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Can Inflation Shift the Fed’s Rate Path? This week’s inflation data could be decisive for traders as markets weigh whether the Fed will cut rates by 25 or 50 basis points. Last week’s jobs report did not sway the market from its current consensus. The US economy added 142,000 jobs in August 2024, falling short of the expected 160,000, based on the latest NFP data. According to the CME FedWatch Tool, the likelihood of a 25-bps rate cut climbed to 73%, while expectations for a 50-bps cut dropped to 27%. Attention now turns to inflation, with consumer prices expected to fall to 2.6%—the lowest since March 2021—and producer prices anticipated to rise 0.2% month-over-month. Key USD pairs to watch this week include EUR/USD, with the ECB's upcoming interest rate decision in focus. Additionally, pairs impacted by inflation data releases from Mexico, Brazil, Russia, and India could see significant movement.
by BlackBull_Markets
EUR/USD dips after US payrolls misses estimateThe euro has edged lower on Friday. EUR/USD is trading at 1.1088 in the North American session at the time of writing, down 0.20%. Today’s US nonfarm payrolls wasn’t a disaster but certainly nothing to smile about. The economy created 142 thousand new jobs in August, better than the July gain of 114 thousand but short of the market estimate of 160 thousand. The unemployment rate ticked lower to 4.2%, in line with expectations and a shade below the market estimate of 4.3%. The US dollar hasn’t shown much reaction to the employment report. However, expectations for an oversize 50-basis point cut from the Federal Reserve in September have shot up to 59%, up from 43% prior to the nonfarm payrolls release, according to CME’s FedWatch. Had nonfarm payrolls beaten expectations, it likely would have cemented a 25-bps cut. The soft reading means that the Fed meeting is live, with investors unsure about the size of the expected rate cut. The US will release CPI and retail sales before the Fed meeting and any surprises from these releases could impact on the rate decision. Germany’s economy continues to flounder, which doesn’t bode well for the eurozone economy. German industrial production, released today, declined 2.4% m/m in July, down from a 1.7% gain in June and shy of the market estimate of -0.3%. Manufacturing declined across the board and the automotive sector was especially weak. Yearly, industrial output declined by 5.3% in July, compared to a 3.7% decline in June. The European Central Bank meets on Sept. 12 and is widely expected to trim rates after an initial cut in July. Inflation has been tamed and is close to the 2% target and the eurozone economy is struggling. The ECB wants to avoid a recession and a rate cut would provide a boost to the economy and provide relief for consumers. EUR/USD is testing support at 1.1082. Below, there is support at 1.1044 There is resistance at 1.1119 and 1.1102
by OANDA
Yen extends gains on solid wage growth, consumer spending nextThe Japanese yen has posted gains on Thursday. In the North American session, USD/JPY is trading at 143.27 at the time of writing, down 0.33% on the day. The yen continues to pummel the US dollar and is up 1.9% this week. Since July 1, the yen has surged a massive 10.7%. Average cash earnings in Japan rose 3.6% y/y in July, down from 4.5% in June, which was the highest since January 1997. Still, this beat the market estimate of 3.1%. Wages are a key factor as to how soon the Bank of Japan could raise interest rates. Inflation has been moving higher but the BoJ wants to see increased wage growth as well in order to achieve the Bank’s target of sustainable inflation at 2%. Japanese firms agreed to a huge wage increase of 5.1% for 2024 and this is being reflected in solid wage growth. Japan’s economy is showing signs of recovery and consumers are opening their wallets. Household spending will be released early Friday and is expected to rebound with a gain of 1.2% y/y in July, following a 1.4% decline in June. In the US, all eyes are on Friday’s employment report, specifically nonfarm payrolls. After a lower-than-expected gain of 114 thousand in July, the markets expect a gain of 160 thousand in August. The weak July numbers triggered a meltdown in the financial markets and investors remain uneasy. The Federal Reserve is poised to deliver a milestone rate cut on Sept. 18. The likelihood of a 25 bps cut stands at 61% and a 50 bps cut at 39%, according to CME’s FedWatch and these odds could change after the US employment report. USD/JPY has pushed below support at 143.57 and tested support at 142.91 earlier There is resistance at 144.10 and 144.76
by OANDA
AUD/USD sinks ahead of GDPThe Australian dollar is sharply lower on Tuesday. AUD/USD is trading at 0.6732 in the European session, down 0.88% today at the time of writing. Australia’s economy has been sputtering and the markets aren’t expecting much change from second-quarter GDP on Wednesday. GDP is expected to trickle lower to 1% y/y, down from 1.1% in Q1, which was the weakest pace of growth since Q4 2020. Quarterly, the market estimate for GDP stands at 0.3%, compared to 0.1% in Q1. GDP-per-capita is expected to be negative, another indication that economic activity remains subdued. Australia has been hit by a drop in iron ore and core prices and exports fell by 4.4% in the second quarter, which doesn’t bode well for the Australian dollar. The GDP is unlikely to change the Reserve Bank of Australia’s plans when it meets on Sept. 24. The central bank is closely watching inflation, which remains stubbornly high, as well as the labor market. Governor Bullock has said she has no plans to lower the cash rate from its current 4.35% for the next six months. The RBA has stuck to its “higher for longer” stance and has maintained rates since November. The Federal Reserve is widely expected to lower rates on September 18, with a 70% likelihood of a quarter-point cut and a 31% likelihood of a half-point cut. Ahead of the meeting is a crucial employment report on Friday. The previous jobs report was much weaker than expected and triggered a meltdown in the financial markets. Another weak jobs report would raise the likelihood of a half-point cut, while a solid release will cement a quarter-point cut. AUD/USD has pushed below support at 0.6780 and is testing support at 0.6737. Below, there is support at 0.6708 0.6809 and 0.6852 are the next resistance lines
by OANDA
Will the dollar bounce back from its current decline? The US July PCE was in line with market consensus. Headline PCE prices rose 0.2% from a month ago and 2.5% from a year ago, which aligns with market expectations. Core PCE, the Fed's price benchmark, rose only 0.16%, slower than the previous month's 0.18%. This is the lowest level this year and has catalyzed the market sentiment of the Fed’s rate cut. It is worth noting that despite a 0.3% increase in personal income, surpassing the previous month's 0.2%, the savings rate remains alarmingly low. This is because personal consumption expenditures are growing at a faster rate than personal income. The current savings rate has dropped to 2.9%, marking only the second instance in the past 16 years, since the global financial crisis, the savings rate has fallen to the 2% range. This implies that consumption in the United States could decline quickly, serving as a cautionary signal that if employment falters, there may be insufficient buffers to sustain consumption. DXY sustained its uptrend after breaking out of the descending channel and advanced to 101.60. The price consolidates around the 101.50-101.70 range, waiting for an additional price trigger. If the price breaches the resistance at 101.80 while holding above the EMA, the price may gain upward momentum toward 102.60. Conversely, if DXY fails to stay above both EMAs and retreats to the support at 100.50, the price could fall further to the 100.00 threshold.
CAPITALCOM:DXY
by inkicho_exness
AUD/USD – Australian retail sales flat, Aussie shrugsThe Australian dollar continues to have a quiet week. AUD/USD is trading at 0.6804 in the European session, up 0.09% today at the time of writing. Consumer spending in Australia has been weak, which has chilled economic activity. Retail sales for July didn’t provide any relief with a reading of zero, shy of the market estimate of 0.3% and well off the June gain of 0.5%. Consumers continue to feel squeezed by elevated interest rates and the high cost of living. The weak economy and a cooling labor market are making consumers even more cautious about discretionary spending. Will today’s soft data prod the Reserve Bank of Australia to consider a rate cut? The RBA is frustrated with the slow decline in inflation - Governor Bullock has said that the central bank is unlikely to cut for six months and RBA members have been discussing a possible rate hike at recent meetings. The markets are marching to a different tune and have priced in a rate cut in November with more cuts early next year. The remaining tier-1 events ahead of the Sept. 24 policy meeting are GDP and the employment report and both releases will be important factors in the rate decision. If these numbers are weaker than supported, it would support the case for a rate cut before year’s end. The week wraps up with the US Core PCE Price index, considered the Federal Reserve’s preferred inflation indicator. The markets are expecting a small increase in July – from 2.5% to 2.6% y/y and 0.1% to 0.2% m/m. A small move is unlikely to concern the Fed, which has shifted its focus to the weakening labor market now that the battle with inflation is largely over. AUD/USD is testing resistance at 0.6808. Above, there is resistance at 0.6822 0.6776 and 0.6754 are providing support
by OANDA
EUR/USD - ECB eyeing German, eurozone CPIThe euro has extended its decline on Thursday. In the European session, EUR/USD is trading at 1.1095 at the time of writing, down 0.22% on the day. The US dollar has rebounded against the euro this week, climbing 0.89%. Inflation is expected to ease in Germany and the eurozone, which could have significant impact on the European Central Bank rate announcement on Sept. 12. Inflation declined in German states and the national harmonized inflation rate is expected to fall to 2.1% y/y in August, down from 2.3% in July. The eurozone releases CPI on Friday. The market estimate for CPI stands at 2.2%, compared to 2.6% in July. The core inflation rate is expected to creep lower to 2.8%, down from 2.9% in July. A drop in inflation in Germany and the eurozone would support the case for another rate reduction next month. The weak eurozone economy and the fact that the Federal Reserve is also poised to lower rates have strengthened the case to cut rates. At the same time, concern about wage increases is a reason for the ECB to hold off on cutting rates. The Federal Reserve is poised to cut rates next month, which would mark the US central bank joining in the global trend of central banks lowering rates now that the threat of inflation has largely abated. Most FOMC members have come out in favor of a September cut but Atlanta Fed President Raphael Bostic said on Wednesday that the Fed should wait for additional data before lowering rates as it would be a mistake to cut and then have to hike again. EUR/USD is testing support at 1.1087. Below, there is support at 1.1055 There is resistance at 1.1138 and 1.1170
by OANDA
Knock Knock. Who's There? Vibecession Ft. US Interest RatesHello Everyone, IMPORTANT: ALL FED POLICIES LEAD TO NEGATIVE OUTCOMES TLDR AT THE END In February 2022 the Federal Reserve gave us the fastest rate raising campaign in history to try and combat very high inflation, but they were very late in raising rates causing one of the worst inflation in 40 years. During his speech at Jackson Hole he confirms rate cuts in September due to inflation being under control and the labor market "cooling." Good news is inflation is under control, however this is only the start of our labor market "cooling." Jerome Powell is extremely late in cutting rates and will be cutting rates because we are getting BAD economic data and the cracks are showing in our labor market, commercial real estate, and banking sectors. The Federal Reserve 100% KNOWS a recession is coming that is why they are cutting rates. We have Jerome Powell come up on stage sweet talk to us about a soft landing, inflation under control, and how he will cut rates to help the labor market. He's not going to be instilling fear in Americans as a chairman. Just Remember, ALL FED POLICIES LEAD TO NEGATIVE OUTCOMES. Recession is coming, Sahm rule and inverted yield curve hasn't been wrong and it won't be wrong this time. This time it's not different. TLDR: Jerome Powell is too late in cutting rates causing a recession
ECONOMICS:USINTR
by justaturboman44
1
Analysis of the Dollar Index (DXY)Overview: On Tuesday, the Dollar Index (DXY) showed weak performance, failing to consolidate the partial recovery seen on Monday after last week's sharp decline. Although the dollar posted gains against major Asian currencies, such as the Japanese Yen (JPY) and the Korean Won (KRW), these gains were quickly erased during the US trading session. The return of a "risk-on" sentiment in the markets, with stock indices rising in Asia, Europe, and US futures, has led investors to move away from safe-haven assets, further weighing on the dollar. Fundamental Factors: Market Sentiment: The return of the "risk-on" sentiment has favored riskier assets at the expense of the US dollar. The easing of tensions in the Middle East has helped reduce flows into safe-haven assets, exerting bearish pressure on the DXY. Economic Data: On Tuesday, attention will be focused on the weekly mortgage applications data published by the MBA and the EIA's report on US crude oil inventories. Additionally, the speech by Federal Reserve's Waller could provide further insight into the direction of US monetary policy. Currency Performance: The EUR/USD has resumed its bullish trend, partially erasing the weakness seen at the start of the week. The British pound (GBP/USD) reached over two-year highs, supported by expectations that the Bank of England (BoE) will not cut rates as much as the markets anticipated. Commodities and Precious Metals: WTI saw a sharp decline, breaking a three-day winning streak due to renewed demand concerns and some profit-taking. Gold prices alternated between gains and losses above the $2,500 per ounce mark, while silver prices remained near the $30.00 per ounce level.
TVC:DXYLong
by Forex48_TradingAcademy
1
USD/JPY: Limited Recovery Below 145.00!General Overview: USD/JPY remains near 145.00 in the Asian session on Tuesday, despite a cautious market environment. The pair benefits from the recent rebound of the US Dollar and higher US Treasury yields. However, the divergence in monetary policies between the Federal Reserve (Fed) and the Bank of Japan (BoJ) continues to be a key factor that could influence the pair’s movement in the coming days. Fundamental Factors: Japanese Macroeconomic Data: Japan's recent GDP growth in the second quarter exceeded expectations, strengthening the case for a possible interest rate hike by the BoJ. This temporarily strengthened the Japanese Yen (JPY), contributing to the downward pressure on USD/JPY. Monetary Policy and the Fed: The US Dollar found support from higher US Treasury yields, but expectations of a rate cut by the Fed in September limit the upside potential. Specifically, the debate is focused on a possible 25 basis point cut, with a 60% probability, while there is still a 36% chance of a more significant 50 basis point cut, according to CME FedWatch.
Short
by Forex48_TradingAcademy
1
USDJPY Vulnerable on Monetary Policy DynamicsThe pair is heading towards its second straight losing month, due to the shift in monetary policy dynamics, which could fuel further losses and new 2024 lows towards 140.26. Chair Powell offered the strongest signal to date of a September pivot, bolstering market optimism for multiple rate cuts ahead. The bank of Japan is on the opposite direction, trying to make policy less loose. Stepping up its effort, it raised rates for second time in this cycle and pointed to more moves, while Governor Ueda stack to script last week. On the other hand, Mr Powell did not offer any insights around the size and pace of rate cuts, while market pricing for four moves this year is stretched. The BoJ’s latest rate hike meanwhile sparked volatility and forced the bank to pledge to not hike again while markets are unstable. Furthermore, the rate differential will still be wide even if the BoJ hikes again and the Fed cuts more than once. As such, a recovery effort would not be surprising, but the EMA200 (black line) and the 38.2% Fibonacci of the recent slump can cap the upside. Sustained strength above this resistance confluence does not easy under the current 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. 62% 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 Europe Ltd (trading as “FXCM” or “FXCM EU”) (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 59% 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.
Short
by FXCM
GBP/USD in Rally: Geopolitical Calm Sparks Bullish MomentumThe GBP/USD pair is currently in a bullish phase, trading near its highest level in the past three weeks, just below the 1.2900 mark. This movement followed the easing of concerns about a broader conflict in the Middle East, after recent hostilities between Israel and Hezbollah in Lebanon did not escalate further. The reduction in geopolitical tensions has supported risk sentiment, helping GBP/USD to rise. Fundamental Analysis The recent rise in GBP/USD can be attributed to a combination of diminishing geopolitical risks and favorable technical positioning. On Thursday, the pair initially fell towards 1.2800 following positive economic data from the United States. Initial Jobless Claims in the U.S. decreased by 7,000, reaching 227,000, and retail sales for July increased by 1%, well above the expected 0.3%. This positive data temporarily strengthened the U.S. Dollar. However, with the improvement in risk sentiment throughout the day, GBP/USD regained momentum and closed in positive territory. The resilience of GBP/USD despite the positive U.S. data suggests an underlying bullish momentum driven by risk appetite. Looking ahead, the U.S. economic calendar includes data on housing starts and building permits for July, along with the preliminary Consumer Sentiment Index from the University of Michigan for August. Outlook The short-term direction for GBP/USD will likely be influenced by risk sentiment and potential profit-taking as the week comes to a close. A bullish opening on Wall Street could weaken the U.S. Dollar and support further gains in GBP/USD.
Short
by Forex48_TradingAcademy
2
USOIL AnalysisOil prices have surged on Monday, driven by escalating tensions in the Middle East and potential disruptions in Libyan oil production. The recent uptick in violence between Israel and Hezbollah, coupled with ongoing drone attacks and bombings, has severely diminished the prospects of a Gaza ceasefire deal, pushing oil prices higher. Adding fuel to the fire, Libya is facing a significant disruption in oil production due to an internal political conflict between rival governments vying for control over the central bank. The sudden halt in production exacerbates supply concerns, contributing to the sharp rise in oil prices. The US Dollar Index (DXY) is struggling after a poor performance last week, influenced by Federal Reserve Chairman Jerome Powell's confirmation of an impending interest rate cut in September. However, markets may be overestimating the scale and pace of these cuts, which could have broader implications for the oil market if expectations are not met. Technical Analysis Oil is currently in a strong position at the start of the week. Despite fears of a sell-off from hedge funds, oil prices have rallied, potentially inviting more bullish positioning. The violence in the Middle East raises doubts about the feasibility of a ceasefire between Israel and Hamas, and any further escalation could drive prices even higher. On the technical front, WTI Crude Oil is trading around $77.07, while Brent Crude is at $80.44. A key resistance level is at $77.65, which aligns with both a descending trendline and the 200-day Simple Moving Average (SMA). A break above this level could see the 100-day SMA at $78.45 act as another potential rejection point. On the downside, support remains at $71.17, the low from August 5, which has provided a base for the current rebound. Should prices fall below $70.00, the next significant support levels to watch are $68.00 and $67.11, the latter being the lowest point from the triple bottom formation seen in June 2023.
TVC:USOILShort
by Forex48_TradingAcademy
1
EUR/USD dips as German business climate fallsThe euro is in negative territory on Monday. In the European session, EUR/USD is trading at 1.1156 at the time of writing, down 0.32% on the day. The euro posted strong gains on Friday, rising 0.73% and breaking above 1.12 for the first time since July 17. The markets got what they were looking for from Federal Reserve Chair Powell on Friday – an endorsement for a rate cut. Powell didn’t specify when the Fed would cut but said that the “time has come for policy to adjust”. Investors are ready for the Fed’s first rate cut in over four years at the Sept. 18 meeting. What is still up in the air is the size of the cut. Just one month ago, the odds of a 25-basis point cut stood at 88% and 12% for a cut of 50 bps, according to the CME’s FedWatch. Since then, the US economy has posted some weaker-than-expected data and the probability of a 25-bps reduction has fallen to 63.5% for a 25-bps cut vs. 36.5% for a 50 bps move. One key factor in the Fed’s decision will be the August jobs report on Sept. 6. A very weak report for July panicked investors that the US economy was hurtling towards a recession and financial markets were routed before bouncing back. Another weak jobs report could rattle investors and push the Fed to respond with a 50-bps cut. The expected September cut will mark the start of a new rate cycle for the Fed, which has maintained rates at 5.25%-5.50% for over a year. The Fed is expected to lower rates at least one more time this year and continue trimming into 2025. Germany’s Ifo Institute business climate sentiment index declined in August for a fourth consecutive time as the German economy continues to struggle. The index eased to 86.6, down from 87.0 but above the market estimate of 86.0. The survey’s manufacturing component dropped sharply and the services component also fell. EUR/USD is testing support at 1.1165. Below, there is support at 1.1130 1.1229 and 1.1264 are the next resistance lines
by OANDA
XAU/USD Above $2,500, But Is a Drop Coming?The gold price (XAU/USD) has maintained a solid position above the psychological support level of $2,500 at the start of the week. This increase is supported by growing expectations that the US Federal Reserve will begin lowering borrowing costs in September. From a short-term technical perspective, the gold price still suggests upside risks, especially if buyers maintain control above the triangle support, which was previously resistance, at $2,470. Technical Analysis The gold price recently confirmed a bullish breakout from a symmetrical triangle, indicating further gains. Gold buyers need to reclaim the all-time high of $2,532 to face the next key barrier at $2,600. If the gold price fails to sustain current levels, a correction could occur towards the $2,500 threshold. A sustained break below $2,485 would expose the market to further declines, down to the critical support at $2,470. Fundamental Factors The positive tone surrounding the gold price is mainly attributed to the sustained weakness of the US dollar and negative US Treasury yields, following dovish remarks by Fed Chairman Jerome Powell at the Jackson Hole Symposium. Powell clearly confirmed that the Fed's easing cycle will begin in September, signaling a possible rate reduction. The market currently sees a 38% probability of a 50 basis point rate cut and a 62% probability of a 25 basis point cut, as indicated by the CME Group's FedWatch Tool. In a low-interest-rate environment, gold, which does not yield interest, tends to benefit. Additionally, the precious metal, considered a safe haven, is capitalizing on escalating geopolitical tensions in the Middle East, particularly after Israel's preemptive airstrike on Hezbollah in southern Lebanon and the lack of an agreement in ceasefire talks in Cairo. Future Outlook With the support of favorable fundamental factors and a technical setup that favors buyers, the gold price remains exposed to upside risks. The next significant move could be driven by the US Durable Goods Orders data, expected later on Monday.
OANDA:XAUUSDShort
by Forex48_TradingAcademy
3
Is all this a coincidence? USD/JPY 1M chartUSD/JPY 1M chart; World trade was seriously affected by the very strong dollar. Therefore, due to the Plaza Agreement signed in 1985, the Japanese Yen started to appreciate significantly against the USD. Then it continued to appreciate due to the economic bubble that burst in the 90s. In 1998, there was a major collapse with the Asian Crisis. The Japanese Yen was positively affected by this situation. After the 2008 global crisis, the Fed's interest rate cut broke the support zone downwards and started its second move below the $100 level.
 After the earthquake and tsunami disaster in 2011, Japan launched a massive quantitative easing program, which was significantly bullish for the USD. Finally, Japan raised interest rates for the first time in 17 years, leading to a sharp fall in the markets. Was it a coincidence that the $160 level was tested for the first time in 34 years? #USDJPY #Forex #Economy
by ugurtash