AUDUSD Analysis
AUDUSD is moving in the Descending triangle pattern and the market has fallen from the lower high area of the pattern
Following last week’s positive data on employment and unemployment, the Australian dollar is slightly higher. The market is consolidating this week ahead of FOMC.
After strengthening earlier in the week, the Australian dollar weakened heading into the weekend. In comparison to the majority of other major currencies, the US dollar gained ground last week overall. At the Federal Open Market Committee (FOMC) meeting on Wednesday of this week, interest rate markets have been reducing their expectations of rate hikes. The markets for interest rates are not anticipating any changes, but they do assign a 50/50 chance of a 25 basis-point increase by year’s end, followed by a relaxation in the middle of 2024. The European Central Bank (ECB) raised its target rate by 25 basis points to 4.00% last Thursday. Reactions to the event were less upbeat regarding the Eurozone’s prospects for growth. As a result, the markets anticipate that the ECB will be less aggressive in the future.
Australia’s unemployment rate for August was 3.7% last week, as previously reported and as expected. The number of new jobs in Australia for the month was 65k, significantly more than the predicted 25k. Regretfully, 62k of the newly created jobs were part-time as opposed to full-time. The rate of participation increased from 66.7% to 67.0%. In the future, on Tuesday, the minutes of the RBA’s meeting from earlier this month will be made public. The FOMC meeting on Wednesday, however, will be the main events for markets.
Michelle Bullock, the newly appointed Governor, will take over as RBA Governor next month. She predicted that the economy would prosper, that inflation would be reined in, and that rates of unemployment and employment would rise. Rate reductions are anticipated by many more analysts for her career in the RBA Cycle.
Reuters reports that Michele Bullock will inherit an economy characterised by steady employment growth, moderate inflation, and ongoing development when she becomes the first female head of the Reserve Bank of Australia (RBA) on Monday. For the past three months, the Reserve Bank of Australia (RBA) has paused its aggressive rate rises that lasted more than a year. In her first meeting as governor next month, Bullock is expected by the markets to maintain them, and some economists predict that her first move would be a rate cut.
In the 13 months leading up to June, the RBA raised interest rates by 400 basis points (bps), to an 11-year high of 4.1%, while the Consumer Price Index (CPI) declined, falling from 8.9% in December to 4.9% in July. By the end of 2025, the bank anticipates reaching the RBA’s target range of 2% to 3%.
XAUUSD Analysis
XAUUSD Gold price is moving in the Descending triangle pattern and the market has reached the lower high area of the pattern.
Prior to this week’s FOMC meeting, gold prices have been gradually rising. It is more anticipated that there will be no change in rates, which will support gold prices relative to the USD.
For the third day in a row, the price of gold draws some buying on Monday, and during the Asian session, it gradually returns to the $1,930 supply zone. With support from an overall weaker tone around the Asian equity markets, the XAU/USD may now be looking to build on its recent goodish rebound from the $1,900 round figure, or over a three-week low touched last Thursday.
The deteriorating economic conditions in China continue to worry investors, and the most recent events surrounding China Evergrande Group have only added to their concerns. A few staff members of the beleaguered developer’s wealth management division were arrested in Shenzhen, and the company postponed making a decision to restructure its debt. This is a result of China’s conservative approach to implementing additional stimulus measures, and it negatively affects the global risk sentiment. As a result, some haven flows are observed towards the price of gold.
XAGUSD Analysis
XAGUSD Silver price is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
In addition, a slightly more positive outlook for the US Dollar (USD) is thought to be another factor supporting the XAU/USD. While traders appear hesitant to make bold wagers ahead of the significant two-day Federal Open Market Committee (FOMC) policy meeting beginning on Tuesday, the downside risk for the USD is still mitigated. Although it is widely expected that the Federal Reserve (Fed) will maintain current interest rates, markets are still factoring in the possibility of an additional 25 basis points (bps) of hike in November or December. The outlook is still favourable for high US Treasury bond yields, which support the USD and may limit further gains for the price of gold, which does not yield. Also, traders may decide to hold off on making bold wagers in favour of watching for new indications regarding the Fed’s trajectory for future rate hikes. The accompanying monetary policy statement and Fed Chair Jerome Powell’s comments at the press conference following the meeting will therefore be the main points of interest. This will affect the USD and give the commodity denominated in US dollars a new direction.
This week, investors will also have to deal with a number of significant rate announcements from central banks, starting on Thursday with the Bank of England (BoE) and the Swiss National Bank (SNB), and concluding on Friday with the Bank of Japan (BoJ). In addition, traders will be watching Tuesday and Wednesday for Canada’s and the UK’s most recent consumer inflation data, respectively, in order to identify some significant trading opportunities related to the price of gold.
USDCHF Analysis
USDCHF is moving in an Ascending channel and the market has reached the higher high area of the channel
The August Swiss CPI data increased by 0.20 percent, but it fell short of the 2% SNB target. Which means that a 25bps hike by SNB this week is likely.
The three-day winning streak for the USDCHF pair is broken on Monday during the early European session. The US Dollar Index (DXY), meanwhile, has dropped from a nine-month high of 105.40 to a current level of about 105.25. At the moment, the pair is trading close to 0.8966, down 0.11% for the day. On Wednesday and Thursday, respectively, the Federal Reserve (Fed) and the Swiss National Bank (SNB) will make important interest rate decisions that will be watched by market participants.At its policy meeting in September, the Fed is expected by the market to maintain current interest rates, but one more rate rise is still possible. Later in the day, Fed Chairman Jerome Powell is scheduled to give a press conference; however, no major announcements are expected from the Fed. Conversely, dovish policy from officials could lead to a drop in the US Dollar (USD), which would be negative for the USDCHF pair. The markets have priced in the Fed’s September rate-hike decision, according to the CME Fedwatch tool, while the likelihood of a 25 basis point (bps) increase at the November meeting has decreased to 27%.
In August, the Empire State Manufacturing Index increased to 1.9 from -19 in the previous reading, exceeding the market consensus of a 10 decline, according to a report released by the Federal Reserve Bank of New York on Friday. Moreover, Industrial Production beat market expectations, rising by 0.4% MoM from 1% in July. The preliminary Consumer Sentiment Index for September dropped from 69.1 to 67.7, according to the University of Michigan. Lastly, the Consumer Inflation Expectation dropped from 3% to 2.7% over a five-year period. In August 2023, the Swiss Consumer Price Index (CPI) increased by 0.2% from the previous month. The annual inflation rate rose 1.6% from the previous reading, but it was still below the 2.0% target maximum rate set by the Swiss National Bank (SNB). On Thursday, the SNB is anticipated to increase interest rates once more. The SNB is expected by market participants to increase its interest rate from 1.75% to 2%. Ahead of the important event, market players will be watching the Swiss Trade Balance, which is due on Tuesday. The Fed’s interest rate decision on Wednesday, which comes before the SNB meeting on Thursday, will be the main event. These occurrences might cause market turbulence and provide a distinct direction for the USDCHF pair.
USDJPY Analysis
USDJPY is moving in an Ascending channel and the market has reached the higher high area of the channel
This week, analysts and economists predicted that the Bank of Japan would abandon its ultra-loose monetary policy and raise negative interest rates. The Bank of Japan has previously stated that loose policy will not be changed if wage and inflation readings fall short of the target.
Following a retreat from the 147.95 region on Monday morning during the early European session, the USDJPY pair consolidates in a narrow range. Before this week’s major announcement from the Federal Reserve (Fed) and Bank of Japan (BoJ), the markets become cautious. The major is down 0.11% on the day and is currently trading close to 147.68. The Federal Reserve Bank of New York announced on Friday that the Empire State Manufacturing Index for August increased to 1.9 from -19 in the previous reading, surpassing the market estimate of a 10 decline. Additionally, Industrial Production exceeded market expectations by growing by 0.4% MoM from 1% in July. According to the University of Michigan, the preliminary Consumer Sentiment Index for September decreased from 69.1 to 67.7. In the meantime, the Consumer Inflation Expectation over a five-year period decreased from 3% to 2.7%.
The market anticipates that the Fed will maintain its current rate of interest hike while holding out the possibility of one more. The Fed meets this Wednesday. Afterwards, Fed Chairman Jerome Powell will give a press conference, and no significant changes are anticipated from the Fed. A dovish official position, however, could lead to a drop in the US Dollar (USD) and act as a drag on the USDJPY pair. Regarding the JPY, the focus will be on Friday’s BoJ policy meeting. The prospect that the BoJ may be much closer than previously believed to ending its ultra-loose policy and raising negative interest rates. The BoJ policymaker did, however, say last week that as long as wage and inflation data fall short of expectations, there will be no consideration of abandoning the ultra-easy policy, which leaves the JPY exposed to its competitors. On Wednesday, the Federal Reserve (Fed) will make an interest rate decision that market players will be closely watching. At its policy meeting, the market expects the Fed to keep interest rates unchanged. On Friday, the focus will turn to the Bank of Japan (BoJ).
EURUSD Analysis
EURUSD is moving in the Descending channel and the market has reached the lower low area of the channel
According to data on the economy, the ECB raised its rate last week by 25 basis points, which is the final rate increase for this year. Following the ECB’s rate hike last week, the euro fell today.
Commerzbank economists assess the EUR outlook in light of the ECB’s rate hike last week. Basically, the ECB gave a very clear signal that rate hikes will stop, which was exactly what was mostly anticipated for the central banks’ September meeting. The ECB assumed a certain amount of risk by doing this. Given that the Fed and the other major central banks are only meeting this week, it had to set the example. In the event that these central banks give a less definite indication that they will soon stop raising interest rates as well, the euro may come under increased pressure to depreciate.
That would present an issue for the ECB because a much weaker Euro also carries the risk of raising inflation’s upside pressure, which would undoubtedly irritate the bank’s central bankers given the ongoing uncertainty surrounding the trajectory of inflation rates.
EURGBP Analysis
EURGBP is moving in the Descending channel and the market has reached the lower high area of the channel
Knowing that is precisely what neither the market nor we anticipate happening is consoling. The most we can reasonably expect from this week’s central bank decisions, priced in at one and done, with the obvious exceptions of the Bank of Japan and the Riksbank. Therefore, any departure from that is probably going to result in more noticeable fluctuations in the exchange rate.
GBPCHF Analysis
GBPCHF is moving in the Box pattern and the market has reached the horizontal support area of the pattern
A rate increase of 25 basis points is widely anticipated ahead of the Bank of England meeting on Thursday. This rate will be close to the 5.50% level observed during the 2008 financial crisis.
In advance of the Bank of England’s monetary policy announcement on Thursday, the value of the British pound has dropped to its lowest point in three months. Markets for interest rates estimate that there is an 80% chance of a 25 basis point (bp) increase, which would bring the cash rate to 5.50%, the highest since before the 2008 financial crisis. Sterling volatility may start if the bank surprises the markets with a tightening of less than 25 basis points.
NZDUSD Analysis
NZDUSD is moving in the Descending channel and the market has reached the lower high area of the channel
This week’s NZD GDP Q2 figures are planned. According to the Zealand Institute of Economy Research, GDP will increase by 1.1% in 2025 after slowing to 0.40% until 2024. In 2024, inflation is expected to reach 4.30%, and by 2025, it will have decreased by 2.4%.
The New Zealand Institute of Economic Research (NZIER) has released its Consensus Forecasts for the nation’s growth and inflation figures ahead of this week’s official release of New Zealand’s Gross Domestic Product (GDP) data. The average annual GDP growth is predicted to drop to 0.4 percent in March 2024 and then pick back up to just 1.1 percent in 2025. As the effects of earlier increases in the Reserve Bank’s Official Cash rate (OCR) are being felt by the larger economy, higher interest rates are beginning to reduce demand.
The downside risk of decreased demand for New Zealand exports, mostly as a result of China’s revised downgraded growth outlook, is additionally added to this. The positive risks resulting from the robust net migration recovery, which is expected to sustain demand in the upcoming years, counterbalance these. The forecast for inflation for the year ending in March 2024 has been upgraded. It is predicted that annual CPI inflation will peak at 4.3 percent and then fall to 2.4 percent in 2025.
The previous weekend, China’s Foreign Minister Wang Yi and US National Security Advisor Sullivan met in Malta. The purpose of this meeting is to set up the US and Chinese presidents’ participation in this year’s scheduled talks. The US is prepared to work with China on issues pertaining to Russia, Taiwan, and peace negotiations on trade.
As the two biggest economies in the world work to mend strained relations, Beijing and Washington said on Sunday that White House national security adviser Jake Sullivan met with Chinese Foreign Minister Wang Yi for several hours over the weekend in Malta, according to Reuters. The latest high-level discussion between Chinese and American officials, which included Sullivan and Wang, may open the door for a meeting between Chinese President Xi Jinping and US President Joe Biden later this year.
The US communicated to China its willingness to work with it on artificial intelligence, climate change, and drug control, but also voiced concern about Beijing’s recent deployment of fighter jets across the Taiwan Strait and China’s unclear support for Russia.
CADCHF Analysis
CADCHF is moving in the Box pattern and the market has reached the resistance area of the pattern
As market oil prices rise, the value of the Canadian dollar rises as well. The signs of China’s market recovery contributed to an earlier than anticipated increase in oil prices. This resulted in increased revenue flows for Canadian oil exports.
The positive risk tone supported by hopes for additional stimulus from China and below its peak of over six months, which was reached last week. And, the commodity-linked Loonie supported by rising Crude Oil prices, which also help to contain them. Hopes for a rebound in fuel demand in China, the world’s largest oil importer, against the backdrop of worries about reduced global supplies, provide support for the black liquid.
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