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GBP/USD towards 1.277 before reaching 1.31Current Context The GBP/USD pair settled at 1.2895 during the Asian trading hours on Thursday. The increasing possibility that the Bank of England (BoE) might start cutting interest rates in August has weakened the British Pound. In the absence of significant economic data releases from the UK, the GBP/USD pair will be influenced by the US Dollar (USD). Support and Resistance Levels Support Levels: 1.2875-1.2870: This range is defined by the 38.2% Fibonacci retracement of the latest uptrend. 1.2830: Level corresponding to the 50% Fibonacci retracement. 1.2800: Psychological and static level. Resistance Levels: 1.2900: Psychological and static level. 1.2940-1.2950: Range defined by the 23.6% Fibonacci retracement. Economic Data Influence UK Data: The S&P Global/CIPS Composite PMI for the UK improved to 52.7 in the flash estimate for July from 52.3 in June, indicating ongoing expansion in private sector business activity. However, statements from Chris Williamson of S&P Global Market Intelligence highlight caution among policymakers in changing monetary policy due to inflationary pressures and additional costs from shipping delays and rising freight prices. The risk-averse market context limits the ability of GBP/USD to regain ground despite positive PMI data. US Data: S&P Global will release the July PMI data for the United States. If either the Manufacturing or Services PMI unexpectedly falls below 50, the US Dollar could maintain its strength, further capping the upside potential for GBP/USD. Market Sentiment The risk-averse market climate is negatively impacting GBP/USD. At the time of writing, the UK's FTSE 100 Index is down nearly 0.5%, and US stock index futures are down between 0.5% and 0.9%. This risk-averse sentiment supports the strength of the US Dollar and exerts bearish pressure on GBP/USD.
Long
by Forex48_TradingAcademy
2
USD/CAD unmoved by Bank of Canada rate cutThe Canadian dollar is almost unchanged on Wednesday, after the Bank of Canada cut rates at today’s meeting. In the North American session, USD/CAD is trading at 1.3778, up 0.05% on the day at the time of writing. The Bank of Canada lowered rates by 25 basis points, bringing the key interest rate to 4.50%. The markets had priced in a rate cut at close to 90%, so the move was widely expected and the Canadian dollar has shown almost no reaction. The BoC has now lowered rates in two straight meetings, as economic data has supported a shift in policy. Headline and core CPI have fallen within the 1-3% target band and monthly CPI posted its first decline since December 2023. The central bank expects the downtrend in inflation to continue in the second half of the year and that inflation will fall to the 2% by 2025. As well, the unemployment rate has risen to 6.4%, up from 5.7% in January. The labor market has performed well under the weight of steep interest rates but is showing cracks. BoC Governor Macklem said after the meeting that if inflation continues to fall as the Bank expects, “it is reasonable to expect further cuts in our policy interest rate”. This is a strong signal that further rate cuts are coming, barring any unpleasant surprises from inflation. There is still more work for the BoC to do, but it is unlikely to cut rates again before the Federal Reserve does so, as further widening of the US/Canada rate differential will weaken the Canadian dollar. The markets have priced in a Fed cut in September at above 90%. USD/CAD has support at 1.3774 and 1.3703 There is resistance at 1.3820 and 1.3891
by OANDA
Front-Running Yield Curve Normalisation on Rate Cut AnticipationThe (in)famous Yield Curve remains inverted. In recent past, spreads normalized only to revert to inversion as rate cut expectations got pushed out. This time though, is different. Recent CPI print has significantly altered market sentiment. The likelihood of an initial rate cut at the September FOMC meeting now exceeds 90%. Consequently, the yield curve is normalizing once more. Current market signals indicate that this normalization could be enduring. WHY IS THE YIELD CURVE INVERTED? The present yield curve inversion indicates that investors do not expect that rates will remain this elevated for long. While 2Y treasuries continue to be re-issued at higher rates, expectations for longer terms such as 10Y and 30Y are lower as they factor in that rates will normalize from their present levels. YIELD CURVE WILL NORMALIZE SOON, WHAT WILL DRIVE IT? While this is the longest period of yield curve inversion in history, the curve has started to normalize. The factors driving normalization in the yield curve were previously discussed. Ordinarily investors demand higher rates for longer-duration treasuries to account for the higher inflation expectations and greater risk. Either inflation must fall, or inflation adjusted treasury yields for longer maturities must rise. Rate cuts will also drive the normalization in the yield curve. The yield spread between 2Y & 10Y treasuries tends to rise in the two months preceding the first rate cut in a cutting cycle as observed in the past. The impact of rate cuts on the 2Y-10Y spread is even more pronounced in the two months following the first-rate cuts. UNCERTAINTY IN MACRO ECONOMIC DATA IS DISSIPATING Make no mistake, the broader picture remains uncertain. However, recent data points to recovery. Chicago PMI showed a sharp recovery in July. But the job market signals uncertainty. Continuing jobless claims remain elevated. Job openings have fallen. But job creation in the last two non-farm payroll prints were above expectations. US Retail sales and industrial production have improved. The impact can be observed through the consistent increase in the GDPNow forecast for Q2 GDP since 12/July. Source: GDPNow The June CPI release showed uncertainty easing. Headline CPI cooled sharply as it fell on a MoM basis. Notably, the stickier core CPI also continued to cool as it fell to 3.3%. However, inflation remaining sticky at the 3% level remains a grave concern. Even if a recession does arrive in the coming months, the 10Y-2Y yield spread is likely to have normalized by then. Yield curve inversion is observed only before recessions not during. RAPID RATE CUTS EXPECTED IN THE COMING YEAR Source: CME FedWatch The rate cuts outlook has improved substantially. FedWatch signals that rates will fall by 100 basis points by March 2025 (as of 19/July) suggesting successive cuts. Other analysts are even more optimistic. Analysts at Citi bank hold the view that rates will be slashed by 200 bps (2% in total), starting in September across eight successive FOMC meetings (25 bps at each) by the summer of 2025. CERTAINTY IN RATE OUTLOOK SUGGESTS YIELD CURVE NORMALIZATION Major moves in the yield curve have only come through after commencement of rate cuts in the past. This time, markets may front-run these expectations. The attempts to front-run rate cuts were already observed in December when the yield spread recovered sharply after the Fed signaled six potential rate cuts in 2024. Presently, the 10Y-2Y yield spread is trading below those levels and has the potential to break out as we approach September rate cuts. The risk of a reversal remains but it is lower. Higher rates pose a systemic risk for the US given its profligate borrowing. Higher rates on treasuries are untenable for much longer. Cost of servicing public debt in June hit USD 140 billion and totaled USD 868 billion in the first nine months of the current fiscal year (33% higher YoY). For reference, the total budget deficit for this period was $1.27 trillion. The interest burden is weighing heavily on the overall budget deficit. HYPOTHETICAL TRADE SETUP Treasury auctions are a sound guide to maturities selection when positioning for yield curve normalization. The recent demand for treasuries at the latest auctions has been low. Bid-to-cover ratio for all (2Y, 5Y, 10Y, and 30Y) was lower than the average bid-to-cover over the prior ten auctions. Demand was weak for the 10Y treasuries. Demand for 30Y treasuries has also been lower than previous auctions but has remained more consistent than 10Y. The yield spread between 30Y-2Y treasuries has outperformed the 10Y-2Y spread over the past 2 months. Investors can seize opportunities from normalization in the 30Y-2Y spread using CME Yield futures. The CME Yield futures are quoted directly in yield with a one basis point change in the yield representing a P&L of USD 10. As yield futures across various maturities represent the same notional, to calculate the spread P&L is equally intuitive with a one basis point change in the spread between two different maturities also equal to USD 10. The hypothetical trade setup consisting of long 30Y and short 2Y is described below. • Entry: -2.6 basis points (bps) • Target: +25 bps • Stop Loss: -25 bps • Profit at Target: USD 276 (27.6 bps x USD 10) • Loss at Stop: USD 224 (22.4 bps x USD 10) • Reward to Risk: 1.24x MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
CBOT_MINI:30Y1!Long
by mintdotfinance
Oil Prices Plunge Amid Global UncertaintyCurrent Price Movement: West Texas Intermediate (WTI) futures on the NYMEX have extended their downside, trading below $78.00. This decline is primarily driven by concerns over China's economic outlook and political uncertainty in the United States. Factors Influencing the Oil Price: China’s Economic Concerns: The People's Bank of China (PBoC) unexpectedly reduced its Loan Prime Rate by 10 basis points to 3.35% (one-year) and 3.85% (five-year). This rate cut follows weaker-than-expected Q2 GDP growth of 0.7%, below estimates of 1.1% and previous figures of 1.5%. As the world's largest oil importer, China’s economic slowdown raises concerns about future oil demand, exerting downward pressure on prices. Supply Outlook: Morgan Stanley forecasts an increase in oil supply by 2.5 million barrels per day by 2025 from OPEC and non-OPEC producers. The anticipated supply growth exceeds demand growth projections, contributing to the easing of tight market fears and further weakening oil prices. US Political Uncertainty: The potential nomination of Kamala Harris as the Democratic leader and speculation about Donald Trump’s potential victory in the upcoming presidential election have created political uncertainty. Trump’s promise to increase US oil production if elected could lead to a future increase in supply, adding downward pressure on oil prices. The US Dollar Index (DXY) has edged lower amidst this political uncertainty, affecting oil prices inversely. Global Economic Indicators: Preliminary S&P Global Manufacturing PMI data from various nations are expected to provide insights into the global demand outlook, which will further influence oil prices. Canadian Dollar (CAD) Dynamics: The USD/CAD pair has risen to near 1.3750, influenced by the sharp correction in oil prices. Canada, being a leading oil supplier to the US, sees its currency affected by oil price movements. The weakening CAD amidst declining oil prices reflects this relationship. Expectations of the Bank of Canada (BoC) cutting interest rates by 25 basis points to 4.5% due to easing price pressures and a cooling labor market also impact the CAD. US Economic Data: The trajectory of the US Dollar will be influenced by upcoming US economic data, providing clues about the Federal Reserve's interest rate decisions. Political developments, such as the withdrawal of Joe Biden's re-election bid, have added to the uncertainty, impacting the DXY and, consequently, oil prices.
TVC:USOILShort
by Forex48_TradingAcademy
1
$QQQ Nasdaq with Rate Hiking Cycle DatesGoing along with my usual 'Key Hidden Levels' in the markets perspective that NEWS is an important price level to mark on charts so it is visible to everyone, I have created the update to the "Rate Hiking Cycle" chart. The purple triangles and lines are the range of the day of the announcement and the mid-point of the day plotted horizontally forward. With this data you can see how past levels where the Fed Rate Decision occurred has provided either support or resistance to the movement of the market. Typically it hasn't been as obvious the the observer of a chart all by itself without these markings. At some point these important news levels will be visible for all of us investors so we can see and understand more quickly how the market is absorbing or dealing with the news. I hope you enjoy this chart an continue to update it for yourself. I will work to get these dates into the system so you can all see them on every chart. Wishing you all the best in your investing and trading. Tim 1:48PM, Thursday May 23, 2024
NASDAQ:QQQ
by timwest
3
EUR/USD: will it reach the level of 1.11?EUR/USD stays below 1.0900: The pair has defended gains in a context of a weak US Dollar (USD), despite risk aversion, which has supported the EUR/USD exchange rate. Focus on Political and Macroeconomic Data: Attention remains on US political updates and mid-tier economic data from both the EU and the US for fresh trading impetus. Key Technical Levels Resistances: First resistance at 1.0950. Followed by the March high at 1.0980. Psychological level at 1.1000. Supports: June low at 1.0668. May low at 1.0650. 2024 annual low at 1.0600. Fundamental Factors Factors Affecting the US Dollar: The USD regained momentum on Thursday, pushing the USD Index (DXY) above the 104.00 level, thanks to a rebound in US yields. Prospects of Fed rate cuts, with the CME Group's FedWatch Tool indicating a nearly 98% probability of lower rates at the September 18 meeting and another cut expected in December. Factors Affecting the Euro: The ECB maintained a dovish stance at Thursday's meeting, with a slight uptick in German 10-year Bund yields. Christine Lagarde highlighted expectations of a recovery supported by consumption, with a resilient labor market and high domestic inflation. The ECB projects that the Harmonized Index of Consumer Prices (HICP) will reach the target in the second half of 2025. Monetary Policy Outlook: Ongoing debate about how many times the Fed will cut rates this year, despite the current projection of a single cut. Prospects of Fed rate cuts occasionally support EUR/USD, reducing the gap between the Fed's and the ECB's monetary policies. Outlook and Prospects Short-Term Prospects: The trading dynamics for the EUR/USD pair will likely be influenced by upcoming Fed speeches and economic updates from both the US and the Eurozone. The loss of bullish momentum indicated by the 4-hour chart suggests caution, but defending key levels like the 200-SMA and the indicated supports could provide further bullish impetus. Medium-Long Term Prospects: If the EUR/USD convincingly surpasses the 200-SMA, further gains may be on the horizon. However, failure to do so could lead to a test of lower support levels.
Long
by Forex48_TradingAcademy
1
WTI Oil Price Analysis: Market Dynamics and Global ChallengesCurrent Situation: The price of West Texas Intermediate (WTI) has experienced a slight decline due to the strengthening of the US dollar (USD), supported by rising yields. Currently, the price of WTI is around $81.20 per barrel during European hours on Thursday, after gaining ground in the Asian session due to a larger-than-expected drop in US crude oil inventories. Supply and Demand: The reduction in US crude oil inventories has been significant. The Energy Information Administration (EIA) reported a decrease of 4.87 million barrels for the week ending July 12, a figure much higher than the expected drop of 0.80 million barrels and the previous decrease of 3.443 million barrels. This decline in inventories may suggest robust domestic demand, which can have a positive effect on oil prices. Impact of Monetary Policies: Expectations that the Federal Reserve (Fed) will reduce interest rates in September could improve economic conditions in the United States. With lower borrowing costs, economic activity could increase, which in turn could support oil demand. Statements by Fed Governor Christopher Waller and Richmond Fed President Thomas Barkin indicate a possible rate cut, which could further incentivize oil demand. Market Pressures: Despite some positive signs, the overall decline in commodity demand expectations continues to threaten the energy complex. According to Daniel Ghali, senior commodity strategist at TDS, the absence of an increase in supply risk premia could continue to exert downward pressure on prices. However, Commodity Trading Advisors (CTAs) still have substantial resources to deploy in the market, which could limit price declines in the short term, barring a significant downturn. Global Challenges: Another challenge for WTI oil prices is the economic slowdown in China in the second quarter, which reduces demand from the world's largest oil-importing country. Increasing trade tensions, with new tariffs on Chinese electric vehicles imposed by the United States and the European Union, contribute to an uncertain global economic outlook, negatively impacting oil demand.
TVC:USOILShort
by Forex48_TradingAcademy
1
NZD/USD Rises despite Soft NZ InflationThe Reserve Bank of New Zealand kept rates at 5.5% last week, but adopted a softer tone compared to the hawkish messaging of the previous meeting, raising chances of a rate cut this year. Today’s soft inflation data help towards such action, since CPI eased to 3.3% in Q2 and the lowest in three years. Despite these prospects, NZD/USD contains its fall and rebounds today, as there is still a high bar for an RBNZ pivot. At the same time, the Fed may have adopted a cautious stance, but Chair Powell appears to be laying the groundwork for a September cut, as the disinflation trend has resumed, with markets pricing in three moves this year. The monetary policy dynamics are a bit murky, but likely support further upside. Having defended crucial technical levels, NZD/USD can regain the EMA200 (black line) and push for new monthly highs (0.6148), but we are cautious around greater advance 0.6223. But market bets for three cuts by the Fed are very aggressive and would require the Fed to move in three consecutive meetings. This optimism could be disappointed, just as prospects of an RBNZ pivot are strengthening. Below the EMA200, immediate bias is on the downside and risk of a breach of the 50% Fibonacci and the daily Ichimoku Cloud persists. This would make NZD/USD vulnerable t0 0.5952, but sustained weakness is not easy based on the monetary policy dynamics. Stratos Markets Limited (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. S tratos Europe Ltd (trading as “FXCM” or “FXCM EU”), previously FXCM EU Ltd (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Trading Pty. Limited (www.fxcm.com): Trading FX/CFDs carries significant risks. FXCM AU (AFSL 309763). Please read the Financial Services Guide, Product Disclosure Statement, Target Market Determination and Terms of Business at www.fxcm.com Stratos Global LLC (www.fxcm.com): Losses can exceed deposits. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this video are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed via FXCM`s website: Stratos Markets Limited clients please see: www.fxcm.com Stratos Europe Ltd clients please see: www.fxcm.com Stratos Trading Pty. Limited clients please see: www.fxcm.com Stratos Global LLC clients please see: www.fxcm.com Past Performance is not an indicator of future results.
by FXCM
Trump, Fed Speculation Drive Gold to New Heights Trump, Fed Speculation Drive Gold to New Heights Gold price cleared the May 20 high of $2450 on Tuesday, as expectations intensify that the U.S. Federal Reserve will commence an easing cycle in September. Fed Chair Jerome Powell addressed the Economic Club of Washington this week, noting the economy's solid performance and signaling potential rate cuts once inflation trends towards the 2% target. The CME FedWatch Tool indicates near-certain odds of a 25-basis point rate cut in September, with many forecasting a total of 50 basis points in cuts through 2024. But one has to question the accuracy of these optimistic predictions. The next FOMC meeting is in 14 days. Adding to the upward momentum on gold is the potential election of former President Donald Trump in November. Trump's proposed policies, including tariff hikes and tax cuts, are anticipated to increase the U.S. budget deficit and spur inflationary pressures. Bullish momentum in gold appears intact, supported by the Relative Strength Index (RSI) on the daily chart. Although it is trending higher and approaching typical overbought conditions.
BLACKBULL:XAUUSD
by BlackBull_Markets
AUD/USD To Start A New Upside Move?A Hawkish RBA stance, likely to hold rates for some time is a contrast to a FED looking at a softer landing. This difference, particularly in recent times has shown fully. AUD strength has been sustained, whereas lower inflation data has supported the case for easing and brought USD weakness. After lower highs and higher lows have formed a tight price range, you can now see AUD pushing to the upside, towards new shorts zones above. Likely this will continue as sentiment influx does likewise. Short Zones noted above inline with previous short zones (see above eclipse). Long zones are ideal on any falls.
by WillSebastian
2
USOIL | The Sell Off is nearWTI crude oil prices have shown a downward trend in recent sessions, falling for three consecutive days. Currently, WTI stands around the $80.70 region, recording a daily loss of about 0.40%. Despite this decline, the price remains above the overnight swing low, suggesting a lack of conviction among sellers. Factors Influencing Prices Chinese Economy: Economic Growth Data: Official data released on Monday showed that China's economy grew by 4.7% in the second quarter of 2024, down from 5.3% in the first quarter. This has fueled concerns about a slowdown in the Chinese economy, the world's largest oil importer, and a consequent decrease in fuel demand. Impact on the Oil Market: Concerns about Chinese demand are a key factor exerting downward pressure on crude oil prices. Strength of the US Dollar (USD): Dollar Recovery: The US dollar has gained traction, recovering from a more than three-month low touched on Monday. A stronger dollar makes USD-denominated oil more expensive for buyers using other currencies, thereby reducing demand. Monetary Policy Outlook: The growing acceptance that the Federal Reserve might start a rate-cutting cycle as early as September could limit further dollar gains, partially mitigating the negative effect on oil prices. Supply Concerns: Middle East Conflicts: Concerns about potential supply disruptions due to ongoing conflicts in the Middle East continue to support oil prices. This factor could limit further losses in the short term. Forecasts and Expectations Price Range: WTI seems to remain confined within a familiar range maintained over the past two weeks, with prices oscillating around the $80.70-$81.30 region. Awaiting External Impulses: Market participants are now waiting for US retail sales data to find new drivers that could influence prices. Need for Confirmation: To position for a further extension of the recent pullback from levels near $84.00, it would be prudent to wait for more convincing selling signals.
TVC:USOILShort
by Forex48_TradingAcademy
1
XAUUSD is ready to reach $2500 before the crash!Current Overview Gold (XAU/USD) has regained traction, trading in positive territory slightly above $2,420 after dipping towards $2,400 at the beginning of the week. Technical Analysis Daily Chart: The bullish outlook for XAU/USD remains strong despite a retreat from intraday highs. The daily chart shows that the pair is rallying well above bullish moving averages. Technical indicators are gaining upward momentum and approaching overbought readings, with no signs of reversal. 4-Hour Chart: In the near term, XAU/USD might face challenges in extending its gains. Technical indicators are retreating from overbought readings with uneven strength but remain above the bullish 20-period Simple Moving Average (SMA) around $2,400. Key Levels Resistance Levels: Immediate resistance is at the recent high of $2,439. If XAU/USD surpasses this level, it could test the year-to-date high of $2,450. Further gains could target the $2,500 level. Support Levels: Initial support is at $2,400. Market Sentiment US Dollar Dynamics: Demand for the US Dollar initially increased following the weekend news of an assassination attempt on former President Donald Trump. However, the Greenback quickly lost ground as investors speculated that a potential Trump election win might lead to looser fiscal policies. Fed Policy Outlook: Moody’s Credit Rating Agency predicts that the Federal Reserve could start easing monetary policy as early as this month, with potential rate cuts of 50-75 basis points in 2024 and an additional 100-125 basis points by 2025. This dovish outlook has bolstered gold prices, as lower rates make non-interest-bearing assets like gold more attractive. Economic Data: US Consumer Price Index (CPI) data came in weaker than expected, increasing the likelihood of a Fed rate cut, as reflected by falling US Treasury bond yields. The University of Michigan's Consumer Sentiment Index dropped to a seven-month low of 66.0 in July, missing expectations, which further supports the case for rate cuts. Additional Influences Global Factors: The People's Bank of China (PBoC) decided to halt gold purchases in June, as it did in May. By the end of June, China held 72.80 million troy ounces of gold.
OANDA:XAUUSDShort
by Forex48_TradingAcademy
2
EURUSD heading towards 1.10!Current Overview EUR/USD is defensive below 1.0900 in the Asian session on Monday, edging lower amid risk aversion following the shooting incident at a Trump rally. This event has bolstered the US Dollar due to its safe-haven appeal. The pair's focus remains on US politics and upcoming statements from Federal Reserve officials. Technical Analysis Support Levels: The first support is at 1.0840-1.0850. Further support is at 1.0800. Resistance Levels: If EUR/USD rises above 1.0900 and confirms this level as support, it could target 1.0950 and then 1.1000. Market Sentiment US Inflation Data: Recent soft inflation data from the United States has put downward pressure on the US Dollar. The Consumer Price Index (CPI) decreased by 0.1% on a monthly basis, while core CPI increased by only 0.1%. Both readings were below market expectations, increasing the likelihood of a Federal Reserve rate cut in September. According to the CME FedWatch Tool, the probability of the Fed leaving the policy rate unchanged in September has declined to below 10% from over 20% before the CPI data release. Additional Influences US Political Climate: The recent incident during a Trump rally in Butler, Pennsylvania, where former President Donald Trump was injured in an assassination attempt, has increased risk aversion and supported the US Dollar. US Economic Data: The Producer Price Index (PPI) rose to 2.6% year-on-year in June from the previous revised 2.4%, above the expected 2.3%. Core PPI increased to 3.0% year-on-year, surpassing the expected 2.5%. The University of Michigan's Consumer Sentiment Index dropped to 66.0 in July from 68.2 in June, missing expectations of 68.5. The UoM 5-year Consumer Inflation Expectations declined to 2.9% from the previous 3.0%. Fed Outlook: Analysts from Fitch suggest that the Federal Open Market Committee (FOMC) might cut interest rates sooner than expected due to concerns about the labor market. Fed officials are likely to be cautious about additional weaknesses in the labor market. Eurozone Outlook: Eurozone officials expect pricing pressures to remain stable throughout the year, reducing expectations for further rate cuts by the European Central Bank (ECB). ECB President Christine Lagarde emphasized a cautious approach, highlighting uncertainties in the growth outlook.
Long
by Forex48_TradingAcademy
1
GBPUSD H8 - Sell SignalGBPUSD H8 Converse to AUDUSD analysis above. We also have the likes of GBPUSD here in front of us, where we have seen a rejection from 1.28500 price, a half number acting as resistance. If we look to the left on this chart, on June 12, you'll notice and aggressive selloff. This formed an attractive area of supply. We have a few confluence in and around this 1.28500 price, so it's certainly a zone to keep an eye on for USD strength resumption. A double top on 1.28500 could be a great sell signal.
Short
by Trade_Simple_FX
USDJPY towards 154 or 166?Current Situation USD/JPY is holding at elevated levels near 161.00 during Asian trading on Tuesday. The high-risk sentiment, driven by expectations of a Fed rate cut, contributes to the pair's latest increase. All eyes are on Fed Chair Powell’s testimony for further indications on monetary policy. Recent Data and Technical Indicators Daily Chart: On Wednesday, July 3, USD/JPY posted a bearish Hanging Man candlestick pattern, followed by a bearish down day, confirming the bearish sentiment. Support and Resistance: Support: The pair found support at the April 29 high of 160.32, forming a price gap indicating potential exhaustion. Resistance: It is currently trading against resistance from the 50-period Simple Moving Average (SMA). Key Factors Fed Rate Cut Expectations: Speculation about a possible rate cut by the Federal Reserve in September has increased, with the CME’s FedWatch tool indicating a 76.2% probability, up from 65.5% the previous week. Powell’s Testimony: Market participants are awaiting Fed Chair Jerome Powell’s testimony on the Semiannual Monetary Policy Report to the US Congress for further insights into future policy direction. Japanese Yen Weakness: The JPY is extending losses due to foreign asset purchases by Japanese individuals under the Nippon Individual Savings Account (NISA) program and concerns over potential intervention by Japanese authorities in the FX markets. US Treasury Yields: Rising speculation about a Fed rate cut is putting pressure on US Treasury yields, which could limit the upside for the US Dollar. Market Sentiment and Projections Short-term Trend: USD/JPY remains in a short-term downtrend. However, given the exhaustion gap and the strong medium to long-term uptrend, there is a risk the pair could continue recovering. Potential Targets: Upside: If the pair surpasses 161.40, it would be a bullish signal, with further gains potentially reaching 162.90. Downside: A break below 160.20 would confirm further downside towards a probable target of 158.50.
Short
by Forex48_TradingAcademy
2
XAUUSD Heading Towards $2440?Current Situation The gold price (XAU/USD) registered a decline during the Asian session on Monday, following the news that the People’s Bank of China (PBoC) suspended gold purchases for the second consecutive month. This decision negatively impacted the gold price as China is the world's largest consumer of this precious metal. Recent Data Current Price: Gold has experienced a decline, stabilizing below the $2,400 threshold. Key Factors PBoC Purchases: The PBoC maintained its gold stock at 72.80 million troy ounces in June, contributing to the decrease in gold demand. US Interest Rates: The possibility of an interest rate cut by the Federal Reserve in the third quarter could support the gold price. Political Situation in France: Political uncertainty in France might increase the demand for safe-haven assets like gold. US Treasury Yields: A slight recovery in US Treasury yields makes gold less attractive as an alternative asset. Technical Forecast Resistances: $2,400 (psychological level) $2,450 (all-time high) Supports: $2,330-$2,340 Outlook In the short term, if buyers regain strength, the gold price could retest the six-week high of $2,393, with a potential break above the $2,400 threshold opening the path towards the all-time high of $2,450. However, a further decline could lead the price to challenge Friday’s low of $2,352, with a possible drop to the support zone at $2,340.
OANDA:XAUUSDLong
by Forex48_TradingAcademy
1
EUR/USD Heading towards 1.095?Current Situation EUR/USD has shown signs of losing traction but remains above the 1.0800 level after peaking above 1.0840, its highest in three weeks. Despite the US Nonfarm Payrolls (NFP) increasing more than expected in June, downward revisions for May and April have prevented the USD from gaining strength. Technical Indicators Relative Strength Index (RSI): On the 4-hour chart, RSI has risen above 70, indicating that EUR/USD is technically overbought. However, this overbought condition does not necessarily signal an imminent drop, as long as key support levels hold. Support Levels: The 1.0800 level, which coincides with the 100-day and 200-day Simple Moving Averages (SMA), is a crucial support. A drop below this level could see the next supports at 1.0760 and 1.0730-1.0740. Resistance Levels: On the upside, the 1.0840 level (Fibonacci 23.6% retracement) serves as interim resistance, followed by the psychological level of 1.0900. Economic Indicators and Market Sentiment Nonfarm Payrolls: The US NFP report exceeded expectations with a rise to 206K, higher than the forecasted 190K, but revisions for previous months and a rise in the unemployment rate to 4.1% have tempered the positive impact. Unemployment Rate: Increased to 4.1%, the highest since November 2021, slightly higher than the expected 4.0%. Average Hourly Earnings: Growth slowed to 3.9% YoY, matching expectations but down from the previous 4.1%. Market Expectations Fed Policy: The CME FedWatch Tool indicates a 25% probability that the Federal Reserve will leave the policy rate unchanged in September. Weak job data could push the USD down further, as markets may price in a September rate cut. Conversely, stronger-than-expected NFP data could lead to reassessments regarding the timing of the Fed’s policy adjustments, potentially triggering a downward correction in EUR/USD. Upcoming Economic Events Fed Chairman Jerome Powell’s Appearance: Traders will look for insights on monetary policy direction. EU and US Inflation Data: Final inflation figures will be released on Thursday, which could impact EUR/USD movements. German Retail Sales and US PPI: Scheduled for next Friday, these data points will provide additional market cues.
Long
by Forex48_TradingAcademy
4
USD/CAD steady as job growth falls in Canada, USThe Canadian dollar is showing little movement on Friday. In the North American session, USD/CAD is trading at 1.3618, up 0.05% on the day. Canada and the US released employment data today and surprisingly, the Canadian dollar has showed almost no reaction. Canada’s labor market contracted in June, with a decrease of 1.4 thousand. This follows a gain of 26.7 thousand in May and was well below the market estimate of a 22.5 thousand gain. The unemployment rate rose to 6.4%, up from 6.2% in May and higher than the market estimate of 6.3%. At the same time, wage growth climbed 5.6% in June, up from 5.2% and the 5.3% market estimate. The Bank of Canada will be pleased with the weaker job data but the sharp increase in wages could complicate plans to lower interest rates. The BoC cut rates in June for the first time since March 2020, the first major central bank to do so. The Bank wants to see a further cooling of the economy and lower inflation before it feels confident delivering a second rate cut. The US economy added 206 thousand jobs in June, beating the market estimated of 190 thousand. The May reading was revised sharply lower from an initial 272 thousand and the April data was also revised lower. This indicates that the labor market is weakening and could set up a quarter-point rate cut in September. Federal Reserve officials remain cautious about shifting rate policy and have stressed that a rate cut will have to wait until they are confident that inflation will continue to move sustainably towards the 2% target. New York Fed President John Williams echoed this stance on Friday, saying that the Fed had lowered inflation significantly but “we still have a way to go to reach our 2% target on a sustained basis”. The Fed may be in a cautious mood but the markets are becoming more confident of a September cut. The odds have risen to 72% following today’s employment release, up from 68% immediately before the release and just 58% one week ago, according to the CME’s FedWatch. USD/CAD is testing resistance at 1.3621. Above, there is resistance at 1.3656 There is support at 1.3600 and 1.3586
by OANDA
EUR/USD Awaits ADP Data!EUR/USD Analysis Current Overview EUR/USD is retreating towards 1.0700 during the European session on Wednesday. The pair is under pressure as the US Dollar finds stability after dovish comments from Fed Chair Powell. Cooling inflation in the EU keeps the Euro under pressure. Eyes are on the US ADP report and Fed Minutes. Key Support and Resistance Levels Support: 1.0650 Resistance: 1.0780 Recent Trends and Outlook Euro Weakness: Primarily due to cooling inflation in the EU and comments from the ECB about further rate cuts. US Dollar Strength: Supported by more hawkish comments from Fed officials and the possibility of a rate cut in December. Recent Trading Range: 1.0730-1.0740, reflecting a consolidation phase. Fundamental Analysis Eurozone: The ECB is considering further rate cuts by the end of the year, with inflation at 2.5% YoY and core inflation at 2.9%. United States: Debates on one or two rate cuts by the end of the year, with a 69% probability for a cut in September and 95% for December, according to the CME Group's FedWatch Tool. Political and Economic Factors ECB Forum in Sintra: Discussions between Lagarde and Powell. Lagarde highlighted progress in Eurozone disinflation, while Powell emphasized the need for more data before deciding on rate cuts. French Elections: The upcoming round of elections in France could further influence the EUR/USD pair, introducing short-term volatility. Short-Term Outlook Bearish Risk: If bears regain control, EUR/USD could test the June low of 1.0665. Bullish Potential: Renewed strength could bring the pair towards the 200-day moving average at 1.0790. A breakout of this level could focus on the March peak at 1.0981 and the January weekly high at 1.0998, with the psychological level of 1.1000 in sight.
Long
by Forex48_TradingAcademy
1
EUR/USD eases as inflation ticks lowerThe euro is slightly lower on Tuesday. EUR/USD is trading at 1.0712 in the European session, down 0.24% on the day at the time of writing. The euro hit a two-week high on Monday, rising to 1.0776, but couldn’t consolidate and ended the day almost unchanged. The annual inflation rate in the eurozone dropped to 2.5% in June, compared to 2.6% a month earlier and in line with market expectations. The slight decline was driven a slower pace of price rises for food and energy. On a monthly level, CPI was unchanged at 0.2%, matching the forecast. Core CPI was unchanged at 2.9% y/y, a bit higher than the market estimate of 2.8% y/y. The downward move in inflation is good news and follows a decline in June inflation in Germany, France and Spain. Services inflation in the eurozone, however, climbed 4.1% y/y in June, more than twice the ECB’s target of 2% . The inflation report won’t prod the European Central Bank to cut again in July, after an initial quarter-point cut earlier this month. What can we expect from the ECB? That isn’t clear, as Governing Council members are divided. Governing Council member Madis Muller said today that the ECB must be patient with further rate cuts and warned against underestimating price stickiness. Another member, Pierre Wunsch said that another cut was an easy decision but there was no urgency. We’ll hear from ECB President Lagarde at the ECB forum in Sintra later today and the euro could react if Lagarde weighs in on the rate path issue. Federal Reserve Chair Powell will also speak at the ECB forum later today and investors will be looking for clues about rate cut plans. Expectations of a September rate cut have been steady over the past week at around 60%, according to the CME’s FedWatch. EUR/USD is testing resistance at 1.0752. Above, there is resistance at 1.0790 1.0709 and 1.0671 are the next support lines
by OANDA
The US Election and Possible Fed Rate DetourCBOT: Micro 2-Year Yield ( CBOT_MINI:2YY1! ), Micro 10-Year Yield ( CBOT_MINI:10Y1! ) Last Thursday night, I watched the first Biden-Trump presidential debate live on TV, along with tens of millions of likely voters of the 2024 US presidential election. Who won the debate? According to the exit poll conducted by 538/Ipsos: • 60.1% of the likely voters being polled said former President Trump performed best; • Only 20.8% said President Biden performed best at the debate. However, the debate may not change the minds of many voters. • Biden gained support from voters who would likely vote for him, from 46.7% before the debate, to 48.2% after that; • Trump also gained support modestly, from 43.5% to 43.9%; • Robert Kennedy, Jr., an independent presidential candidate who did not participate in the debate, saw his support increase from 17.3% to 18.4%. What mattered most to voters? • Inflation or increasing costs is the No. 1 issue, called out by 50% of the likely voters; • Immigration came in 2nd at 37%, while Political polarization is the 3rd at 25%. The second and final presidential debate is scheduled on September 10th. Ahead of this, the Republican National Convention will be held on July 15th-18th. Donald Trump is likely to be nominated as the Republican candidate for the US presidential election. The Democratic National Convention will be held on August 19th-22nd. After his poor performance in the first presidential debate, we are uncertain if President Biden will be nominated, or replaced by an alternative candidate. On TradingView, our focus is always on trading and investing. However, geopolitics plays a crucial role in shaping global markets, influencing economic growth, investment flows, and asset prices. Understanding the complex interplay between political events and market dynamics is essential for investors seeking to navigate the ever-changing landscape. That being said, I would like to outline these generic scenarios: • If President Biden is re-elected for a 2nd term, he would likely maintain similar political and industry policies which we have been seeing in his first term; • If Former President Trump returns to the White House, we would likely see huge reversal in the policies enacted by the current Administration. What Donald Trump did in his first term will be a good indicator for what lies ahead. Looking across asset classes, I think the interest rate regime will be impacted the most in a Trump-winning scenario. The US Interest Rate Regime In the 21st century, we have four US presidents so far: George W. Bush (2001-2008), Barack Obama (2009-2016), Donald Trump (2017-2020) and Joe Biden (2021-2024). The US Federal Reserve also has four Chairmen: Alan Greenspan (1987-2005), Ben Bernanke (2006-2013), Janet Yellen (2014-2017) and Jerome Powell (2018-2026). I observe that Fed Funds Rate exhibited unique pattern under each president. Let’s look at President George W. Bush first: • The younger President Bush came into the White House when the Internet bubble just busted, and the Enron and WorldCom scandals shook the stock markets. “9/11” occurred less than 8 months into his presidency. • Fed Chair Alan Greenspan executed steep rate cuts to rescue the economy in crisis, pushing the Fed Fund rate down to 1% from 6.5%. • By 2004, the economy has recovered and became overheated. To combat inflation, Chairman Greenspan hiked interest rate all the way to 5.25%. • High interest rates busted the subprime housing market, triggering the Great Recession of 2008. New Fed Chair Ben Bernanke steered the country through the financial crisis, and lowered interest rates to 0-25 basis points. The Obama Administration (2009-2016): • President Obama inherited the Zero Rate environment, and throughout most of his 8-year presidency, interest rates largely stayed at the ultra-low levels. • In the 3rd year of her Fed Chair tenure, Janet Yellen began raising interest rates, from 0-25 bps to 1.25% by the end of her four-year term. The Trump Administration (2017-2020): • In November 2017, President Trump nominated Jerome Powell as new Fed Chair. • Chairman Powell continued the rate hike and raised the Fed Funds rate to 2.25%. • President Trump openly criticized his Fed Chair and intervened central bank policy. • Under great pressure, the Fed lowered rates in 2019. With the pandemic sending the economy into a free fall, Fed Funds rate was back to 0-25 bps by April 2020. The Biden Administration (2021-2024): • During the pandemic, a global supply chain bottleneck pushed US inflation to a 40-year-high at 9.1% by July 2022. • Albeit initially assessing the inflation as transitory, the Fed launched a series of rate increases beginning March 2022, pushing the Zero Rate to 5.25-5.50% by 2023. • While the US CPI came down to about the 3-3.5% range, the Fed was hesitant to lower rates too early. It had maintained the current rate in the last seven FOMC meetings. As we observed from the above, Donald Trump strongly believes that high interest rates would hurt the economy. He would go out of his way and convince the Fed to lower rates. What he considered “too high” was 2.25% in 2018. The Fed Funds rate is now more than doubled at 5.25-5.50%. In my opinion, in a Trump-winning scenario, he would call for the Fed to lower rates as soon as he returns to the White House. The Fed would cave in again, and quicken its rate cut schedule. Trading with CBOT Micro Yield Futures For someone who shares my view of aggressive rate-cut schedule under a new Trump Administration, he could express it by trading with CBOT Micro Yield Futures. Unlike bond futures, Micro Yield contracts quote the respective interest rates directly. A lower interest rate means lower futures prices. Last Friday, the August contract of Micro 2Y Yield futures (2YYQ4) were settled at 4.628%. Each contract has a notional value of 1,000 index points, or $4,628 at the current price. To buy (long) or sell (short) 1 contract, a trader needs to deposit an initial margin of $330. The August Micro 10Y Yield (10YQ4) settled at 4.318%. Notional value is 1,000 index points or $4,318. Initial margin is $320. In my opinion, rate cuts are coming, but the timing is uncertain. At what point the presidential pressure will cause rate cuts to speed up is also uncertain. To counter the uncertainty, a trader could use a Futures Rollover strategy. This is to maintain a Short position on Micro Yield Futures over time. When an existing contract is about to expire, we could close the position by buying the same contract, with the long order offsetting the short position. Meanwhile, the trader could enter a Short position with the newly listed contract. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CBOT:ZQ1!Short
by JimHuangChicago
4
All eyes on the PCE todayWe are waiting to see what's going to happen after the release of the Fed's preferred inflation metric, the PCE. EASYMARKETS:EURUSD could one of those exciting pairs to watch today, but wait for the number to come out first. Disclaimer: easyMarkets Account on TradingView allows you to combine easyMarkets industry leading conditions, regulated trading and tight fixed spreads with TradingView's powerful social network for traders, advanced charting and analytics. Access no slippage on limit orders, tight fixed spreads, negative balance protection, no hidden fees or commission, and seamless integration. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, are intended only to be informative, is not an advice nor a recommendation, nor research, or a record of our trading prices, or an offer of, or solicitation for a transaction in any financial instrument and thus should not be treated as such. The information provided does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it. Please be aware, that past performance is not a reliable indicator of future performance and/or results. Past Performance or Forward-looking scenarios based upon the reasonable beliefs of the third-party provider are not a guarantee of future performance. Actual results may differ materially from those anticipated in forward-looking or past performance statements. easyMarkets makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or any information supplied by any third-party.
by easyMarkets