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GBPUSD H4 15 March 2024GBPUSD H4 15 March 2024 Lack of market catalysts from the UK region coupled with US Dollar appreciation prompted a bearish momentum for the GBP/USD pair. Strong US inflation data and high PPI figures dimmed expectations for Fed easing policies, contrasting with the UK's economic rebound from recession, which pushed back expectations for a Bank of England rate cut. GBP/USD is trading lower following the prior breakout below the previous support level. Suggesting the pair might extend its losses. Resistance level: 1.2770, 1.2860📉 Support level: 1.2700, 1.2615📈
Short
by top_fx
Currency most likely to rebound against USD next week? Next week's Federal Reserve interest rate decision possibly just got a lot more interesting. Last night we got PPI data. In February, the producer price index, a key gauge of wholesale inflation, surged by 0.6%, surpassing expectations by more than double. The big question now is whether traders will reassess their expectations for the timing of a Fed rate cut. Currently, the market is pricing in less than a 15% chance of a rate cut in May and a 60% likelihood in June. This PPI report marks the final significant economic data released before the Federal Reserve's forthcoming policy meeting scheduled for March 19-20. The USD dollar knocked back all its pairs after the PPI announcement. But which pairs are likely to stage a comeback? The Japanese yen is possibly one of the best prospects in this regard. Traders will be looking for serious talk on Monday about the Bank of Japan ending it decades of extremely low-interest rates (or God-forbid an actual rate hike). The BoJ's Interest Rate Decision is slated for 11 pm on Monday. Next week, we will also see the release of inflation data from Canada and the UK, adding potential volatility to USDCAD and GBPUSD pairs.
by BlackBull_Markets
1
🚨 Bitcoin NOT at all-time high yet! 🚨🚨 Bitcoin NOT at all-time high yet! 🚨 I developed this formula a long time ago and have been observing it. When the founder of ADA (Charles Hoskinson) said that the previous Bitcoin all time high was $69,000 based on the value of the dollar in 2021, I remembered my formula. The essence is quite simple: multiply the sum of the Fed's liabilities, the US budget balance, and the debt-to-GDP ratio by the dollar index and divide by the price of Bitcoin. From an economic point of view, this formula attempts to correlate US monetary and fiscal indicators, as well as the strength of the dollar, with the price of Bitcoin. It is my attempt to measure the "fundamental value" of Bitcoin relative to the indicators of the US economy and the strength of the dollar.
FRED:RRPONTTLDLong
by sholi_software
Aussie edges higher despite business confidence declineThe Australian dollar remains close to the 0.66 line, where it has been for most of the week. In the North American session, AUD/USD is trading at 0.6620, up 0.21%. The business sector is not feeling very confident about the near-term outlook of the Australian economy. The NAB Business Confidence index dipped to zero in February, down from one in January but above the forecast of -1. The NAB report noted that retail confidence remains deeply negative. There was better news from the NAB Business Conditions index, which rose to 10 in February, up from 7 in January. By industry, manufacturing showed improvement but retail and construction weakened. Australia’s economy has been limping along and consumers are still feeling the squeeze of 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 have priced in rate cuts for 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 the cash rate of 4.35%. Thursday will be busy in the US, with the release of retail sales, the producer price index and unemployment claims. Retail sales is often a market-mover and will be closely watched. The markets are expecting a strong rebound in February, with an estimate of 0.8% m/m. This follows a 0.8% decline in January, which was a 10-month low. There is resistance at 0.6702 and 0.6780 0.6590 and 0.6512 are providing support
by OANDA
1
USD/JPY slips after US inflation surpriseThe Japanese yen has looked sharp lately but is considerably lower on Tuesday. In the North American session, USD/JPY is trading at 147.75, up 0.55%. The yen has rallied for five straight days, gaining 2.4% during that time. The US inflation rate crept higher in February. Headline CPI climbed 3.2% y/y, up from 3.1% in January and above the market estimate of 3.1%. On a monthly basis, CPI ticked higher to 0.4%, matching the market estimate and above the January gain of 0.3%. The increase in inflation was mainly due to energy costs, such as gasoline, falling less than expected. Core CPI, which excludes food and energy and is considered a more reliable gauge of inflation trends, ticked lower to 3.8% year-on-year in February, lower than the 3.9% gain in January but above the market estimate of 3.7%. Monthly, core CPI remained steady at 0.4%, above the market estimate of 0.3%. The US dollar responded to the inflation report with sharp swings against the major currencies. The markets have lowered rate cut expectations, as the Fed will be less inclined to lower rates if inflation is moving higher. The Fed is virtually guaranteed to pause at the March meeting and the probability of a June cut has fallen to 66%, compared to 90% just one month ago. The US releases retail sales for February on Wednesday and an unexpected reading could cause further volatility for the US dollar. Retail sales fell to 0.6% y/y in January, compared to a sizzling 5.3% gain in December. The market estimate for February stands at 1%. USD/JPY has pushed above resistance at 147.25 and 147.55, and is testing resistance at 147.93 146.87 and 146.57 are providing support
by OANDA
GBP/USD edges lower, UK employment nextThe British pound has started the trading week in negative territory. In the North American session, GBP/USD is trading at 1.2807, down 0.39%. The pound has posted six straight winning days and climbed 1.56% last week against the US dollar. The UK releases the employment report on Tuesday. The labor market has remained resilient even with the steep rise in interest rates, and the new measure for employment data has indicated that the labour market is stronger than previously thought. For instance, the unemployment rate in the fourth quarter of 2023 stood at 3.8%, compared to 4.2% under the old measure. The unemployment rate is expected to remain steady at 3.8% in the first quarter. We could see a large drop in job growth, with an estimate of 10,000 for Q4, compared to 72,000 in Q3. Wage growth has been dropping steadily and is expected to tick lower to 5.7% y/y including bonuses, down from 5.8% in the third quarter. The Bank of England will be keeping a close eye on the employment release. The BoE meets on March 21 and Governor Bailey has eased up on his pushback against rate cut expectations. If Tuesday’s employment numbers are stronger than expected, it will likely raise the odds of a rate cut later this year. In the US, Friday’s employment release was a mix. Job growth remained strong as nonfarm payrolls rose 275,000, easily beating the market estimate of 200,000 and the downwardly revised 229,000 in January. However, the unemployment rate surprised by climbing to 3.9% after holding at 3.7% for three consecutive months, which was also the market estimate. This was the highest unemployment rate in two years and points to softer labor market conditions. The rise in the unemployment rate has raised the odds of a rate cut in June by the Federal Reserve. Currently, the likelihood of a cut is 71%, compared to 64% just one week ago, according to the CME’s FedWatch tool. There is resistance at 1.2902 and 1.2945 GBP/USD pushed below support at 1.2852 and is testing support at 1.2809
by OANDA
Rising interest rates are not affecting Bitcoin anymore Before significant interest rate hikes, I have claimed that Bitcoin is decoupling from the rest economy (which probably happened). However, the effect of rising interest rates still had some power over the Bitcoin in the tank. It seems that this power of raising interest rates is diminishing for Bitcoin relative to the rest of the economy which will probably suffer quite a bit more after this post. The chances of Bitcoin being affected by raising interest rates are becoming lower and lower. The bitcoin community is pricing in these hikes a lot earlier than the rest of the market. The same thing happened when inflation started (2020), when Bitcoin moved significantly quicker than the CPI. My estimate is that the Bitcoin public generally sticks (as do I) to the rule that Inflation is defined as an increase in money supply and deflation is defined as a decrease in the money supply. These numbers are available much quicker than CPI (Consumer Price Index) which is a trailing indicator and can lag 15-24 months on average. The same thing happened in reverse now. One more important point is that monetary inflation is much more difficult to reverse through rising Interest rates, and the community is also aware of this. In my previous posts I have explained how interest rates cannot curb inflation (even in theory) unless they overshoot the current CPI number, which at the time was over 9%. Interest rates could have bigger effects at <9% rates only if they break the economy (which slowly might start happening), but this will still not be enough to reduce the money supply. This could stop further inflation at <9% interest rates, however at the cost of economy. What they cannot do is reverse inflation, meaning that all the money that is in the system will stay in the system and prices will not come down. Killing inflation this way will be paid for through increased poverty and decreased standard of living, until the economic growth "eats" through that "debt". Which at a 2-3% rate could take multiple years. If we account for all of these effects and consider the Bitcoin community world views, the chance of further fall is very low, while the stock market still has a lot of down room.
BITSTAMP:BTCUSDLong
by josip
8
Euro in holding pattern ahead of ECB decisionThe euro is barely making a peep on Thursday, ahead of the European Central Bank’s decision later in the day. In the European session, EUR/USD is trading at 1.0894, down 0.04%. The ECB is expected to follow the Federal Reserve’s pause and hold the deposit rate at 4.0% for a fourth straight time. Have ECB rates peaked? The answer seems yes, but ECB policy makers are unlikely to confirm that tightening is over, as concerns remain that inflation is not yet beaten. CPI is down to 2.6%, but core CPI is at 3.1% and service inflation is running around 4%. Inflation is on a downtrend, but the battle to bring down inflation to the ECB’s 2% target is not over. In what sounds like a Jerome Powell sound bite, ECB members have been saying that there is no rush to lower rates. The markets have priced in 90 points in cuts for 2024, with a first cut expected in June. The ECB will likely hold rates again today, which means that investors will be focused on the central bank’s economic outlook. The ECB is expected to revise lower its inflation forecast and ECB President Lagarde will likely address the inflation outlook in her press conference. Anyone looking for some insights about rate policy from Federal Reserve Chair Powell’s testimony on Capitol Hill on Wednesday was no doubt disappointed. Powell essentially doubled-down on a script we’ve heard before, which is that the Fed is planning to cut interest rates this year but please don’t hold your breath, as inflation is not where it needs to be and the Fed will remain cautious. Powell did not give any hints about the timing of a rate cut except to say that the timing was not yet right. Powell said that the Fed would carefully monitor data and the economic outlook before making any moves and that the Fed had to first gain “greater confidence that inflation is moving sustainably toward 2 percent”. Powell signaled that rates have likely peaked, saying that the Fed’s “policy rate is likely at its peak for this tightening cycle”. This means that the Fed’s rate path will probably remain in a holding pattern of “higher for longer” until the Fed sees clear evidence that inflation has been subdued. The markets have priced in three rate cuts this year, with June the likely date for the initial cut. EUR/USD is testing resistance at 1.0905. Above, there is resistance at 1.0944 1.0872 and 1.0833 are providing support
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
Gold Correction: Seizing Strategic OpportunitiesThe analysis on XAUUSD highlights a likely corrective period for gold, in line with the movement of the US dollar and Treasury bond yields. After a period of steady growth, the price of gold is now consolidating recent gains, with the Relative Strength Index (RSI) signaling a high level of overbought conditions, potentially foreshadowing an imminent downward correction. However, the current bullish crossover of moving averages may mitigate this negative trend. It is essential for gold buyers to defend the key support level at $2,107 to avoid further declines, while surpassing the resistance at $2,144 could pave the way for further gains. Growing expectations of interest rate cuts by the US Federal Reserve, supported by disappointing economic data, are fueling interest in gold as a safe-haven asset. Investors will closely watch Federal Reserve Chairman Jerome Powell's testimony for further insights into future rate movements. Meanwhile, upcoming employment and labor market data will be crucial in influencing trading on both the dollar and gold, offering significant trading opportunities.
OANDA:XAUUSDShort
by Forex48_TradingAcademy
1
Greenback Correcting Its Dovish OversoldWhat market participants expected: - 2023 Sept: Betting one last rate hike (a 4th in year 2023) in Nov/Dec FOMC meeting. - 2023 Dec: No rate hike in Dec FOMC meeting. Afterwards, expected the Fed to cut in March 2024 What the Fed told us: - According to the 'dot plot', majority of committee anticipate a 50-100 bps cut by the end of 2024. - Powell once said the Fed will act if inflation comes back up. USD movement: - "Hawkish" Nov/Dec rate hike expectation fell short that was interpreted as Powell's "dovish" stance. - Implied 150 bps rate cut mismatched the Fed's projection. - Speculations amplified the "mismatch" during holiday session when traders and fed officials are in the holiday. - When volume comes back after holiday, markets act to correct. Technical view: - DXY still being the triangle, i.e. support found upon its upward trendline - Short-run key level would be 103, where around a former bottom - Actual resistance should be 104 when an inverted Head and Shoulder pattern is forming.
TVC:DXYLong
by kenhungbiz
1
Undervalued Dollar? Democrats' Influence on Rate Cut PlansUndervalued Dollar? Democrats' Influence on Powell's Rate Cut Plans Federal Reserve Chair Jerome Powell is scheduled to present his semi-annual monetary policy testimony to the House and Senate starting this Wednesday. The market will be looking for Powell to provide a more specific timeline for interest rate cuts. Currently, the market is pricing in three interest rate cuts by the Federal Reserve this year, with the first expected in June. However, the market is likely to be disappointed, with Powell keeping tight-lipped and echoing the sentiments of other Fed officials, suggesting that the first rate cut may occur "later this year." Although the market might be disappointed by the lack of a clear timeline, it will likely take no news as good news though and have no reason to amend their forecast to any time later than June. This could be undervaluing the US dollar, as the market overlooks “higher for even longer”. When the market finally comes to terms with this, targets for a stronger USD could include those levels designated on the chart. What could break Powell's tight lips is pressure from Democrats, who could advocate for interest rate cuts to support the strength of the economy in an election year.
by BlackBull_Markets
EUR/USD: Fluctuations and Challenges Amidst US Economic DataThe EUR/USD exchange rate continues to fluctuate within its daily range above the level of 1.0800 during Friday's American session. Economic data from the United States shows that the ISM Manufacturing PMI decreased more than expected in February, making it difficult for the US dollar to gain momentum. Nonetheless, the EUR/USD has found support around 1.0800 but still needs to surpass the 200-period Simple Moving Average (SMA) on the 4-hour chart, currently around 1.0820. The Relative Strength Index (RSI) indicator remains just below 50, indicating a lack of momentum in the recovery phase. If the EUR/USD manages to consolidate above 1.0820 and utilize that level as support, we could see the next resistance at 1.0860, followed by 1.0900-1.0910. However, a 4-hour close below 1.0800 could attract technical sellers, pushing the exchange rate towards 1.0760 and 1.0720. The EUR/USD was under bearish pressure during Thursday's American trading hours and closed in negative territory for the third consecutive day. Although the exchange rate manages to stay above 1.0800 on Friday, it might struggle to recover unless Eurozone inflation data supports the euro. Favorable comments on monetary tightening from Federal Reserve (Fed) members following the inflation data strengthened the US dollar, causing the EUR/USD to turn downward. Eurostat will publish the Harmonized Index of Consumer Prices for February, with forecasts of a 2.5% increase. I expect a breakout on the daily level of 1.088 with a break of supply and subsequent retracement for a retest before the upward momentum towards 1.0950. Best wishes and have a good start to the week everyone.
Long
by Forex48_TradingAcademy
2
EUR/USD dips as German inflation declinesThe euro is in negative territory on Thursday. In the North American session, EUR/USD is trading at 1.0800, down 0.35%. Germany’s inflation rate dropped to 2.5% y/y in February, down from 2.9% in January and lower than the market estimate of 2.6%. This was the lowest level since June 2021, as inflation continues to move closer to the European Central Bank’s target of 2%. Food and energy prices were the main drivers of the decline, while services inflation was unchanged at 3.4%. Monthly, inflation rose 0.4%, up from 0.2% in February and shy of the market estimate of 0.5%. Core CPI remained steady at 3.4%, its lowest level since July 2022. The eurozone releases February on Friday, which is also expected to decline. Headline CPI is expected to ease to 2.5%, down from 2.8% in January. Core CPI is projected to decline to 2.9%, compared to 3.3% in January. If the market estimates are on target, the drop in inflation will put pressure on the ECB to consider lowering interest rates as inflation gets closer to the ECB’s 2% target. ECB policy makers have been extremely cautious about easing monetary policy too quickly due to fears of inflation resurging, but the recipe of high interest rates and a weak eurozone economy could lead to a recession. In the US, market pricing for Fed rate cuts has been slashed and is currently in line with the Fed projection of three rate cuts this year. In December, the markets priced in as many as six rate cuts but a surprisingly robust US economy and a Fed pushback against rate expectations has pushed a March rate cut off the table, with June or September the likely dates of an initial rate cut. EUR/USD is testing support at 1.0823 . Below, there is support at 1.0760 There is resistance at 1.0885 and 1.0948
by OANDA
GBPUSD: Expecting a drop from hereEven though sterling has found recent resilience, we are in a long-term down trend. I believe the recent rally must end, fundamentally the pound is much weaker than the dollar, the UK is in recession and the US looks likely to avoid one. The FED will start cutting rates, but I believe the BoE will act sooner (or at the same time) because it doesn't have the grace of a strong economy. On the LTF's we're at the top of this current dynamic rising range, but I think we may see a break of the lower boundary, and if we do this will be the resumption of the downtrend.
Short
by Finchcliffe
FOMC FORWARD GUIDANCE SINCE 2018 w/SPXThe chart provided visually represents the forward guidance issued by the Federal Open Market Committee (FOMC) alongside the performance of various key economic indicators and market indices. The FOMC forward guidance serves as a crucial tool for signaling the Federal Reserve's monetary policy stance and future intentions, thereby influencing market expectations and economic behavior. By examining the interplay between FOMC forward guidance and these key economic indicators, investors, policymakers, and analysts can gain insights into the likely direction of monetary policy and its potential impact on financial markets and the broader economy.
SP:SPX
by koyking
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