Fri, Apr 19, 2024

GOLD Analysis

XAUUSD Gold Price is moving in the Descending channel and the market has reached the lower high area of the channel.

Following US NFP data that showed fewer jobs than anticipated, gold prices rose last Friday. Benchmark 10-year bonds increased from 3.25% in April to 4.10% today. Gold depreciates against the USD due to the hawkish tone of the US FOMC meeting minutes, but the NFP report causes the USD to weaken.

The price of gold has started the week by maintaining the gains made on Friday when the US Dollar fell against a basket of other currencies. Despite Treasury yields continuing their upward trend and the benchmark 10-year bond trading at close to 4.10%—a far cry from the low of 3.25% seen in April—the dollar weakened. For the first time in 16 years, the policy-sensitive 2-year note yielded over 5.10% on last Thursday before falling to 4.75% on Friday. It has risen back to over 4.90%. The rough ride was a result of the data points along the way as well as the fact that the minutes of the Federal Open Market Committee meeting showed a more hawkish board than the market had previously believed. The rise in US real yields, which the interest rate market now views as having an 80% probability, may be of concern to gold bulls. The Fed is expected to raise interest rates by 25 basis points on July 26. The market-priced inflation rate derived from Treasury inflation-protected securities (TIPS) for the same tenor is subtracted from the nominal yield to determine the real yield.

On Friday, the 10-year Treasury bond yield after inflation was over 1.82%. Spot gold last traded at these prices in 2009, when the price was less than $1,000. When compared to the possibility of holding a non-yielding asset, such as gold, a rising real yield on Treasury bonds offers an increasing return.  Naturally, a lot has changed since then, but on Wednesday, the US CPI will be closely scrutinised to determine whether the Fed’s tightening is still having the desired effect on inflation. In contrast to the prior reading of 4.0%, economists polled by Bloomberg expect the year-over-year CPI to print at 3.1% through the end of June. The rise in nominal yields has been the primary factor driving real yields higher, with inflation expectations currently appearing to be anchored, as shown in the chart below. For gold traders looking for hints on potential directional signals, monitoring US yields may be worthwhile.

USD index Analysis

DXY US Dollar index has broken the Ascending channel in downside

USD index has broken the Ascending channel in downside.

The world is big enough to strive for both countries’ power to withstand, US President Joe Biden wanted to make a friendly move with China, Treasury Secretary Janet Yellen said after a 10-hour bilateral meeting between the US and Chinese finance ministries. According to Yellen, after these fruitful talks with China, our relationships will be good and we have made some good progress in the negotiations.

US Treasury Secretary Janet Yellen reported on Saturday’s 10-hour bilateral meetings with senior Chinese officials as direct and productive, which will help to normalise the tumultuous US-Sino relationship. China and the United States disagree on important issues. Unfair economic practises in China and recent sanctions against US companies. However, President Joe Biden and I do not view the US-China relationship through the lens of a great power conflict. We think there is enough room in the world for both of our nations to prosper. I do believe we have made some progress, and I also believe the world will benefit from our having a sound economic relationship.

EURGBP Analysis

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

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

By the end of 2023, Mario Centeno, a member of the ECB’s Governing council, anticipated that inflation would be below 3%. He anticipated this because the Eurozone’s labour market was stronger than ever. Lagarde of the ECB said two additional rate increases are flexible to bring inflation under control.

The European Central Bank (ECB) gets ready for additional interest rate increases, the cross is holding up well. As fuel prices have decreased, inflationary pressures in the Eurozone have eased; however, core inflation has consistently remained obstinate. The increased wage pressures and higher demand for essential goods and services are uncomfortable for ECB policymakers. ECB President Christine Lagarde has already stated that two additional interest rate increases are necessary to cool the blazing inflation. The ECB’s interest rates are currently at 4%, but this month’s end could see additional policy tightening.

In the meantime, Mario Centeno, governor of the Bank of Portugal and a member of the Governing Council, made a bold statement regarding inflation guidance. By the end of 2023, inflation under 3% in the Eurozone, according to ECB Centeno. He added that while the labour market in the Eurozone is at its strongest ever, inflation is declining more quickly.

EURCHF Analysis

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

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

The Swiss Posts announced that beginning in 2024, there will be price increases for sending packages and mail through the post office. Due to the extremely low demand, Swiss Post intended to raise the prices for letters. Over the next 10 years, cost savings of 300 million francs are anticipated.In 2022, 15% of Post services have already decreased.

Swiss Post has announced that it will raise the price for sending letters and packages within Switzerland starting in the first quarter of 2024. The provider of postal services argued that price increases are necessary due to rising costs and a decrease in the volume of letters being sent. Swiss Post will start raising the cost of sending letters and packages to Swiss cities, cantons, and other countries in 2024. Priority A and B letters will now cost an additional 10 rappen, for a total of 1,20 and 1, respectively.  All sizes of priority and economy packages will cost an additional 1,5 francs. The decision will take effect on January 1 and last for at least two years after being approved by Switzerland’s official price monitor.

The price increases, according to a statement provided to Watson by Swiss Post, are necessary due to the continuing decline in letter volumes and post office counter transactions. The company further stated that the price increase was unavoidable due to the rising costs of labour, energy, transportation, and materials. The official price monitor for the government, on the other hand, claimed that while it could not stop the move, it was able to significantly slow it down. Swiss Post had originally planned to raise prices by 50% more, which, according to the company, could have brought in an additional 70 million francs a year. The monitor did acknowledge that the postal service is operating in a difficult financial environment, with fewer letters being sent and prices continuing to rise. According to Swiss Post, just in 2022, over-the-counter sales at post offices throughout Switzerland fell by 15%. With 300 million francs in cost savings anticipated by the end of the decade, they also cautioned that the company would still need to tighten its belt.

EURNZD Analysis

EURNZD is moving in an Ascending channel and the market has rebounded from the higher low area of the channel

EURNZD is moving in an Ascending channel and the market has rebounded from the higher low area of the channel.

The lower risk climate helps the dollar’s status as a relative safe haven and discourages investment in the perceived riskier New Zealand Dollar NZD. Worries about slowing growth in the second-largest economy in the world have increased as a result of a slew of weak economic data from China released over the past week or so, including the softer inflation figures on Monday. The risk of a further escalation in the US-China trade dispute also continues to negatively affect investors’ sentiment, as evidenced by the equity markets’ generally softer tone. This is viewed as another factor affecting antipodean currencies, including the Kiwi, and the Reserve Bank of New Zealand RBNZ monetary policy meeting on Wednesday, traders may choose to avoid making risky bets and instead remain passive.

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.

Bank of England (BoE) Governor Andrew Bailey stated on the UK front that action must be taken immediately to bring inflation under control, allowing market participants to maintain bets on a number of additional hikes before the Bank decides the end credits of this tightening season roll. Even though recent surveys of the manufacturing and services sectors’ business activity suggested a potential recession in the nation, the swaps market continues to indicate the BoE will raise rates by up to 6%.

In the quarterly report, the Japanese government upgrades its evaluation for 3 of the country’s 9 economic regions.  The wage growth and labour market tightness are increasing in these regions. Some areas raise their prices in response to rising labour costs.

The Bank of Japan BoJ updates its assessment for three of the nation’s nine economic regions in a quarterly report on the regional economies of Japan. BoJ continues to assess six of Japan’s nine regions. All of Japan’s regions experienced moderate economic growth. Labour conditions tightened up across many regions. Small and midsize businesses raised wages in many regions, which had not happened in recent years. In some areas, businesses were considering price increases in anticipation of rising labour costs.

AUDCAD Analysis

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

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

China’s monthly inflation rate has remained constant at 0.20%, the annual CPI has decreased to 0.20%, and the PPI has increased to -5.4% from the previously published -4.6%. Lower factory gate prices in China had an impact on the economy’s exports and imports.

The Consumer Price Index (CPI) in China is at an extremely low level, and it is anticipated that inflation in the US will continue to be stubborn. These obstacles are expected to cause the Australian asset to continue its downward trajectory.Inflation in China for the month of June was unchanged at 0.2%. Similar to its previous release, the annual CPI continued to decelerate at 0.2%. The annual Producer Price Index (PPI) has also slowed down more, falling to -5.4% from -4.6% in the previous release. Lower factory-gate prices show how vulnerable both domestic and export demand is.

AUDCHF Analysis

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

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

According to China’s Foreign Ministry, in order to prevent the exclusion of Chinese companies from US stock exchanges, the US should remove its tariffs and taxes on Chinese companies. China is not a threat to US power; instead, both nations are contributing to the needs of the global economy. Therefore, maintaining cordial relations with China will benefit both nations in the long run.

China’s Finance Ministry urged the US to act practically in response to China’s major concerns regarding the US economic sanctions and crackdown in a statement following the visit of US Treasury Secretary Janet Yellen. The Chinese side once more expressed its concerns regarding the removal of tariffs on China and the end of the persecution of Chinese businesses. According to China, the United States should view China’s development as an opportunity rather than a challenge and a benefit rather than a risk. A realistic need exists, and the US and China made the right decision to intensify their cooperation. China and the US concur to maintain high-level and all-level communications in the economic sector.

CADJPY Analysis

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

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

Canadian job reports for June show a 60000 increase rather than a 20k expectation. Unemployment increased to 5.4% and wage growth slowed, indicating a loosening labour market in Canada. The Bank of Canada is therefore anticipated to raise interest rates this week and defer the next increase until September.

Crude Oil Analysis

Crude Oil Price is moving in the Box pattern and the market has fallen from the resistance area of the pattern

Crude Oil Price is moving in the Box pattern and the market has fallen from the resistance area of the pattern.

Data made public on Friday revealed that Canada’s employment increased by 60,000 in June, which was higher than the 20,000 forecast. While CIBC analysts note that employment growth was robust in June, they caution that rapid population growth and a rise in participation led to a two-tick increase in the unemployment rate to 5.4% and an unexpectedly large slowdown in wage growth. The Bank of Canada also believes that labour market conditions are loosening as a result of the rising unemployment rate and slowing wage growth. Instead of waiting until September as we had previously predicted, policymakers may decide to act this week and raise interest rates by 25 basis points as a result of the data.


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