Mon, Mar 04, 2024

USDCHF Analysis

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

According to data released on Monday by the Swiss State Secretariat for Economic Affairs (SECO), the country’s GDP did not change in the second quarter of this year from the previous trimester. Between April and June, the value of manufacturing fell by 2.9%, while good exports fell by 1.2% and the construction industry shrank by 0.7%. In contrast, the accommodation and services sector grew by 5.2%, while private and government consumption increased by 0.1% and 0.4%, respectively.

The Swiss economy expanded by 0.5% annually from the second quarter of 2022. After accounting for athletic events, the GDP of Switzerland grew by 1.1% annually and stayed constant from quarter to quarter.

XAUUSD Analysis

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

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

Ahead of US Services data, gold prices have stabilised; a slowdown to 52.5 in August from the previous reading of 52.7 is anticipated. US domestic data last week came in higher than anticipated, strengthening the US relative to counter pairs.

This past week, the performance of gold XAUUSD and silver XAGUSD was very different. While the latter saw some wild swings during the fiveday period, gold finished the week up about 1.3%. This was all against the backdrop of U.S. dollar indecision in the FX market, which saw the DXY index decline at first before rebounding to close mostly around the flatline. However, the divergence within the precious metals complex might only be a transient phenomenon, suggesting that their price movements may eventually converge in the coming days, perhaps in an upward direction. That said, the Federal Reserve’s monetary policy outlook repricing could be a catalyst that has bullish implications for the market.

XAGUSD Analysis

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

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

The chance of additional FOMC tightening in 2023 has declined in recent days, mostly as a result of weak U.S. economic data, like July job openings JOLTS and August consumer confidence. This mood swing has also been influenced by the most recent nonfarm payrolls survey, which shows a better balance between the supply and demand for labour rather than any signs of weakness.

USDCAD Analysis

USDCAD is moving in the Descending triangle pattern and the market has reached the lower high area of the pattern

USDCAD is moving in the Descending triangle pattern and the market has reached the lower high area of the pattern

In contrast to the 1.2% forecast, the Q2 GDP report for Canada came in at 0.20%, which is less than the 2.6% reported in the Q1 data. The manufacturing PMI data was 48, which was lower than the previous readings of 49.2 and 49.6.

The data releases from the US and Canada are responsible for the downward support that the Canadian dollar (CAD) is seeing against the US dollar (USD). As previously mentioned, the second quarter saw an unexpected 0.2% annual decline in Canada’s GDP, compared to 1.2% growth predicted. The first quarter’s growth rate was 2.6%. With a reading of 48, the S&P Global Manufacturing PMI for August fell short of both the previous month’s 49.6 and the market’s 49.2 estimates. Lower-than-expected data figures put downward pressure on the USD/CAD pair. The depressing GDP number could have an effect on the Bank of Canada’s (BoC) projected 25 basis point (bps) rate hike, which the BoC is expected to announce this Wednesday. The gains of the Loonie pair, however, may have been constrained by the rising price of US crude oil. A new high of $85.57 was reached by the price of Western Texas Intermediate (WTI) this year, as a result of the anticipated 1 million barrels per day (bpd) supply reduction by Saudi Arabia in October. Furthermore, Russia concurs with the decision made by the Organisation of the Petroleum Exporting Countries (OPEC) and its allies.

However, the US Nonfarm Payrolls (Aug) report indicated that job growth had improved. The data showed a number of 187K, which was higher than the 170K predicted reading. In July, the data showed a figure of 157K. From a previous reading of 46.4, the ISM Manufacturing PMI increased to 47.6. 47 was the market consensus. The strong manufacturing and employment statistics bolster the Greenback, which compares the US Dollar (USD) to the performance of the other six major world currencies. As of this writing, Spot is trading at approximately 104.20. Market players, however, are looking for more clues about the US Federal Reserve’s (Fed) policy decision at the next meeting.

EURUSD Analysis

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

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

Pierre Wunsch, the governor of the Belgian Central Bank and a member of the ECB Governing Council, stated that a rate pause rather than a rate cut is more likely at the upcoming meeting. Following last month’s lower CPI data, the euro is now weaker.

Pierre Wunsch, the governor of the Belgian Central Bank and a member of the ECB Governing Council, stated that the central bank could do a little bit more. He went on to say that although it is too soon to discuss completely stopping rate hikes, the ECB will eventually need to pause the programme. Furthermore, policymaker for the European Central Bank Francois Villeroy de Galhau stated that although interest rates are nearing their peak, a rate cut is still a long way off. Regarding the US dollar, the US Bureau of Labour Statistics reported on Friday that the US Nonfarm Payrolls (NFP) for August were 187K, exceeding both the estimate of 170K and the reading from July of 157K. In the meantime, the unemployment rate dropped sharply to 3.8% from the previous data point of 3.5% and the market estimate of 3.5%. The monthly Average Hourly Earnings increased by 0.2% as opposed to the 0.3% predicted increase. Lastly, the US Manufacturing PMI beat the market consensus of 47.0 to come in at 47.6, up from 46.4 the previous month.

EURCHF Analysis

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

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

The Federal Reserve (Fed) is expected to conclude its tightening cycle, according to market participants. The possibility of a rate hike in November and December has dropped to almost 35%, and markets have priced in that the Fed will not raise rates during its September meeting, according to the CME FedWatch tool. For the sixth week running, the US Dollar (USD) is in positive territory even though it had its lowest weekly gain since early July. Because it is Labour Day, the US market is closed. Ahead of the ECB’s President Lagarde Speech, market participants will be watching the German Trade Balance for July, the Eurozone Sentix Investor Confidence for September, and the speech by German Buba President Joachim Nagel. The statement will serve as a guide for traders as they look for trading opportunities surrounding the EURUSD pair.

EURJPY Analysis

EURJPY is moving in the Box pattern and the market has rebounded from the horizontal support area of the pattern

EURJPY is moving in the Box pattern and the market has rebounded from the horizontal support area of the pattern

In contrast to the previous reading of a 1.3% decline, August Japanese Monetary Base data showed an increase of 1.2% YoY. Shunichi Suzuki, the Japanese finance minister, said on Friday that while abrupt changes in exchange rates are bad, there is not any obvious evidence of market intervention to support the weakening yen. Reuters reports that the policymaker will be closely monitoring the movement of the currency. The Bank of Japan (BOJ) is moving away from yield curve control while continuing its loose monetary policy. According to Toyoaki Nakamura, a member of the BoJ Board, policymakers require additional time to adjust to monetary tightening.

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

Following the release of stronger US jobs data last week, the value of the New Zealand dollar declined. China’s decision to implement appropriate monetary policies and revive the economy after the COVID-19 pandemic boosts the value of NZD dollars in the market.

Antipodean currencies, such as the New Zealand Dollar (NZD), gain from investor confidence and optimism over additional supportive measures from China to support economic growth. The National Development and Reform Commission (NDRC), China’s principal economic planner, announced that it would create a special department to support the nation’s struggling private sector. This follows China’s last-week easing of some mortgage regulations and increase in local dollar liquidity, both of which maintained the positive outlook for the equity markets. The positive attitude helps the risk-averse Kiwi and further undercuts the safe-haven narrative.

GBPUSD Analysis

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

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

According to the UK National Account of Statistics for 2023, the country’s GDP increased by 0.60% in 2023, which was more than in 2021, the year before the pandemic. Ahead of this month’s Bank of England monetary policy meeting, the GBP is stronger against counter pairs.

The UK economy grew more than previously believed in 2020 and 2021, according to the recently released UK Annual National Accounts 2023 . The Office for National Statistics (ONS) revised the estimates for both years upward, resulting in a GDP estimate for Q4 2021 that is 0.6% higher than pre-pandemic levels, as opposed to the previous estimate of 1.2% lower. Even though “richer data” was the primary reason for the revisions, investors might reconsider UK PLC and see it in a slightly more positive light as a result. According to the most recent US Jobs Report (NFP), 187k new jobs were created in August, which was slightly more than the 170k market estimate. However, the headline numbers for June and July were revised downward. But in August, the unemployment rate increased from 3.5% to 3.8%, and wage pressure somewhat decreased. Overall, the US dollar saw some movement after its release, though it has since slightly increased in value as we approach the weekend.

AUDCAD Analysis

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

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

With the Australian dollar declining ahead of Wednesday’s Q2 GDP report and the RBA interest rate announcement, a hold on rates at 4.10% is more anticipated from this meeting. The Australian economy’s slowing CPI data forces the RBA to hold the interest rate at this meeting.

The Reserve Bank of Australia’s rate decision tomorrow and the release of GDP data on Wednesday have the Australian dollar stable at 0.6450 heading into Monday’s trading session. The final RBA monetary policy committee meeting that Governor Philip Lowe will chair before handing the reins to Michele Bullock later this month is on Tuesday. Interest rate markets predict that, following a 400 basis point increase in rates since May 2022, the bank will maintain rates at 4.10% for the third consecutive month. This view is corroborated by an economist survey conducted by Bloomberg. Here is a live feed of the decision. The newly appointed Governor explained last week that future rate decisions will depend on data and will be determined by the circumstances of each meeting. The market is currently anticipating a reduction in the cash rate towards the end of 2024 and is not pricing in any more hikes during this cycle. On Wednesday, the GDP for the second quarter is expected to increase from 0.2% to 0.3%. As the base effect takes hold, the annual GDP to the end of July is predicted to be 1.8%, down from the previous read of 2.3%.

Since today is a holiday in the US, overnight market conditions may be apprehensive due to reduced liquidity. Tomorrow is the start of the ASEAN 2023 summit in Jakarta, among other things. Australian and Chinese officials are reportedly going to meet behind closed doors for the first time since their relationship soured in 2020. While no significant announcements are anticipated, the markets may view the nations’ thawing of tension as a positive development.

The US is expected to grow by 1.9% in 2023, according to Moody’s Global Rating Agency, up from the 1.1% growth forecast in May. China’s outlook is expected to be 4.0%, down from the previous 4-5% estimate. This degeneration point is demonstrated by declining consumer confidence and difficulties encountered by those buying homes in China.

In its most recent report, which was released late Friday, the global rating agency Moody’s revised up its estimates for the US Gross Domestic Product (GDP) and lowered its estimates for economic growth in China. In a report obtained by Reuters, Moody’s stated, “We have raised our growth forecast for the United States’ economy to 1.9% in 2023 from 1.1% in our May outlook, acknowledging the strong underlying economic momentum.” The rating agency also pointed out challenges facing the Federal Reserve (Fed) in maintaining the 1.0% US growth projections for 2024 while defending the Fed’s 2.0% inflation target should the current economic transition succeed.

However, Moody’s projects that China’s GDP will expand in 2023 at the same 5.0% annual rate as anticipated. The global rating agency did, however, also lower its estimate of China’s GDP in 2024 from 4.5% to 4.0%. In doing so, Moody’s notes that uncertainty in the economy and in policy will continue to influence business decisions and points to low consumer confidence as a reason why household spending has been restrained.


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