USDCHF is moving in the Descending channel and the market has reached the lower high area of the channel
Vice Chairman Martin Schlegel of the Swiss National Bank (SNB) announced on Thursday that the SNB will increase the channels through which it provides banks with liquidity. SNB anticipates that banks that lend money for mortgages will participate in the programme.
SNB will give all Swiss banks, not just those that are systemically important, liquidity against mortgages as collateral. This will help Switzerland as a whole as well as the participating banks. In order to obtain liquidity using mortgages as collateral, a bank must transfer mortgages to SNB.
XAUUSD Gold price is moving in the Symmetrical triangle pattern and the market has fallen from the top area of the pattern
FED took hold on the interest rate last night making the US 10-Year Treasury rise to 4.43% highest level since 2007. Holdings of Gold are bearish after the holding of the rate path by the FED.
The price of gold is trading at about $1,930 in the early hours of Thursday’s European trading session. The US Federal Reserve’s (Fed) decision on policy rates appears to have caused investors to refocus their attention on impending US data. The Fed’s hawkish outlook on the trajectory of interest rates, however, puts pressure on the yellow metal’s price. At its meeting on Wednesday, the Federal Reserve made the predictable decision to keep the benchmark policy rates at their current level of 5.5%. Furthermore, it is expected that the central bank will pursue a further rate hike in 2023, consistent with the forecast of slightly higher inflation from the Federal Open Market Committee (FOMC) than from its earlier estimates. As a result, the Federal Reserve raised its 2024 interest rate projections from 4.6% to 5.1% in an unexpected move. The US Dollar (USD) was significantly supported by this adjustment.
The US Dollar Index (DXY), which compares the performance of the US dollar to six other major currencies, continues to rise and is currently trading at a six-month high of approximately 105.50. Higher US Treasury yields have also strengthened the US dollar and raised the opportunity cost of owning gold and other non-interest bearing assets. At 4.43%, the yield on the US Treasury note maturing in 10 years is at its highest point since 2007. Additionally, Federal Reserve Chair Jerome Powell reaffirmed the Fed’s commitment to hitting its long-term inflation target of 2% in a press conference that followed the rate decision on Wednesday. Powell underlined that data-driven analysis would be the foundation for any future policy decisions, even as he also hinted that the central bank is probably nearing the peak of its cycle of interest rate hikes. On Thursday, investors will be closely watching the United States (US) for their next round of data releases. The Philadelphia Fed Manufacturing Survey, the weekly Initial Jobless Claims, and the shift in Existing Home Sales are all included in this data. These studies can offer insightful information about the state of the US labour market, manufacturing sector, and real estate market—all of which have a significant impact on the mood of the economy.
XAGUSD Silver price is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
FED According to a statement from the FED conference meeting, the interest rate was held last night, which caused the US dollar to rally. Any additional rate hike will be based on data.
At its most recent meeting, the Federal Reserve Fed maintained the current range of interest rates 5.25%–5.5%, but it did so in a more hawkish manner than the markets had anticipated. In contrast to the previous four rate cuts predicted in June, the Fed’s dot plot only looked for two rate cuts in 2024, leaving the door open for one more rate hike by year’s end. In a similar vein, the Fed funds rate was predicted to reach 3.9% in 2025, up from the earlier estimate of 3.4%. The obvious conclusion from this is a high-for-longer rate outlook, which demanded an overnight hawkish recalibration of rate expectations. Although there is more reason to believe that a soft landing is possible given the higher GDP and lower unemployment estimates for 2023 and 2024, Fed Chair Jerome Powell also appears to be more confident in his ability to maintain a stricter stance during his press conference, downplaying the rate of inflation and saying that stronger activity means we the Fed have to do more with rates.
US Treasury yields found support overnight to continue rising to 16-year highs, which helped the US dollar recover some of its previous losses. That means that a bullish pin bar is forming on the daily chart, indicating that the US dollar is about to reclaim the resistance level of 105.00. If there is more positive follow-through, the 106.84 level might be the next obstacle to overcome. Its weekly Relative Strength Index RSI is still trading above the crucial 50 level, indicating that buyers are still in broad control, while its weekly moving average convergence/divergence MACD is currently aiming for a cross back into positive territory.
EURUSD is moving in the Descending channel and the market has reached the lower low area of the channel
The European Central Bank’s policy maker, Gabriel Makhlouf, stated that if inflation stays constant for an extended period of time, the ECB will not be able to raise interest rates. The ECB bases its rate increase on data from the European regions.
Policymaker Gabriel Makhlouf of the European Central Bank (ECB) stated that “a further rate hike is possible” in an interview with an Irish newspaper on Thursday. Before March, there is little chance of a rate reduction. At our upcoming meeting, we will not be stating that. Rate increases might not be necessary if inflation stays the same. The current ECB rate may not change for some time.
GBPUSD is moving in the Descending channel and the market has reached the lower low area of the channel
UK Chancellor Jeremy Hunt stated that we want to lower inflation earlier than anticipated and that it is still too high ahead of the Bank of England’s interest rate decision today.
In preparation for the Bank of England’s (BoE) interest rate announcement on Thursday, the British pound is strengthening (see the economic calendar below). The UK economy has experienced a rollercoaster build-up to this specific risk event, with inflation increasing and market pricing increasing hawkish bets. This has since been significantly reduced to about 22bps of additional rate increases in early 2024 (see table below). Up until Wednesday morning, expectations were firmly in favour of another 25 basis point hike; however, the UK CPI indicated an easing of inflationary pressures, which caused a significant shift in market pricing in favour of a rate pause. Pound traders will be closely watching tomorrow’s decision, which is essentially a coin toss.
GBPCHF is moving in the Box pattern and the market has rebounded from the support area of the pattern
Recent increases in rental prices have brought them to levels not seen in a decade, and should this trend continue, it will exacerbate inflationary pressures. Before this information, BoE Governor Andrew Bailey hinted that the cycle is close to or approaching its peak, which made the BoE’s guidance a little more dovish than it was a few months ago. When you combine that with the upside surprises in the PPI input and output, the UK might eventually experience ripple effects.
Voting on the BoE rate announcement could be far more divided than it was in the previous split, which is displayed below. This morning, UK Chancellor Hunt continued to stress the significance of reducing inflation with the following remarks: There is still too much inflation. All the more reason to adhere to our strategy of cutting inflation in half. The BoE may very well stick to previous market projections and raise rates by 25 basis points in light of this.
AUDUSD is moving in the Box pattern and the market has fallen from the resistance area of the pattern
Last night, the Australian dollar fell against the US dollar due to the FED rate pause. In upcoming meetings, the RBA will hold rates due to China’s stimulus injection.
The AUD/USD pair continues to lose ground during Thursday’s Asian session, carrying over the sharp retracement slide from levels slightly above the 0.6500 psychological mark, or a nearly three-week high, from the previous day. Supported by persistent buying of US dollars (USD), the downward trajectory pushes spot prices to the lower end of the weekly range, or roughly the 0.6420-0.6415 region. The USD Index (DXY), which measures the strength of the US dollar relative to a basket of other currencies, is actually approaching a six-month high that was reached last week and is still strongly backed by the Fed’s (Fed) hawkish outlook. After two days of monetary policy meetings, the US central bank decided, as was widely expected, to keep interest rates unchanged on Wednesday. The Fed did, however, maintain its forecast that rates would peak at 5.5% to 5.75% by the end of this year and left open the possibility of one more 25 bps lift-off in 2023. Moreover, instead of the four rate cuts previously anticipated in 2024, policymakers now see the benchmark rate at 5.1% the following year.
This drives the yield on the rate-sensitive two-year US government bond to a 17-year high, reaffirming a higher-for-longer narrative. In addition, the benchmark 10-year yield has increased to its highest level since late 2007, which is supporting the safe-haven currency and putting more pressure on the Australian Dollar (AUD), which is sensitive to risk, along with a softer risk tone. In addition, the cautious approach China is taking to adding more stimulus and the conjecture that the Reserve Bank of Australia (RBA) may have concluded its rate-hiking cycle are factors that contribute to the negative sentiment surrounding the AUD/USD pair. Consequently, this implies that the spot prices’ least resistance path is downward. The bearish flag pattern that has formed on short-term charts supports the bearish outlook for the AUD/USD pair even from a technical standpoint. That being said, it will be wise to hold off on positioning for any additional depreciating move until there has been a sustained break below the 0.6400 mark. The US economic docket, which includes the regular data on Existing Home Sales, the Philly Fed Manufacturing Index, and Initial Weekly Jobless Claims, is now the focus of market participants. This could affect the dynamics of the USD price and create short-term trading opportunities around the AUD/USD pair ahead of Friday’s release of flash PMI prints, along with the US bond yields and the general risk sentiment.
AUDJPY is moving in the Box pattern and the market has fallen from the resistance area of the pattern
According to Japan’s chief cabinet secretary, Hirokazu Matsuno, foreign exchange moves are fundamental and based on fundamentals. We closely monitor and cooperate with the US for FX desirable moves.
At a press conference on Thursday, Chief Cabinet Secretary of Japan Hirokazu Matsuno stated that he “will not rule out any options for response to FX moves.” It is critical that FX moves steadily in line with fundamentals. Will react suitably to FX movements when required. Anticipate the BoJ to maintain appropriate monetary policy and to keep in close contact with the government. Acknowledge to international authorities that excessive foreign exchange movements are not desirable.
NZDUSD is moving in an Ascending channel and the market has reached the higher low area of the channel
New Zealand’s GDP increased by 1.8% in the second quarter compared to the previous reading of 2.2%, exceeding the estimate of a 1.2% increase. The data caused the NZD dollar to decline.
The New Zealand economy grew by 0.9% in the second quarter, up from 0% in the first reading, according to Statistics New Zealand’s most recent data, which was made public on Thursday. A 0.5% expansion was anticipated by the market. While beating estimates of a 1.2% increase, the annual GDP grew by 1.8% in the second quarter, as opposed to 2.2% growth in the first quarter.
CADCHF is moving in an Ascending channel and the market has reached the higher high area of the channel
BoC Deputy Governor Sharon Kozicki said Domestic readings have more ups and downs, So we are waiting for stable inflation to come into the economy in the upcoming days.
A drop in oil prices has hurt the Loonie, which is correlated with commodities. The Canadian Consumer Price Index (CPI) increased to 4.0% YoY in August from 3.3% in July, according to data released on Tuesday. The core CPI, which does not include volatile food and oil prices, increased from 3.2% in the prior reading to 3.3% YoY. The Bank of Canada (BoC) may decide to raise interest rates even further as a result of these numbers.
Deputy Governor Sharon Kozicki of the Bank of Canada stated in a speech following the release of the data that the central bank concentrates on core inflation measures because large ups and downs like those that have occurred in the last few months are not all that uncommon. The preliminary Canadian retail sales data for July is scheduled to be released on Friday.
In an interview with FOX, Saudi Crown Prince Mohammed bin Salman stated that the reduction in oil production is not favoured for the benefit of the Russia War, but rather to balance supply and demand for global necessities.
Saudi Crown Prince Mohammed bin Salman stated that the goal of OPEC’s decision to reduce oil production was market stability rather than aiding Russia in its conflict in Ukraine. In an interview, the crown prince stated, We simply monitor supply and demand. Our responsibility as members of OPEC+ is to make up for any shortages in supply. Our responsibility as members of OPEC+ is to gauge any excess supply in order to maintain market stability.
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