.

AUDCAD is moving in Descending channel and the market has rebounded from the lower low area of the channel.

Canada will release its employment statistics today. However, analysts at ING predict that the US Nonfarm Payrolls report will overshadow this one. Payrolls with lesser significance Given the Loonie’s elevated exposure to global risk appetite, the significance of today’s Canadian employment data for the CAD may be less than that of the US NFP.

For the fourth consecutive day, selling pressure on Crude Oil prices has persisted, weighing on the commodity-linked Canadian dollar. In reality, despite concerns that slowing global economic growth will reduce fuel demand, the price of the dark liquid is on pace for its largest decline since early February. In addition, Wednesday’s decision by the Bank of Canada to suspend its rate-hike cycle, making it the first major central bank to do so, is seen as a drag on the Canadian Dollar.


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