Thu, Mar 28, 2024

GOLD Analysis

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

Prior to important US data/events, the gold price shows a corrective bounce while erasing the losses suffered over the previous two weeks. Nevertheless, the shiny metal continues to trade within a positive channel that has been in place for one month, currently between $1,970 and $2,050, as traders exercise caution ahead of the crucial May Federal Open Market Committee Monetary policy meeting. Even so, the XAUUSD sellers are optimistic despite the recession difficulties below the $2,010 crucial barrier and the big central bankers’ “higher for longer” mantra.

However, despite the most recent corrective bounce off the bottom line of the aforementioned channel, the growing concerns of an impending economic recession, supported by hawkish signals from the major central banks, appear to be weighing on the price of gold. The recent decline in rates and the US Dollar amid expectations of a durable economic recovery in China has strengthened the rally. It’s important to keep in mind that the upcoming US preliminary PMI numbers for April and the final round of Fed policymakers’ statements prior to the May FOMC need to defend the hawkish Fed bets in order to keep the gold price down for a second straight week.

USDJPY Analysis

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

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

As traders wait for additional cues to prolong the most recent run-up, USDJPY accurately captures the market’s lack of movement early on Thursday. However, the Yen pair oscillates at 134.80, having just fallen from a six-week high reached the day before. Recent news from the Bank of Japan, which maintains its generally positive economic assessment for seven of Japan’s nine regions, may have weighed on the Yen pair. The USDJPY values are also impacted by Reuters-favored rumours that the BoJ may modify its Yield Curve Control strategy if wage momentum persists.In the most recent Fed Beige Book, it was stated that “Overall economic activity was little changed in recent weeks.” The report also stated that projections for future growth remained largely the same. On a broader scale, the US Treasury bond yields and the US Dollar appeared to be propelled the day before by growing concerns about an impending economic recession, which were supported by hawkish signals from the major central banks. In a statement made late on Wednesday, New York Fed President John Williams expressed support for a 0.25% interest rate increase in May and stated that “we will use the tools available to us under monetary policy to bring back price stability.” Austan Goolsbee, president of the Chicago Federal Reserve Bank, spoke immediately before him and emphasised the strength of the credit market as one of the major factors to watch ahead of the upcoming Fed monetary policy meeting.

In the midst of these bets, CME’s FedWatch Tool advises that market participants increase their bets on the US central bank raising rates by 0.25% in May, almost 85% at the latest, and decrease the likelihood that rates would be cut in 2023. However, after re-entering the monthly peak the day before, the US 10-year and two-year Treasury bond rates crawl towards 3.60% and 4.25%, respectively. Additionally, due to demand for the US Dollar as a safe haven, geopolitical worries about China, Russia, and the US put a floor under the USDJPY pricing elsewhere. The latest mixed US data and uncertainty on the Fed’s trajectory for future rate hikes, however, encourage purchasers of the Yen pair. In order to get clear direction, traders may closely monitor today’s secondary US data and remarks made by Fed officials during their final round of public appearances before the blackout period. The US PMIs and Friday’s Japan inflation numbers are also important for a new jolt of momentum.

USDCAD Analysis

USDCAD is moving an Ascending channel and the market has reached the higher low area of the channel

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

The USDCAD pair is currently fluctuating in a constrained range near the 1.3470-1.3475 area, or over the one-week high reached on Wednesday, and appears to have entered a bullish consolidation phase. In response to concerns that rising borrowing costs may stifle economic development and reduce fuel demand, crude oil prices have fallen to a new monthly low. In addition, the commodity-linked Loonie is undermined by signals of slowing consumer inflation in Canada, which helps the USD/CAD pair build on its recent strong recovery from the 1.3300 level, or the two-month low seen earlier this week. However, the upside is still limited as a result of a little weaker tone surrounding the US Dollar, driven by a slight decline in the yields on US Treasury bonds. Nevertheless, the likelihood of future Federal Reserve  policy tightening should support US bond yields and, at least initially, prevent the USD’s decline. The markets now appear to be certain that the US central bank will increase rates by 25 basis points at its upcoming policy meeting in May, and they have factored in a slim possibility of an additional rate hike in June. The recent hawkish remarks by numerous Fed officials and an increase in short-term inflation forecasts, which benefits the USD bulls, confirmed the bets.

In reality, according to the Fed’s Beige Book, which was published on Wednesday, US inflation is still running at a high rate. In addition, while reducing concerns about a full-blown banking crisis, the incoming US macro data indicated a resilient economy and fuelled worries that the Fed may still have work to do. Apart from this, a generally weaker tone in the equities markets is perceived as another reason favouring the Greenback’s relative safe-haven assets, reiterating the bullish outlook and indicating that the USDCAD pair’s upward movement will encounter the least opposition. Now that the Philly Fed Manufacturing Index and Existing Home Sales data have been released, market participants are turning their attention to the US economic calendar, which includes the typical Weekly Initial Jobless Claims, Existing Home Sales, and the Philly Fed Manufacturing Index. The USD/CAD pair will gain some momentum as a result of this, statements by significant FOMC members, US bond yields, and a general increase in risk sentiment. Traders will also pay attention to the movements of the oil price and the speech that Bank of Canada Governor Tiff Macklem is expected to give.

USDCHF Analysis

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

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

According to Reuters, Treasury Secretary Janet Yellen will state in her address later on Thursday that the US wishes a ‘constructive and fair’ economic relationship with China, using excerpts made public by the US Treasury.The US will express its concerns about China’s actions explicitly, preserve its national security interests, and uphold human rights. Even if it means making concessions to commercial interests, the US will not compromise on national security issues. Security considerations are what motivate US targeted moves against China; they are not intended to obtain a competitive economic advantage. calls on China to keep its word and cooperate with the US on issues including the macroeconomy, the environment, and debt crisis.

EURUSD Analysis

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

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

In the early hours of the European session on Thursday, the Euro is still fluctuating between 1.09 and 1.10 against the US Dollar (USD). In general, the pair has declined from the 1.1075 highs reached on April 14 as the US Dollar strengthens amid speculation that the Federal Reserve (Fed) will keep hiking interest rates.  Technically speaking, the medium-term upswing that the Euro-Dollar pair is on is likely to continue. Looking closer, price activity seems to be coiling to a point, and the declining volatility may be a sign that a breakout move is about to occur. The most recent US economic report, the Fed’s Beige Book, which noted that “Economic activity was little changed in recent weeks,” continues to provide support for the USD. The same research indicated tighter credit conditions following the banking crisis, although it was to be expected. Because of Bullard’s continued promotion of future rate increases due to sustained inflation and exaggerated recession fears, the USD continues to gain.Large US banks like JP Morgan and BofA reported unexpectedly high first quarter earnings, which helped to heal the scars from the sector’s crisis in March and strengthened the US dollar.

Recent US figures have shown a solid labour market, putting the possibility of a recession to rest.

The belief that the ECB would keep raising interest rates, albeit at a data-dependent pace, continues to boost the euro. The health of the banks in the region, as revealed by the ECB Bank Lending Survey, which will be released on May 2, will play a significant role in determining whether the ECB rises rates aggressively or not, according to Philip Lane, chief economist of the European Central Bank. Lane believes that the April HICP inflation figure, which was also reported on May 2, is crucial to the outlook for rates. The most important data releases on Thursday for the Euro are the ECB minutes, which are released at 11:30 GMT, Christine Lagarde’s speech at 12:00 GMT, and April Consumer Confidence, which is released at 14:00 GMT. The primary releases for the US Dollar are Philadelphia Fed Manufacturing, Initial Jobless Claims, and Fed comments.

GBPUSD Analysis

GBPUSD is an Ascending channel and the market has reached the higher low area of the channel.

GBPUSD is an Ascending channel and the market has reached the higher low area of the channel.

On Wednesday, the GBPUSD pair experiences some selling pressure and pulls down from the previous day’s high, which was at the 1.2470-1.2475 range. The pair is currently trading close to the daily low, in the vicinity of 1.2420, and has remained on the back foot during the early part of the European session. The US Dollar continues to benefit from a number of reasons, which is regarded as exerting some negative pressure on the GBPUSD pair. The likelihood of more Federal Reserve policy tightening and a downtick in inflation expectations provide some support for the safe-haven Greenback. Nevertheless, increasing odds of a further increase in interest rates by the Bank of England may discourage bearish traders from making risky wagers and assist in containing losses for the major. The markets now appear to be certain that the US central bank will increase rates by 25 basis points at its upcoming policy meeting in May, and they have factored in a slim possibility of an additional rate hike in June. The recent hawkish remarks made by numerous Fed officials confirmed the wagers. Additionally, the incoming macroeconomic data from the US indicated a strong economy and increased worries that the Fed may still need to do more to rein in the country’s stubbornly high inflation while allaying concerns about a full-blown banking catastrophe.

Worries about the economic challenges brought on by rising borrowing costs are exacerbated by this, and investors’ desire for riskier assets is dampened, as evidenced by the generally softer tone in the equities markets. The safe-haven Greenback receives extra support from the anti-risk sentiment, which drags down the GBP/USD pair. Nevertheless, the BoE should continue to feel pressure to hike interest rates further and the stronger UK inflation data announced on Wednesday could support spot prices. In the absence of any pertinent macroeconomic data from the UK, it is recommended to hold off on placing aggressive negative bets around the GBPUSD pair in light of the aforementioned mixed fundamental backdrop. The typical Weekly Initial Jobless Claims report, the Philly Fed Manufacturing Index, and Existing Home Sales are all scheduled for release on the US economic calendar. This will fuel demand for the USD and give it some impetus, coupled with US bond yields and the general risk mentality.

EURGBP Analysis

EURGBP is moving in Descending channel and the market has reached the lower high area of the channel. 1

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

While prospects for additional tightening by the European Central Bank are growing, the euro’s advance against the US dollar may be coming to an end as it encounters a significant obstacle. As worries about the banking industry have subsided, expectations of more interest rate hikes by the ECB have grown. Additionally, recent ECB rhetoric has been hawkish; Joachim Nagel, the head of the German central bank, stated that the ECB must hike rates because of the danger of rapid price growth being entrenched. Francois Villeroy de Galhau, the head of the French central bank, and Philip Lane, the top economist of the ECB, both stated that there is potential for rate increases in upcoming sessions.Core inflation in the euro area reached a record high of 5.7% in March and may still increase before reaching a peak. In the Euro area, long-term inflation forecasts increased to a month high. As a result, the markets have already completely priced in a rate increase of 25 basis points at the following meeting and are already pricing in almost 3 such increases by September. The markets are also factoring in an 84% possibility that the US Fed will raise interest rates by 25 basis points in May.

NZDUSD Analysis

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

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

In response to the worse New Zealand consumer inflation numbers, the NZD/USD pair experiences strong selling pressure and slips to a one-month low on Thursday in the range of 0.6150-0.6145. However, during the early European session, spot prices recover to the 0.6175–0.6180 range after trimming some of their significant intraday losses. The US Dollar drifts lower with a little decline in US Treasury bond yields and pulls back from a one-week high reached on Wednesday, which is thought to be supporting the NZDUSD pair somewhat. Nevertheless, the likelihood of future Federal Reserve (Fed) policy tightening should support US bond yields and, at least initially, prevent the USD’s decline. In actuality, the markets have already priced in a 25 basis point increase in May, and the Fed funds futures point to a slim possibility of another rate increase in June. The recent hawkish remarks by numerous Fed officials raised the bets. In addition, while alleviating concerns about a full-blown banking crisis, the US macroeconomic data indicated a resilient economy and fuelled worries that the Fed may still need to work harder.

In addition, information made public earlier on Thursday revealed that the headline CPI slowed from a 32-year high of 7.2% in the previous quarter to 6.7% in the three months ending in March. The Reserve Bank of New Zealand may adopt a somewhat less hawkish approach in response to this, which might be interpreted as the first indication of cooling inflation. This suggests that the downward is the direction of least resistance for the NZDUSD pair. Now that the Philly Fed Manufacturing Index and Existing Home Sales data have been released, market participants are turning their attention to the US economic calendar, which includes the typical Weekly Initial Jobless Claims, Existing Home Sales, and the Philly Fed Manufacturing Index. The demand for the USD will be driven by this, as well as remarks made by significant FOMC members, US bond yields, and the general risk sentiment, which will give the NZD/USD pair some momentum.

AUDUSD Analysis

AUDUSD is moving an Ascending channel and the market has reached the higher low area of the channel. 1

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

In the early European session, the AUDUSD is trading sideways within a constrained range of the round-level resistance of 0.6700. After a slight correction move, the Australian asset is now consolidating. Following the People’s Bank of China’s announcement of its interest rate decision, the Australian Dollar did not demonstrate any significant movement as was anticipated.As Netflix’s missing earnings dragged on market sentiment during the Asian session, S&P500 futures have been continuously accruing losses. Investors are concerned that companies would provide poor revenue projections as a result of the Federal Reserve’s (Fed) skyrocketing interest rates and the United States banks’ extremely stringent loan disbursement policies to protect asset quality. The liquidity issue would have a substantial impact on businesses, which is why the events are solidifying a recession in the US economy. The US Dollar Index is performing weakly since both the upside and downside are constrained around the 101.93–102.04 range. The US Treasury rates are likewise doing poorly, following in the footsteps of the muted USD Index. The 10-year US Treasury note yields appear to be constant at or above 3.59%.

AUDNZD Analysis

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

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

Investors were looking for information in the Federal Reserve’s (Fed) Beige Book that might encourage the Federal Reserve to contemplate a policy-tightening pause sooner rather than later. All economic indicators, with the exception of the US commercial banks’ restrictive credit conditions, were in favour of the Federal Reserve raising interest rates again. The first Fed Beige Book after the failure of US regional banks was published on April 19 and it revealed how concerned banks are about the quality of their assets. Across all consumer and corporate loan types, lending volumes and credit demand decreased. In response to rising unpredictability and worries about liquidity, banks tightened lending conditions, according to a number of districts. Future rate increases from the Federal Reserve and strict requirements for credit disbursement by US banks would have a synergistic effect that would have a significant impact on US inflationary pressures. Regarding the interest rate forecast, According to a Reuters poll on the Fed’s interest rate forecast, Fed chair Jerome Powell will raise interest rates by a total of 25 basis points in May and then leave them unchanged for the rest of 2023. A brief and weak recession this year is also predicted by the study. The US S&P PMI preliminary statistics will continue to be a hot topic this week.


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