The US federal Reserve is not the only major central bank making an interest rate decision this week. So too, will the nonconformist Bank of Japan (BOJ).
In its April policy meeting, the BOJ highlighted upside risks to inflation and indicated readiness to adjust monetary policy, if necessary, although it expects to maintain its current policy for the time being....
While closely related, US inflation and the Federal Reserve's interest rate decisions can impact the market with varying intensity. The Fed aims to avoid surprising the market, whereas inflation is unpredictable. Consequently, the market is confident that the Fed will neither hike nor cut rates at the upcoming meeting. However, inflation forecasts are often...
Given the increasing likelihood that the ECB will cut rates before the Fed, further EUR/USD depreciation could be anticipated in the coming days/ weeks. A move below the 100-day moving average would have traders looking toward the 200-day moving average of 1.0853.
However, weaker jobs data from the US this week is tempering this expectation, which means some...
Trump and Hunter Biden Trials
Former U.S. President Donald Trump was convicted last week on all counts of falsifying business records. Trump faces sentencing in one month’s time on July 11. Each of the 34 felony counts could result in up to four years in prison, although first-time offenders (or ex-presidents) like Trump are rarely incarcerated.
Meanwhile, a...
Dollar Watch: JOLTs, ADP, NFP
It's US jobs week. Which gives us at least three trading opportunities, scattered out nicely over the whole week.
First is the JOLTs Job Openings report.
Second is the ADP Employment Change report.
Finally, we have the Nonfarm Payrolls (NFP) report.
Let's look at what happened last month:
Nonfarm payrolls increased by...
Key factors for EUR/GBP trade next week
With a European Central Bank (ECB) decision due next week, a trade in the GBP/EUR could be of interest. Presently, the EUR/GBP is trading at the lowest rate since August of 2022.
The divergence in monetary policy between the ECB and the Bank of England (BOE) is what could be driving this weakness in the EUR. E ECB...
USD/CNH: BofA’s Caution, JPM’s Warnings
Bank of America (BofA) has expressed caution about betting against the US dollar in the face of recent improvements in sentiment towards China's economic policy stimulus. Recent policy actions by China have sparked optimism, leading to a weakening of the USD. However, BofA advises against making hasty financial moves based...
Can Oil soar on June 2 OPEC+ cut hopes?
WTI crude futures and Brent continue to recover from three-month lows. The rebound is potentially driven by expectations that OPEC+ will extend its output cuts of 2.2 million barrels per day into the second half of the year during its June 2 meeting.
Additional support for crude prices came from the start of the U.S....
We have another eventful week ahead with numerous Federal Reserve officials scheduled to speak publicly. Anecdotally, I seem to recall Mester and Kashkari are two of the most impactful speakers, and this week provides an excellent opportunity to see if this holds true. Kashkari recently left The Federal Open Market Committee (FOMC), so his impact might be lessened...
On Friday, alongside the US PCE data release, Canada will publish its Q1 GDP growth figures. Earlier in the week, Canada will also release its producer prices data. Note that US markets will be closed on Monday for Memorial Day.
According to the Royal Bank of Canada, the Canadian economy likely grew more quickly in Q1 2024 based on headline figures. However,...
The Federal Reserve’s preferred inflation gauge, US Core PCE (Personal Consumption Expenditure) Price Index MoM, is released at the end of the coming week. This means some USD trades could present themselves.
But first, a quick recap on why the Core PCE Price Index matters and why it is the Fed’s preferred gauge:
Unlike the more familiar Consumer Price Index...
As expected, the Reserve Bank of New Zealand (RBNZ) kept interest rates unchanged yesterday but did provide some surprises to the market; extending the timeline for a potential rate cut, and even noted its consideration of a rate hike. This unexpectedly hawkish stance sent the NZDUSD higher.
Before the announcement, markets saw an ~80% chance of a rate cut by...
Is a rate cut imminent? Watching incoming UK Inflation data
"The next move will be a cut," Bank of England's Andrew Bailey stated in response to a question about the Governors thoughts on interest rates during a speech at the London School of Economics. This does not mean the next decision will immediately be a cut; rather, rates will remain stable until a cut...
Gold maintains upward bias on Iran and Fed speak?
Gold surged at the beginning of the week due to escalating geopolitical tensions, reaching a new all-time high of $2,450. However, it has since retreated slightly but perhaps maintains an upward bias.
The rise in gold prices could have been fueled by news of the deaths of Iranian President Ebrahim Raisi and...
This week's trade could be a decision between gold and silver.
The former might be swayed by the seven fed officials that are planned to speak this week, while the latter could be influenced by the #SilverSqueeze movement that is tangentially related to the meme stock frenzy that reignited last week.
Gold Technical
Gold (XAU/USD) prices rose at the end of...
The major trading opportunities next week could be front-loaded, with significant events occurring from Monday to Wednesday.
USD
Seven Fed officials are scheduled to speak on Monday and Tuesday, followed by the release of the FOMC meeting minutes on Wednesday.
AUD
The Reserve Bank of Australia will release the minutes from its latest interest rate...
The AUD/USD and NZD/USD are trending higher due to risk-on flows boosting these currency pairs.
For AUD/USD, on the downside, immediate support could lie at 0.6594, just above the 100 Daily Moving Average. The RSI is almost levelling off at around 80.
Westpac recently highlighted a bullish stance on AUD/USD:
“...there is no clear path to significantly higher...
Federal Reserve Chair Jerome Powell expressed reservations about the trajectory of disinflation in the US during his recent remarks, stating, "My confidence in that is not as high as it was." Despite this, he indicated that further rate hikes were unlikely based on the data from the first quarter of the year.
Powell's comments largely echoed those made during...
