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EUR/USD climbs after US GDP, eurozone CPI nextThe euro has in positive territory on Thursday. EUR/USD is trading at 1.0840 in the North American session, up 0.37% on the day. The week wraps up with eurozone inflation on Friday. The market estimate for May stands at 2.5% y/y/, compared to 2.4% in April. The core inflation rate is expected to tick higher to 2.8% y/y, up from 2.7% in April. In Germany, the largest economy in the eurozone, inflation accelerated to 2.4% y/y in May, following a 2.2% gain in each of the past two months. This was the first time in five months that Germany’s inflation rate increased. On a monthly basis, inflation fell to 0.1%, a sharp drop from the 0.5% gain in April. The timing of the eurozone CPI release is significant, as it comes shortly before the European Central Bank rate meeting on June 6th. The ECB has strongly hinted that it will lower rates at the meeting and it would be a nasty surprise for the markets if the ECB changes its mind. With inflation under 3% and the eurozone grappling with sluggish economic activity, the conditions seems right for a rate cut. The ECB’s rate-tightening cycle has done a good job slashing inflation, and lower rates would provide some relief to households which are struggling with elevated rates and the high cost of living. In the US, second-estimate GDP was revised downwards to 1.3% y/y. This was below the 1.6% in the first estimate but higher than the market estimate of 1.2% and much weaker than the 3.4% gain in the fourth quarter of 2023. The drop in GDP was mainly attributable to weaker consumer spending, as consumers are yet to see any relief from the Fed’s high benchmark rate target of 5.25% to 5.50%. The Fed is concerned about stubbornly high inflation and FOMC members have been constantly pouring cold water on rate-cut expectations. The Fed has shown it can be patient and if the inflation picture doesn’t improve, it is conceivable that the Fed won’t lower rates before 2025. EUR/USD pushed past resistance at 1.0806 and is testing resistance at 1.0845 1.0765 and 1.0726 are the next support levels
by OANDA
GOLD (Summary + GDP result) Technical Analysis of Gold The price is expected to consolidate between 2327 and 2344 until a breakout occurs. Today, the GDP report will impact the market, with expectations being negative for the U.S. dollar. Depending on the results, the price may initially push up before starting to drop. However, if the GDP exceeds 1.2%, this outcome will likely be negative for gold. In summary, stability below 2327 will lead to a drop towards 2303, while stability above 2344 will support a rise towards 2354 and 2369. Pivot Price: 2344 Resistance Levels: 2354, 2369, 2388 Support Levels:** 2327, 2318, 2304 Today's anticipated trading range is between the support level at 2302 and the resistance level at 2369.
OANDA:XAUUSD
by SroshMayi
Strifor || GOLD-30/05/2024Preferred direction: SELL Comment: There are no changes for gold , as for metals in general. A downward movement is also expected in silver , which we wrote about earlier. At the moment, the deal is going more, of course, within the framework of scenario №2 , but we remember that this deal was considered in combination with scenarios №1 and №2 , therefore, in general, the short is activated and an approach to support is expected at the level of 2300 with the potential for a fall to 2250 . Additional comments on this trade will be provided as situation changes. Follow us! Thank you for like and share your views!
OANDA:XAUUSDShort
by Strifor
1
Strifor || GBPUSD-30/05/2024Preferred direction: SELL Comment: The British pound has almost the same setup for selling as the euro . For now, we are putting all purchases aside, and in the near future, a further fall is expected towards the level of 1.26000 , just above which we fix the target for this short. The most likely scenario №1 speaks of selling at current prices, one can try small stop losses, and it is better to re-enter. That is, this is an intraday trade. Scenario №2 involves shorting after a deeper pullback towards the 1.27500 level, but this is a very unlikely potential maneuver. Additional comments on this trade will be provided as situation changes. Follow us! Thank you for like and share your views!
Short
by Strifor
1
Strifor || EURUSD-30/05/2024Preferred direction: SELL Comment: The price did not approach the level of 1.09000 , at least in the first half of this week, and the euro quickly fell to 1.08000 . In the short term, the decline is likely to continue. An important point, of course, will be today's statistics from the US on GDP , the labor market, and so on. We consider two scenarios, which are depicted in the graph. Scenario №1 assumes a fall from the level of 1.08000 , below which the price is currently located. Scenario №2 - preliminary growth above the level of 1.08000 , the buyer’s attempt to gain a foothold above, and to sell it will be necessary to wait until it closes below the specified level again. The target for the fall is considered to be at the level of 1.07500. Additional comments on this trade will be provided as situation changes. Follow us! Thank you for like and share your views!
Short
by Strifor
1
Strifor || USDCHF-29/05/2024Preferred direction: BUY Comment: For the Swiss franc , the focus is on the level of 0.91424, from which buy-deal is expected, and at the same time the medium-term strengthening of the US dollar. The context for a long position has now been formed and one can look for an entry point. The best option would be to go long through a breakout, as shown in the chart. Scenario №1 and Scenario №2 in this case are precisely a long trade through a breakout. The growth target is fixed at the level of 0.92160. Additional comments on this trade will be provided as situation changes. Follow us! Thank you for like and share your views!
Long
by Strifor
1
Strifor || NZDUSD-28/05/2024Preferred direction: BUY Comment: For the NZDUSD currency pair, we have come close to the resistance level of 0.61670 , thereby fixing the previous long target. At this stage, short-term purchases continue to be relevant, and strengthening towards the level of 0.62175 is expected. Of course, overcoming the resistance at the level of 0.61670 will not be the easiest task for the buyer, but most likely, after a short accumulation, the instrument will begin to rise (scenario №1) . Also, as an alternative scenario, a preliminary rollback from this level and, after a small correction, another attempt to break up are considered (scenario №2). Additional comments on this trade will be provided as situation changes. Follow us! Thank you for like and share your views!
Long
by Strifor
1
EUR/USD steady as German Business Climate unchangedThe euro is drifting on Monday. EUR/USD is down 0.05%, trading at 1.0849 in the North American session at the time of writing. US markets are closed for Memorial Day, which will likely mean a quiet day for the US dollar. In Europe, German Ifo Business Climate stagnated in May and was steady at 89.3. This unchanged from the downwardly revised 89.3 in April and short of the market estimate of 90.4. The German economy, the largest in the eurozone, has struggled although they have been signs of recovery. GDP grew by just 0.2% in the first quarter, after contracting in the fourth quarter of 2023. The ECB meets on June 6th and its credibility is on the line if it doesn’t deliver a rate cut which would be the first since March 2016. ECB President Christine Lagarde said last week that there was a “strong likelihood” of a rate cut in June and stated that she was confident that inflation was under control. This sounded like a strong endorsement of a rate cut next week. Bundesbank President Joachim Nagel also signaled that a rate cut was coming in June, dismissing concerns over wage growth, which rose from 4.5% to 4.7%. Nagel stressed that a June cut did not signal the start of a series of cuts, as ECB decisions will depend on incoming data. The eurozone releases the May inflation report on Friday, which isn’t expected to change expectations of a June rate cut. CPI fell to 2.4% y/y in April and is expected to tick higher to 2.5% in May. EUR/USD has weak support at 1.0845. Below, there is support at 1.0806 There is resistance at 1.0886 and 1.0925
by OANDA
GBP/USD steady despite plunge in retail salesThe British pound continues to have a quiet week in which it has stayed close to the 1.27 line. GBP/USD is trading at 1.2715, up 0.13% at the time of writing in the European session. UK retail spending slumped in April with a 2.3% m/m decline. This followed a revised 0.2% decline in March and was much weaker than the market estimate of -0.4%. It was the largest decrease in four months, driven by a sharp fall gasoline and non-food items. Most sectors reported a drop in sales volume as unusually rainy weather put a damper consumer spending. On an annualized basis, retail sales fell 2.7%, after a revised 0.4% gain in March and missing the market estimate of -0.2%. Is the UK economy fading? The economy performed well in the first quarter, with Q1 GDP rising 0.6% q/q, its strongest quarter in over two years. The weak retail sales could be indicative of a weaker second quarter, which would support the BoE lowering the current cash rate of 5.25% which is throttling economic activity. With inflation falling to 2.3% in April, the 2% target is within striking distance and speculation has risen that the BoE will start to lower rates as early as August. In the US, the services and manufacturing sectors showed improvement in May. Services PMI jumped to 54.8 in May, up from 51.3 in April and above the market estimate of 51.3. This was the highest level in a year and pointed to improving business activity despite high interest rates. Manufacturing remains weak but the PMI rose from 50.0 to 50.9, which shows very modest growth. The 50 level separates contraction from expansion. GBP/USD is testing resistance at 1.2710. Above, there is resistance at 1.2736 1.2674 and 1.2648 are the next support levels
by OANDA
USD/JPY steady as Japanese PMIs mixedThe Japanese yen is slightly lower on Thursday. USD/JPY is trading at 156.70, down 0.08% on the day at the time of writing. Japan’s PMIs for April were a mixed bag and the yen didn’t show much reaction. Services PMI dipped to 53.6, down from 54.3 in March and just shy of the forecast of 53.8. This was the smallest growth in services since February. Manufacturing PMI showed improvement and rose to 50.5, up from 49.6 in March and above the market estimate of 49.7. This was the first growth since May 2023 as manufacturing has been in a prolonged slump. The 50 level separates contraction from growth. The Japanese economy is showing signs of improving after first-quarter GDP declined. Inflation has been easing, which could hamper the ability of the Bank of Japan to increase rates without reigniting deflation. With inflation falling around the globe, major central banks have been under pressure to lower interest rates. The central banks remain cautious, however, and the Fed minutes indicated that there was a discussion to raise rates at the May 1st meeting. Other central banks are also unclear about their rate path – the Reserve Banks of Australia and New Zealand held rates at their most recent meetings but also considered hiking rates. The FOMC minutes noted that policy makers are not confident about lowering rates at this stage and want to see more evidence that inflation will continue to drop and remain sustainable around the 2% target. This message is consistent with what we have been hearing from a host of Fed members, although the markets have priced in a September rate cut. USD/JPY tested support at 156.02 earlier. Below, there is support at 156.33 157.07 and 157.32 are the next resistance lines
by OANDA
NZD/USD steady ahead of RBNZ rate announcementThe New Zealand dollar is almost unchanged on Tuesday. NZD/USD is down 0.06%, trading at 0.6102 in the European session at the time of writing. The Reserve Bank of New Zealand has shown it can be patient, having held the cash rate at 4.35% for six straight times. The central bank is expected to maintain rates yet again at Wednesday’s meeting as inflation has remained stubbornly high. Inflation has been moving lower and fell to 4% in the first quarter, down from 4.7% in the fourth quarter of 2023. However, this remains double the midpoint of the 1-3% target range and is too high for the RBNZ to start trimming rates in the near-term. At the same time, economic data for the first quarter was soft which should result in disinflation. The unemployment rate rose to 4.3% in the first quarter, private wage growth decelerated and GDP contracted by 0.1% q/q. The RBNZ had its mandate limited to inflation in December; previously, the central bank was mandated to maintain low inflation and full employment. Still, the strength of the labor market and wage growth will be eyed by the central bank as it determines its rate policy. The Federal Reserve continues to sound hawkish about rate policy and remains cautious about rate cuts. On Monday, Fed Vice Chair Philip Jefferson said that it was too early to tell if the downtrend in inflation would be “long lasting”. Fed Vice Chair of Supervision Michael Barr said that first-quarter inflation data was disappointing and was not supportive of easing monetary policy. For a second straight day, there are no US economic releases and we’ll hear from a host of FOMC members, which could provide insights about the Fed’s rate policy plans. NZD/USD is tested support at 0.6089 earlier . Below, there is support at 0.6039 0.6185 and 0.6235 are the next resistance lines
by OANDA
USD/JPY jumps as US inflation drops more than expectedThe Japanese yen has posted gains on Wednesday. The yen gained as much as 1% but has given up about half of those losses on the day. At the time of writing in the North American session, USD/JPY is trading at 155.73, up 0.45%. US headline inflation didn’t drop by much, but it was enough to send the US dollar down against the major currencies. Headline inflation rose 0.3% m/m in April, just below the 0.4% gain in March and the market estimate of 0.4%. Annually, headline inflation dropped to 3.4%, matching the market estimate and down from 3.5% in March. The 3.4% gain marked the first time in four months that inflation was not higher than expected. Core CPI dropped from 3.5% y/y to 3.4% y/y and 0.4% m/m to 0.3 m/m. Both readings matched the market estimate. Investors liked what they saw from the inflation report. Prior to the report, the likelihood of a September rate cut was 64% and rose to 71% after the report. The markets have fully priced in two rate cuts before the end of the year, but are they being too optimistic? There wasn’t anything in the inflation release that would point to inflation falling to the 2% target in the near-term and Fed Chair Powell said on Tuesday that the Fed plans to maintain rates in restrictive territory. It will be interesting to see how Powell reacts to today’s inflation report. Japan releases first-quarter GDP on Thursday and the economy is expected to bounce back. The market estimate stands at 0.1% q/q, compared to -0.4% in Q4 2023. Annually, GDP is expected to climb 0.4% y/y, after a 1.5% decline in the fourth quarter. USD/JPY tested support at 154.83 earlier. Below, there is support at 153.72 There is resistance at 156.88 and 157.99
by OANDA
GBP/USD higher with eye on employment reportThe British pound is slightly higher on Monday. GBP/USD is up 0.20%, trading at 1.2549 in the European session at the time of writing. The UK labor market has held up well despite high interest rates but cracks have appeared and Tuesday’s job report is expected to be soft. Employment change is expected to slide by 215,000 in the three months to March, after declining by 156,000 in the previous release.UK wage growth including bonuses is forecast to fall to 5.3%, down from 5.6% and the unemployment rate is expected to creep up to 4.3%, up from 4.2%. The Bank of England will be keeping a close eye on Tuesday’s employment report. A decline in employment and wage growth will indicate that the labor market continues to cool down which could complicate the BoE’s plans to lower interest rates. The UK ended last week on a high note, as GDP grew 0.6% q/q in the first quarter, higher than the 0.4% market estimate. The stronger data still left a question mark about the central bank’s rate path, as the market pricing of a rate cut in June is around 48%. BoE Governor was non-committal about a June hike at his press conference at last week’s policy meeting. Still, Bailey didn’t rule out a June hike and said that he was “optimistic that things are moving in the right direction”. In the US, the University of Michigan consumer confidence index fell to 67.4 in May, compared to 77.2 in April and shy of the market estimate of 76.2. One-year inflation expectations rose from 3.2% to 3.5%, which indicates that consumers are less confident about inflation receding. GBP/USD tested support at 1.2522 earlier. Below, there is support at 1.2449 1.2597 and 1.2680 are the next resistance lines
by OANDA
United Kingdom GDP (QoQ) ECONOMICS:GBGDPQQ Great Britain officially entered in Recession due to Two Consecutive Negative Quarters. The British economy contracted 0.3% on quarter in Q4 2023, following a 0.1% decline in Q3, worse than market forecasts of a 0.1% fall, preliminary estimates showed. The economy entered recession amid a broad-based decline in output, namely in services (-0.2%, the same as in Q3), particularly wholesale and retail trade (-0.6%); industrial production (-1% vs 0.1%), mostly manufacture of machinery and equipment (-7%) and construction (-1.3% vs 0.1%). On the expenditure side, there was a fall in exports (-2.9% vs -0.8%), imports (-0.8% vs -1.8%); household spending (-0.1% vs -0.9%), particularly lower spending on recreation and culture, miscellaneous goods and services, and transport; and government consumption (-0.3% vs 1.1%), namely lower activity in education and health. Those falls were partially offset by an increase in gross capital formation (1.4% vs -1.4%), mostly other buildings and structures. Considering full 2023, the GDP in the UK edged up 0.1%. source: Office for National Statistics
ECONOMICS:GBGDPQQ
by Mr_J__fx
British pound listless despite strong GDPThe British pound is drifting on Friday. GBP/USD is up 0.05%, trading at 1.2531 in the European session at the time of writing. The British economy grew by 0.6% q/q in the first quarter, higher than the market estimate of 0.4% and above the Q4 2023 decline of 0.3%. This marks a rebound after a mild recession in the second half of 2023. GDP posted its best quarterly growth since Q4 of 2021 and was driven by increased expansion in the services sector. On a monthly basis, GDP rose 0.4% in March, up from 0.2% in February and above the forecast of 0.1%. This was its best performance in nine months. The British pound showed little reaction to the GDP data. The positive GDP report is unlikely to change the BoE’s rate path, which admittedly isn’t all that clear. The modest economic turnaround in the first quarter isn’t expected to be inflationary, which leaves the BoE on course to lower rates later this year. The Bank of England maintained the cash rate at 5.25% at yesterday’s meeting. The markets were hoping for a signal of a rate cut in June, but Governor Bailey didn’t play along, saying that the central bank needed to see more evidence that inflation remain low prior to cutting rates. Bailey added he was “optimistic that things are moving in the right direction”, which could be a signal that rate cuts are on the way. The markets have priced a June cut at around 50% and have fully priced a cut in August. It’s a light data calendar in the US, with UoM Consumer Sentiment the sole tier-1 event. The index is expected to drop to 76.0 in May, down from 77.2 in April. GBP/USD Technical There is support at 1.2499 and 1.2471 1.2552 and 1.2580 are the next resistance lines
by OANDA
1
Will DXY break Descending Channel at Support?!Here I have the DXY on the 4Hr Chart! For the past 2 weeks, Price on DXY has been steadily falling! With our Highs and Lows marked, we can see that Price is outlining what looks to be a Descending Channel! If price continues to follow down this channel, I suspect that the ( 105.53 - 105.025 ) Support Zone will be the area price will Most Likely find support to push higher!! What I want to see is Price test the Falling Support of the Descending Channel for a Third Time with a successful bounce ultimately turning this Descending Channel into a Bull Flag Pattern! -For added confirmation, once the next low is formed, I'd like to see: 1) The low be Equal too OR LOWER than the Second test of the Falling Support 2) A Bullish Divergence to appear on the RSI so underlying direction Fundamentally to finish the week: Advanced GDP, Unemployment Claims, Pending Home Sales (Thur) Core PCE, UoM Consumer Sentiment (Fri) -Another big fundamental factor to DXY strength will be the results from JPY Policy Rate decision and Core CPI released Thur!
TVC:DXYLong
by Novi_Fibonacci
USD/JPY ticks higher ahead of BoJ meetingThe Japanese yen continues to lose ground on Thursday. In the European session USD/JPY is trading at 155.61, up 0.17%. Earlier, the yen dropped to a 34-year low of 155.74. Friday will be a busy day out of Japan. Tokyo Core CPI, which excludes food, is a key leading indicator of nationwide inflation trends. It is expected to drop to 2.2% in April, down from 2.4% in March. The Tokyo core-core rate, which excludes food and energy, is also expected to fall, from 2.9% in March to 2.7% in April. The March reading marked the first time that the core-core rate fell below 3% since November 2022. Inflation played a key factor in the Bank of Japan’s historic decision in March to raise interest rates out of negative territory. The BoJ wants to see service inflation and wage growth to rise in order to ensure that inflation remains sustainable at the 2% target. The Bank of Japan meets on Friday as the Japanese yen continues to lose ground. The yen has lost about 10.4% against the US dollar in 2024 and this sharp descent in such a short period has set off alarm bells in Tokyo. The BoJ’s tightening in March hasn’t stopped the bleeding, as the BoJ has said that it will maintain an accommodative policy and the US/Japan rate differential remains hasn’t narrowed as the Fed has delayed rate cuts. BOJ expected to stand pat The BoJ is expected to maintain policy settings at the meeting but Governor Ueda may sound hawkish in order to provide some support for the yen. The meeting could turn out to be a non-event but the threat of intervention from the Ministry of Finance is sure to be on the minds of investors. The US releases the initial estimate for GDP for the first quarter. The market estimate stands at 2.5% y/y, compared to 3.4% in Q4 2023. The US economy has been robust and rising inflation has not only delayed rate cuts but there is even talk that the Fed could raise rates in order to put the brakes on inflation. USD/JPY tested support at 155.30 earlier. Below, there is support at 154.13 There is resistance at 155.96 and 157.13
by OANDA
GBPUSD: Thoughts and Analysis Today's focus: GBPUSD Pattern – Impulse in a downtrend. Support – 1.2330 Resistance – 1.2456 Hi, traders. Thanks for tuning in for today's update. Today, we are looking at GBPUSD on the daily chart. Today, we have broken down the current PA we are seeing and thinking about on the GBPUSD. We have touched on news to come and discussed the USD index. Can buyers beat resistance and the down trend to start forming a new trend higher? Will we see buyers fail again, maintaining the pattern of LHs and LLs maintaining a new leg lower? Good trading.
by Eightcap
NZ dollar climbs ahead of RBNZ rate decisionThe New Zealand dollar has posted considerable gains on Tuesday. In the North American session, NZD/USD is trading at 0.6065, up 0.54% and its highest level since March 21. The Reserve Bank of New Zealand meets early on Wednesday and it’s practically a given that it will hold the cash rate at 5.5%. This would mark the sixth straight time that the RBNZ maintains rates and prolongs its “higher for longer stance”. Investors will be interested in whether the RBNZ pushes back against market expectations of rate cuts – investors have priced in two cuts with a 70% probability of a third this year. The decision will not include updated economic forecasts or a news conference with Governor Orr, which could limit New Zealand dollar volatility around the meeting. The markets are being aggressive in their pricing of rate cuts, mainly due to a weak economy, as GDP has contracted in four of the past five quarters. However, high inflation is a key reason why the RBNZ is hesitant to signal rate cuts are coming. In the fourth quarter, the inflation rate was 4.7%, well above the upper limit of the 1-3% target band. New Zealand releases first-quarter CPI next week, and the release will be a key factor in the central bank’s rate policy. The RBNZ would prefer to have the Federal Reserve cut rates first, as this would boost the New Zealand dollar and weigh on inflation. The Fed has signaled rate cuts are coming but stronger than expected data, such as last week’s nonfarm payrolls, may lead the Fed to delay lowering rates. NZD/USD is testing resistance at 0.6060. Above, there is resistance at 0.6107 0.6000 and 0.5953 are providing support
by OANDA
USD/CAD edges lower on strong Canadian GDPThe Canadian dollar is slightly higher on Thursday. USD/CAD is trading at 1.3537 in the North American session, down 0.23%. Canada’s GDP bounced back with a strong gain of 0.6% m/m in January, after a 0.1% in December. This beat the market estimate of 0.4%. The preliminary estimate for February’s GDP stands at 0.4%, which means that so far, growth in the first quarter is looking solid. This is a major turnaround for the Canadian economy, which narrowly avoided a technical recession in the second half of 2023. The Bank of Canada meets next on April 10th and the improvement in GDP would support the BoC taking its time before cutting rates. The BoC has held the benchmark rate at 5% six straight times and is looking for the economy to cool and inflation to fall further before it lowers rates. At the same time, households are groaning under the weight of high interest rates, which is putting some pressure on the BoC to provide some relief by lowering rates. The US also released GDP for the fourth quarter, with the third and final estimate being revised upwards to 3.4% y/y, up from 3.2% in the second estimate and beating the market estimate of 3.2%. The GDP release was respectable but sharply lower than the 4.9% gain in Q3, which indicates that the US economy is cooling down due to elevated interest rates. The Federal Reserve has sounded more hawkish about rate policy lately. Fed Governor Christopher Waller said on Wednesday that inflation had not fallen as quickly as expected and “there is no rush to cut the policy rate”. Earlier in the week, Atlanta Fed President Rafael Bostic lowered his forecast to just one rate cut in 2024, after saying in February that he expected two rate cuts this year. USD/CAD is testing support at 1.3559. Below, there is support at 1.3503 1.3661 and 1.3717 are the next resistance lines
by OANDA
AUD/USD surges despite soft GDP dataThe Australian dollar has posted strong gains on Wednesday despite a weak GDP report today. In the North American session, AUD/USD is trading at 0.6562, up 0.90%. Australia’s economy ended 2023 on whimper rather than a gain, as GDP rose just 0.2% q/q the fourth quarter. This was lower than the 0.3% gain in the third quarter and missed the market estimate which was also 0.3%. The economy has been limping along and the Q4 release marked the weakest quarterly growth in five quarters. On an annual basis, GDP rose 1.5%, just above the market estimate of 1.4%. On the positive side, exports were up and imports fell, and household spending showed a small gain of 0.1%. Consumers are still being squeezed by the cost-of-living crisis and high mortgage payments as the Reserve Bank of Australia is yet to lower elevated interest rate levels. The RBA has raised rates only once since June 2023 and hasn’t ruled out rate hikes, although the markets believe that rates have peaked and have priced in rate cuts later this year. The RBA is unlikely to consider lowering rates until inflation falls lower. In January, CPI rose 3.4% y/y, still well above the RBA’s target band of 2-3%. The next meeting is on March 18th and the RBA is widely expected to maintain rates. In the US, Federal Reserve Chair Jerome Powell testifies before the Senate Banking Committee later today. Powell is expected to reiterate that inflation is moving lower but needs to come down further before the Fed will feel comfortable in lowering rates. The Fed’s consistent message of patience and caution appears to have been internalized by the markets, which are now in line with the Fed and have priced in three rate cuts this year. In January, investors had expected up to six cuts, but a stronger-than-expected US economy and a hawkish Fed have dampened the markets’ rate cut expectations. AUD/USD has pushed past resistance at 0.6527 and is testing resistance at 0.6566 0.6486 and 0.6447 are providing support
by OANDA
USD/CAD muted after mixed retail sales reportThe Canadian dollar is drifting on Friday. In the European session, USD/CAD is trading at 1.3468, down 0.1%. With no tier-1 events on the data calendar, we can expect a quiet day for the Canadian dollar. Canada’s retail sales report on Friday was a mixed bag. Consumers sharply reduced their spending in January following better-than-expected retail sales in December. Let’s start with the good news. The end of 2023 saw strong consumer spending, with a gain of 0.9% m/m in December, revised upwards from 0.7% and beating the market estimate of 0.8%. The increase was led by higher sales for motor vehicles, fuel and food. In the fourth quarter, retail sales rose by a respectable 1%. The news was not nearly as positive in January. The preliminary estimate of -0.4% m/m points to a sharp pullback in consumer spending. The slowdown in retail activity in January could continue as more householders renew their mortgages at higher rates, leaving less money for discretionary spending. The Bank of Canada has repeatedly stated that rate decisions will be data-dependent, and we’ll have to wait and see what BoC policy makers make of the mixed retail sales release. Canada releases December GDP next week, followed by the BOC rate decision on February 29. Three top Federal Reserve officials reiterated on Thursday that the Fed is planning to lower interest rates this year but not just yet. Fed Vice Chair Philip Jefferson and Governors Lisa Cook and Christopher Waller said that inflation was headed in the right direction but urged patience. In December, the markets had priced in a rate cut in March at over 70% but that has dissipated to just 2.5% currently, according to the CME FedWatch tool. The strong US economy and constant pushback from the Fed against rate cuts in March have forced the markets to look ahead. Investors have currently priced in a 65% chance of a rate cut in June, compared to 74% just one week ago. USD/CAD is testing support at 1.3477. Below, there is support at 1.3446 1.3514 and 1.3545 are the next resistance lines
by OANDA
USDJPY Watch: Inflation Release to Shape yen’s Path? Japan's economy recently slid to the fourth-largest position, trailing Germany. This shift is primarily attributed to a weakened Japanese yen. In 2023, Japan's GDP stood at approximately $4.2 trillion, while Germany's was around $4.45 trillion. The weakness in the Japanese yen is pressuring BOJ Governor Kazuo Ueda to address this by tightening Japan's ultra-easy policy. However, this move is complicated by concerns about inflation, which BOJ policymakers still consider unsustainable, even as inflation negatively impacts domestic demand, contributing to a technical recession in the Japanese economy. The upcoming release of Japan's inflation rate, scheduled for the coming Monday, is anticipated to significantly influence the BOJ's decision regarding potential rate hikes in the coming months. Analysts predict a possible rate increase as early as April, especially if the country's annual spring wage negotiations confirm a trend of substantial wage increases. On the 4-hour chart, we are watching for the possibility of the USDJPY breaking above the weekly high of 150.430 and reversing the string of lower highs going back to the beginning of last week (which just so happens to be the yearly high for the pair).
by BlackBull_Markets