Sun, May 19, 2024

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

XAUUSD – GOLD Price Stagnates above $2,150 Before FOMC Decision

The Gold prices moved flat against US Dollar ahead of Flat FOMC meeting expectations today. Stronger US Fundamentals driven the US Dollar in the stronger phase.

Gold Price Consolidates Near One-Week Low Before FOMC Decision

The Gold price (XAU/USD) continues its sideways movement in the early European session, remaining close to a one-week low reached on Monday. Investors anticipate the Federal Reserve (Fed) to maintain higher interest rates due to persistent inflation, supporting elevated US Treasury bond yields and the US Dollar (USD) while restraining Gold’s gains.

Additionally, the risk-on sentiment in the market diminishes demand for safe-haven assets like Gold, although geopolitical tensions from the Russia-Ukraine conflict and conflicts in the Middle East provide some support.

Traders await further cues on the Fed’s rate-cut path before making significant moves, exercising caution ahead of the crucial FOMC monetary policy decision later in the US session.

Market Insights:

– Stronger US inflation figures prompt reduced expectations for a June interest rate cut, supporting USD and capping Gold prices.

Gold prices are down from a higher point of 1833 as last week fall to 1741.

– Market pricing indicates less than 50% likelihood of a June rate cut, potentially shifting the Fed’s 2024 median interest-rate projection.

– Benchmark 10-year US government bond yields rise, contributing to USD strength and limiting Gold’s upside.

– Wall Street’s positive performance on Tuesday holds back Gold bulls despite geopolitical tensions.

– Traders await FOMC meeting outcome and “dot plot” for rate-cut clues before deciding on Gold’s next direction.

– Fed Chair Jerome Powell’s post-meeting comments may introduce volatility and influence Gold prices.

EURUSD – Faces Pressure Ahead of FOMC Decision

The German March  ZEW Survey came at 31.7 and Euro zone ZEW Survey came at 33.5 beat the estimates. The US Building permits increased to 1.9% and Housing starts increased at 10.7% in February month than 8.2% printed in January month.

EURUSD has broken the Ascending channel in downsideEURUSD has broken the Ascending channel in downside

On Tuesday, the EUR/USD pair experienced a decline amid significant developments in central banking policies and positive housing data from the United States.

Firstly, the Bank of Japan (BOJ) made a notable decision to move away from negative interest rates, although it implemented a dovish rate hike. This decision led to a weakening of the Japanese Yen (JPY) against most G8 currencies. Similarly, the Reserve Bank of Australia (RBA) opted to keep its interest rates steady at 4.35%. However, the RBA indicated that it would consider raising rates if inflation were to accelerate.

In addition to these central bank actions, Wall Street saw decent gains while global bond yields decreased. The housing sector in the US showed signs of strength, with US Building Permits for February increasing by 1.9% month-on-month (MoM), rising from 1.489 million to 1.496 million. Similarly, Housing Starts during the same period exceeded expectations, growing by 10.7% compared to an estimated 8.2%.

Meanwhile, the yield on the US 10-year Treasury bond decreased by two basis points, reaching 4.034%. Concurrently, the US Dollar Index (DXY), which measures the dollar’s strength against a basket of other currencies, experienced a gain of 0.23%, reaching 103.82.

ECB forecasts for inflation are transitory not permanent so 2.2 in 2021 will step down to 1.7 in 2022 and 1.5 in 2023.

On the Eurozone front, Germany published its March ZEW Survey, which showed an improvement with a reading of 31.7. Additionally, the EU’s ZEW Survey surged to 33.5, surpassing initial estimates.

USDJPY – JPY Extends Post-BoJ Losses, Nears Multi-Decade Low Before Fed

The Japanese yen moved lower against counter pairs after the BoJ shows Dovish rate hike done yesterday. Future policy tightening measures is not announced, Still the bank will approach for accommodative stance for some times, we have to see clear inflation driven wage cycle in the market then only we come to rate hike cycle point as per BoJ statement last day.

USDJPY is moving in an Ascending triangle pattern and the market has reached the resistance area of the pattern

USDJPY is moving in an Ascending triangle pattern and the market has reached the resistance area of the pattern

JPY Hits Four-Month Low as USD Strengthens Before Fed

The Japanese Yen (JPY) continues its seven-day decline, reaching a fresh four-month low against the USD ahead of the European session. The Bank of Japan’s (BoJ) lack of forward guidance on policy normalization weighs heavily on the JPY, coupled with a prevailing risk-on sentiment diminishing its safe-haven appeal.

Meanwhile, the USD maintains near a two-week high, supported by expectations of the Federal Reserve (Fed) maintaining higher interest rates to tackle inflation. This strengthens the USD/JPY pair beyond the mid-151.00s. Potential intervention by Japanese authorities could temper gains as traders await the FOMC policy meeting outcome.

Any changes in policy settings of FOMC meeting will impact USD Dollar

Market Movements:

– Lack of BoJ forward guidance disappoints hawkish traders, dragging JPY to lowest level since November 2023.

– BoJ ends negative interest rate policy, announces first rate increase since 2007, while pledging accommodative monetary conditions.

– Robust US consumer inflation fuels speculation of Fed adjusting forward guidance to two 25 basis points rate cuts in 2024.

– Focus remains on FOMC meeting outcome and updated economic projections, including “dot plot” for rate-cut path cues.

– Hawkish Fed expectations support elevated US Treasury yields, favoring USD bulls, although intervention fears may limit JPY losses and cap USD/JPY upside.

USD INDEX – Rises Below 104.00 Ahead of Fed Rate Decision

The US Dollar index moved higher ahead of  FED Interest rate decision meeting held today.

Strong Labour and inflation data makes  FED has to do no rate hikes in this meeting.

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

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

USD Index Climbs Near Multi-Week Highs as Fed Decision Nears

The US Dollar Index (DXY) continues its upward trend for the fifth consecutive day, hovering near multi-week highs in the early European session on Wednesday. The dollar’s rise is fueled by expectations that the Federal Reserve (Fed) will maintain its high-interest-rate stance amid elevated US inflation. Traders await the outcome of the Fed’s monetary policy meeting and press conference for further guidance. Currently, the DXY stands at 103.88, up by 0.06% for the day.

The Fed is anticipated to keep interest rates steady at 5.25% to 5.5% during its March meeting, with the first rate cut possibly occurring in June or July. Market focus will shift to Fed Chair Powell’s press conference post-meeting, which could provide insights into future rate adjustments for 2024. Hawkish comments from the Fed could bolster the dollar in the short term.

FED US Federal Reserve

Recent US economic indicators suggest a moderation in inflation from its peak levels but still above the 2% target. Strong labor market data indicates no immediate need for rate cuts to avert a recession. Fed Chair Jerome Powell warns against premature rate cuts, fearing they could fuel inflation further and harm consumers. The Fed is likely to maintain its forward guidance, awaiting sustained evidence of inflation easing towards the 2% target before considering rate adjustments.

Traders will closely watch the Fed’s interest rate decision, press conference, and ‘dot-plot’ projection on Wednesday. Additionally, preliminary US S&P Global PMI data for March on Thursday will guide trading opportunities around the US Dollar Index.

USDCAD – gains above 1.3570, focuses on Fed rate decision

Yesterday Canadian Headline inflation rate came at 2.8% and Core CPI data came at 2.1% from January 2.4%, Monthly basis increased to 0.30% from 0.60% expected increment. Whole CPI data down turn against forecasts makes the economists poll of BoC rate cuts increased to 75% in June month

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

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

Fed likely to maintain rates at 5.25%-5.5% amid inflation focus; market eyes June rate cuts

The Federal Reserve is expected to keep interest rates at a two-decade high during its two-day policy meeting on Wednesday, prioritizing concerns over persistent inflation. Market sentiment, as indicated by the CME FedWatch Tool, suggests a 63% probability of three quarter-point rate cuts beginning in June.

In the US, New Home Sales surged 10.7% MoM in February, rebounding from a 12.3% decline in January, while Building Permits rose by 1.9%, contrasting with the prior 0.3% decrease.

Conversely, weaker-than-anticipated Canadian CPI inflation data has raised expectations of a rate cut by the Bank of Canada (BoC) in June, exerting downward pressure on the Canadian Dollar (CAD). Post-data analysis shows a 75% chance of rate cuts by the BoC, up from 50% before the release.

In Canada, February’s headline CPI rose 2.8% YoY, while the Core CPI eased to 2.1% from January’s 2.4%. Monthly CPI figures also came in lower than expected, rising by 0.3% compared to the forecasted 0.6% increase.

Consumer Price Index (CPI)

Looking ahead, the focus remains on the Fed’s monetary policy announcement, with Fed Chair Jerome Powell’s subsequent press conference expected to provide insights into the central bank’s future outlook. Additionally, the release of the BoC Summary of Deliberations and Canadian housing data on Thursday will shape market sentiment.

EURGBP – Stays Range Bound After UK Inflation Data

The UK CPI data for the month of February came at 3.4% well below forecasts of 3.6% and 4.0% printed in previous month. Core CPI down turn to 4.5% from 5.1% printed in January month, But still above the BoE  target of 2.0% inflation reading in the market.

EURGBP is moving in the Box pattern and the market has fallen from the resistance area of the pattern

EURGBP is moving in the Box pattern and the market has fallen from the resistance area of the pattern

Rate cuts is more expected from BoE after the CPI downturn data today.

UK CPI Data: Headline and Core Rates Miss Expectations

According to the UK Office for National Statistics (ONS), headline CPI rose 0.6% in February, contrasting with a 0.6% decline in the previous month. However, the yearly rate decelerated to 3.4%, its lowest since September 2021.

Additionally, Core CPI fell from 5.1% YoY to 4.5% in February, also below expectations. With the UK facing a technical recession in Q4, speculation grows for an early BoE rate cut, pressuring GBP and modestly boosting EUR/GBP.

Britain currency gbp with economic charts

Despite remaining above the BoE’s 2.0% target, UK inflation limits GBP losses. However, the EUR faces pressure amid expectations of ECB interest rate cuts in June, curbing EUR/GBP gains.

Traders show caution ahead of the BoE policy meeting, opting to wait on the sidelines. Thus, it’s advisable to await sustained breakout before considering positions, especially after the recent rebound from the 0.8500 level.

EURCHF – Surprise SNB cut may push EUR/CHF past 0.9700, boost USD/CHF – ING

According to ING analysts, SNB still selling FX in the markets from latest economic data releases.

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

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

Soon SNB buying FX time will come and do rate cuts before June month is widely expected. SNB meets 4 times a year but ECB meets 8 times a year. So more care for rate cuts from SNB side.

EUR/USD could decline if a major European central bank cuts rates. Today’s data reveals that the Swiss National Bank continued FX selling in Q4 of last year. While FX buying this quarter is possible, confirmation won’t be available until late June.

ECB strategy meeting takes place last day

Thursday’s SNB meeting is crucial. While a rate cut isn’t ING’s primary expectation, it’s not ruled out given the SNB’s quarterly meetings compared to the ECB’s eight times annually.

A surprise SNB rate cut could push EUR/CHF above 0.9700 and raise USD/CHF significantly, especially if EUR/USD drops due to a European rate cut.

AUDUSD – AUD Declines as USD Holds Steady, Awaits Fed Decision

The Australian Consumer confidence data came at 81.7 in February month from 82.2 printed in previous month. The China Foreign minister Wang Yi Visited Australian Foreign affairs and discussed about any hesitations, misunderstanding must be addressed immediately for smooth business transactions between us.

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

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

AUD Struggles as USD Strengthens; RBA Maintains Rates

The Australian Dollar (AUD) attempts to recover on Wednesday after intraday losses, potentially aided by ASX 200 volatility, yet faces pressure from a robust US Dollar.

The Reserve Bank of Australia (RBA) keeps interest rates steady at 4.35%, emphasizing the ongoing battle against inflation without indicating specific rate adjustment plans.

US Dollar Index (DXY) maintains uptrend due to improved US Treasury yields ahead of the US Federal Reserve (Fed) interest rate decision, expected to remain unchanged at 5.25% to 5.5%.

In market updates:

– ANZ-Roy Morgan Australian Consumer Confidence index stands at 81.7.

– People’s Bank of China (PBoC) maintains interest rate at 3.45%.

People Bank of China reported the injection of CNY 100 billion 15.46 billion into the financial system on Monday.

– US Building Permits and Housing Starts exceed expectations in February.

– Preliminary US Michigan Consumer Sentiment Index declines to 76.5 in March.

– US Industrial Production increases by 0.1% in February.

– US Core Producer Price Index rises to 2.0% year-over-year in February.

– US PPI exceeds expectations, with YoY increase of 1.6% and MoM rise of 0.6% in February.

NZDUSD – Drops to 0.6040 Before Fed Policy, NZ Q4 GDP

The Q4 NZ GDP data is expected to 0.10% than -0.30% contraction in Q3. If higher data printed then RBNZ keeps rate at higher stance for some time.

The Fed Expected to Hold Rates Steady, NZD Waits on Q4 GDP

NZDUSD has broken the Ascending channel in downside

NZDUSD has broken the Ascending channel in downside

The Federal Reserve is likely to maintain interest rates between 5.25% and 5.50% for the fifth consecutive time, with uncertainty limiting gains in risk-sensitive assets. Investors anticipate Fed support for prolonged higher rates amid stubborn February inflation.

Investors await the updated dot plot, providing quarterly interest rate projections.

Meanwhile, the New Zealand Dollar awaits Q4 GDP data, expected to show a slight 0.1% expansion following a third-quarter contraction of 0.3%.

RBNZ reserve bank of new zealand

Positive GDP figures may support the Reserve Bank of New Zealand’s stance on maintaining higher rates, while a decline could signal economic vulnerability, challenging the bank’s balancing act between inflation and economic growth.

XTIUSD – WTI dips as Russia boosts supply, hovers near $81.80.

The Russia is extended its exports supply of oil after the Ukraine drone attacks in three Russian oil refineries it contributed 10% of Russia oil exports. The Iraq announced they are cut the oil output to 3.3 million barrels per day.

Crude oil price is moving in an Ascending channel and the market has fallen from the higher high area of the channel

Crude Oil price is moving in an Ascending channel and the market has fallen from the higher high area of the channel

WTI oil eases near $81.80 amid rising Russian supply and Fed’s interest rate decision. Ukraine’s drone strikes on Russian refineries impact global oil dynamics.

OPEC nations meeting happening on November 4th of this week

Iraq plans export cuts to offset OPEC+ quota exceedance, while Saudi Arabia’s exports decline. Saudi Aramco CEO predicts continued oil demand growth, dismisses phasing out fossil fuels.

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