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Euro lower as US inflation dips slightlyThe euro is lower on Thursday. In the North American session, EUR/USD is trading at 1.0908, down 0.28%. The German economy has been struggling but there was positive news as German retail sales rose 1.6% in August and 1.5% in July, after declines of 1.1% in June and 1.4% in May. The four monthly releases were all published today due to a technical problem in June. US inflation for September was within expectations and the market reaction has been muted. Headline CPI continued its downswing and rose 2.4% y/y, down from 2.5% in August but above the market estimate of 2.3%. The decline in inflation was driven by a decrease in energy prices, particularly gasoline. On a monthly basis, CPI rose 0.2% in September, unchanged from August but above the market estimate of 0.1%. Core CPI remains a bit high and came in at 3.3% y/y, above the August reading of 3.2% and the market estimate of 3.2%. Still, the Fed has demonstrated that it is willing to slash rates by 50 basis points despite inflation running above the 2% target. Today’s inflation data hasn’t changed market expectations for the November meeting, which remain at around 85% for a cut of 25 basis points. The Fed minutes reflected optimism about the US economy, a signal that more rate cuts are in the pipeline. There was only one dissenting vote against the 50-bps cut in September, but the minutes indicated that some dovish members voted with the majority although they would have preferred a modest 25 bps cut. Jerome Powell may not have the same support for another jumbo cut if the labor market remains solid. That could mean cuts of 25 bps at the November and December meetings. EUR/USD has pushed below support at 1.0920 and is testing support at 1.0901. Below, there is support at 1.0865 1.0956 and 1.0975 are the next resistance lines
by OANDA
NDQ100 (Nasdaq) Price Breakdown Pre-CPI Today's focus: Nasdaq Pattern – Range Support – 17,832 Resistance – 18,355 Hi, traders; thanks for tuning in for today's update. Today, we are looking at the Nasdaq daily. Price remains range-bound. Do traders feel today's CPI will be bearish or bullish? Yesterday, buyers showed some strength, stopping a bear move and reversing losses. Could good news on the CPI and minutes front maintain buyer control? We have run over the primary levels and are currently holding the price. Depending on what we see from the CPI, could we see a new break that is lower or higher? Traders also have to be aware of false breakouts. Good trading.
EIGHTCAP:NDQ100Long
by Eightcap
GBP/USD rises ahead of UK retail salesThe British pound has extended its gains on Thursday. In the North American session, GBP/USD is trading at 1.2772, up 0.32%. The UK will wrap up a busy week with retail sales on Friday. The July report is expected to show a decline in consumer spending. Headline retail sales are expected to fall by 0.5% after a 0.7% gain in May and core retail sales are projected to decline by 0.7% after a 0.8% increase in May. The June numbers were higher than expected despite high inflation, helped by record-hot weather. Will the July data also surprise to the upside? The UK consumer has been grappling with the highest inflation in the G7 club, which means shoppers are getting less for their money. This has dampened consumption, a key driver of the economy. Energy prices are lower, thanks to the energy price cap, but food inflation continues to soar and was 17.4% y/y in June. Consumer confidence has been mired deep in negative territory and the GfK consumer confidence index, which will be released later today, is expected at -29, almost unchanged from the previous release of -30 points. The Bank of England would like to follow some of the other major central banks that are in a pause phase, but the grim inflation picture may force the BoE to keep raising interest rates, which could tip the weak economy into a recession. Wage growth jumped to 7.8% in the three months to June, up from 7.5% in the previous period. In July, headline CPI fell to 6.9%, down sharply from 7.9%, but core CPI remains sticky, and was unchanged at 6.9%. The data points to a wage-price spiral which could impede the BoE's efforts to curb inflation. The Federal Reserve remains concerned about high inflation and said that additional rate hikes might be needed, according to the minutes of the July meeting. At the meeting, the Fed raised rates by 0.25%, a move that was widely anticipated. Most members "continued to see significant upside risks to inflation, which could require further tightening of monetary policy". At the same, time, members expressed uncertainty over the future rate path since there were signs that inflationary pressures could be easing. GBP/USD is testing resistance at 1.2787. The next resistance line is 1.2879  1.2726 and 1.2634 are providing support
by OANDA
USD/JPY gains ground, Fed minutes show policy divisionsThe Japanese yen is showing strong gains on Thursday. In the European session, USD/JPY is trading at 143.82, down 0.57%. The Federal Reserve has been aggressively tightening rates in order to curb inflation but took a pause in June after ten consecutive hikes. At the meeting, the Fed said that a pause would provide members with time to assess the impact of the hikes, which have amounted to some 500 basis points. The minutes of the June meeting were significant in highlighting that Fed members were in disagreement about the decision to pause rates. The decision to pause may have been unanimous, but the minutes made it clear that there was a difference of opinions, with some members preferring a hike but reluctantly agreeing to a pause. There was also disagreement over the pace of tightening in the second half of the year, with 16 of 18 members expecting at least one hike and 12 members expecting two or more hikes. After the minutes, the money markets slightly raised the probability of a 0.25% hike in July from 86% to 91%, according to the CME FedWatch tool. The pricing could continue to change, with two key reports ahead of the July meeting. The non-farm payrolls report will be released on Friday. Job growth is expected to have cooled to 225,000 in June, down sharply from 339,000 in May. This will be followed by the June inflation report next week, with headline inflation expected to fall from 4.0% to around 3.0%. Japan releases Household Spending and Average Cash Earnings on Friday. Household Spending declined by 4.4% in April and another decline of 2.4% is expected for May, as inflation has dampened consumer spending. Average Cash Earnings gained 1% in May and the consensus for June stands at 0.7%. There is resistance at 145.28 and 146.23 144.11 is a weak support level. The next support line is 143.16
by OANDA
AUD/USD steadies after banner dayThe Australian dollar has posted limited losses on Thursday. In the European session, AUD/USD is trading at 0.6822, down 0.17%. The Australian dollar rocketed higher on Wednesday, rising 1.6% and hitting a 3-week high. This followed reports that China was considering easing its ban on imports of Australian coal. The ban has been in place since 2020, but relations between Australia and China have improved since the new Australian government took office. The move would bolster the Australian economy, although the Australian government was surprisingly low-key, saying that the coal industry had found alternative markets. China is Australia's number one trading partner, which means that developments in China have a significant impact on Australia and the direction of the Australian dollar. The sharp U-turn in China's covid policy, from zero-covid to easing restrictions should give a boost to the Chinese economy in the long term. However, we can expect China's economy to slow down and even contract in the first quarter, due to the surge in Covid cases which is dampening demand for services and also lowering production as many workers report in sick. This could pose a major headwind for the Australian dollar early in 2023. The Federal Reserve minutes reflected the hawkish message that Jerome Powell had for the markets at the December meeting. FOMC members committed to maintaining a restrictive policy while inflation remained unacceptably high, saying that more evidence was needed to show that inflation was on a "sustained downward path to 2 per cent". The minutes noted that several members warned against "prematurely loosening monetary policy". Despite the Fed's hawkish stance, there is still a dissonance between the Fed's message and market pricing. The minutes noted that no FOMC members expect any rate cuts this year, while the markets have priced in a possible small reduction by the end of 2023 and have forecast a funds rate peak at 4.5%-4.75%. The Fed, on the other hand, expects rates to hit 5% or higher. Minneapolis Fed President Kashkari said on Wednesday that rates could rise to 5.4% or even higher if inflation doesn't head lower. AUD/USD has support at 0.6703 and 0.6620 There is resistance at 0.6841 and 0.6969
by OANDA
GBP/USD pushes above 1.20The British pound has bounced back on Wednesday and recorded sharp gains. In the European session, GBP/USD is trading at 1.2055, up 0.74%. Ask any British consumer, and they'll tell you that food prices have been going through the roof. The BRC provided data in that regard, stating that food inflation hit a record 13.3% in December, up from 12.4% in November. The BRC put the blame on the Ukraine war, which has resulted in higher prices for energy and raw materials. With the war dragging on and no end in sight, we're unlikely to see a drop in food prices anytime soon. High inflation and more expensive mortgage payments have squeezed British households, which have been hit by the worst cost-of-living crisis the UK has experienced in years. The OBR projected in November that real household disposable income would fall by 4.3% in 2022-2023. The rise in inflation has been accompanied by weak growth, and the UK is likely already in a recession. Goldman Sachs has forecasted the GDP will contract by 1.2% in 2023, the worst among the G-10 major economies. This is only marginally better than the forecast for Russia, with GDP expected to decline by 1.3%. The Bank of England has been focussed on inflation and raised rates by 50 basis points to 3.5% in December. Inflation eased to 10.7% in December, down from 11.1% in November, which marked a 41-year high. The BoE would prefer not to tighten in such a weak economic environment but has argued that it would be worse to allow inflation to remain at high levels. All signs indicate that the BoE will continue to raise rates in early 2023, starting at the February 2nd meeting. In the US, investors will have two key events to digest later today. ISM Manufacturing PMI fell into contraction territory in November for the first time since May 2020, with a reading of 49.0 points. Another weak reading is expected for December, with a forecast of 48.5 points. The 50.0 threshold separates contraction from expansion. The Federal Reserve will release the minutes from its December meeting. At the meeting, Fed Chair Powell sent a hawkish message that interest rates could continue to rise and poured cold water on a dovish pivot. Investors will be looking for clues as to interest rate policy in 2023 and its outlook for the US economy. GBP/USD has support at 1.1949 and 1.1846 There is resistance at 1.2095 and 1.2198
by OANDA
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EUR/USD slides to three-week lowThe US dollar is showing strong gains against the majors on Tuesday, with the exception of the Japanese yen. EUR/USD has tumbled by 1.27% and is trading at 1.0528 in Europe. EUR/USD is sharply lower today, despite a very light economic calendar. The only release of note is German CPI, which will be released later today. Despite the lack of fundamentals, the US dollar is taking advantage of risk aversion in the markets. There are headwinds everywhere you look. The war in Ukraine, the threat of recession in the US and the eurozone and China's slowdown all make for a gloomy outlook as we start the new year. Germany's inflation has been falling, and the downtrend is expected to continue. The consensus for December CPI is 9.0%, compared to 10.0% in November. If the consensus proves accurate, it could put further pressure on the euro, as the ECB may have to reconsider its hawkish stance on rate policy. The International Monetary Fund didn't bring any festive cheer with its pessimistic message on Monday. The IMF warned that 2023 would be tougher than 2022, as the US, EU and China would all see a decline in growth. Adding to the gloom, the IMF said that it expected one-third of the global economy to be in recession this year. In October, the IMF cut its growth outlook from 2.9% to 2.7%, due to the war in Ukraine as well as central banks around the world raising interest rates. After the Christmas and New Year's holidays, the markets are easing back in, as the data calendar gets busier as of Wednesday. We'll get a look at the Fed minutes from the December meeting, which was a hawkish affair that surprised investors and gave the US dollar a boost. On Friday, the US releases the employment report, which always plays an important factor in the Federal Reserve's rate policy. EUR/USD is testing support at 1.0528. Below, there is support at 1.0469 There is resistance at 1.0566 and 1.0636
by OANDA
USD Focus Fed Minutes USD CPIHi, and welcome to Wednesday’s update. Today we are looking at the USD, and it’s hard not to focus on the dollar with all the key news that’s on the way. From tonight, 11:30 local time (AEDT), we have PPI followed by the Fed minutes at 5:00 am and US CPI data at 11:30 pm to cap it off. The CPI data being released will be both the M/M EXP 0.2% and the Y/Y EXP 8.1%. This could be an important period for the markets. The last Fed minutes shocked the markets, and CPI came in hotter than expected. These surprises led to extended moves lower on risk markets and solid a rally on the USD. Will we see a repeat this time? As noted, it is going to come down to what’s released. CPI beats expectations. Fed remains hawkish we see the USD rallying. If CPI misses and the Fed message is not as hard as we have seen, we could see some selling and a move higher from risk markets like we saw just over a week ago. Are we starting to see a small bull trap on the USD? Don't discount the chance of softer minutes or a CPI miss that rattles the cage. It is definitely going to be an interesting period to watch traders from now until Thursday night local time. We like to hear from you, so please feel free to drop us a comment. We also run weekly webinars with guest analysts. Good trading.
EIGHTCAP:USDX
by Eightcap
New Zealand dollar slides after RBNZ hikeThe New Zealand dollar has taken a tumble today. In the European session, NZD/USD has declined by 0.88% and is trading at 0.6289. We continue to see plenty of volatility from the New Zealand dollar. Last week, the currency rose 3.33%, but has pared those gains this week and is down 2.47%. The RBNZ dutifully raised interest rates by 0.50%, for a fourth straight time. This brings the cash rate to an even 3.00%. However, the New Zealand dollar has responded with sharp losses, as the central bank's inflation and unemployment forecasts have been revised upwards. In its monetary statement, the RBNZ said it expected inflation to start to drop from the current level of 7.3%, but said that inflation will not fall below 3% until June 2024. As well, unemployment is expected to rise to 5% in 2025. In May, the central bank projected inflation would drop under 3% in September 2023 and inflation would rise to 4.7% in 2025. The central bank holds its next meeting in October. Governor Orr flatly ruled out any predetermination as to what the RBNZ would do. Still, short of a spectacular turnaround in inflation, odds are that the Bank will deliver another 0.50% hike, as its primary focus is to ensure that inflation does not become entrenched. There is the danger that the sharp rate tightening could cause a recession, but that is a price the RBNZ is willing to pay. The Federal Reserve is doing its best to convey the message that inflation is far from beaten and additional rate hikes are coming. Since the surprising inflation report which showed a decline in CPI, the markets have been holding onto the idea that the Fed will reverse directions next year, which has sent the US dollar sharply lower. The Fed minutes will be released later today, and I expect the Fed to continue to drum out its hawkish stance. Will investors finally buy into the Fed's hawkish message or ignore what they don't want to hear? Stay tuned - the dollar could show some volatility after the release of the minutes. NZD/USD is testing support at 0.6300. Below, there is support at 0.6227 There is resistance at 0.6385 and 0.6495
by OANDA
Japanese yen rises on Ukraine fearsThe Japanese yen has moved higher on Thursday, as tensions are once again rising over the Ukraine crisis. Invasions fears have ratcheted upwards after NATO warned that Russia could use a border skirmish as a pretext for a full-scale invasion of Ukraine. The US has rejected Moscow's claim that it is reducing its military presence on the border and Russia expelled a senior US diplomat from Moscow earlier in the day. There were hopes that the crisis was easing, but the latest moves indicate that it is far from over. With the rising tensions, risk sentiment has fallen and the safe-haven Japanese yen has posted strong gains against the US dollar and the euro. After a stellar retail sales report on Wednesday, today's US data has been softer than expected, which has also weighed on USD/JPY. Unemployment claims rose to 248 thousand, a three-week high, while housing starts and the Philly Fed Manufacturing Index slowed in January and fell short of their estimates. There are no US economic releases on Friday, but we will hear from three FOMC members, which may provide some insight on the Fed's plans after the March rate lift-off. The FOMC minutes was a sleeper for the markets, as the release ended up more of a reminder that big things are coming from the Fed, which we all know. Officials discussed the need to raise rates, strongly hinting that lift-off will take place in March. As well, the Fed plans a significant reduction in the balance sheet, which has ballooned to nine trillion dollars as a result of aggressive bond-buying in an effort to stimulate growth during the Covid pandemic. The Fed will end its QE programme in March as scheduled, although some members at the Fed meeting wanted to wind up the program earlier. 114.79 is under strong pressure in support. Below, there is support at 114.15 There is resistance at 116.21 and 116.99 A major Fibo level is close by at 114.90 (50% of the 113.47-16.34 climb)
by OANDA
Japanese yen drifting, Fed minutes nextThe Japanese yen continues to have a quiet week and is trading at 115.46 in the North American session, down 0.12% on the day. The US dollar enjoyed a boost earlier in the week as tensions between Russia and the West reached a fever pitch. Now that the situation has stabilized somewhat, investors are breathing easier and the dollar has lost ground. Still, there is apprehension in the air and a lack of clarity as to what happens next. Russia says that it has moved some troops away from attack positions, but the US says there is no proof of this. President Biden took to the airwaves on Tuesday and warned the Russians of severe consequences if it attacked Ukraine while saying it was not too late to reach a diplomatic solution. In the US, a strong retail sales report for January provided something for investors to digest other than news from Ukraine. Retail Sales jumped 3.8% m/m, crushing the estimate of 2.0% and rebounding from the 2.5% decline in December. High inflation helped boost the retail sales numbers, but consumers are buying more goods and services as well. Investors will now shift their attention to the Fed minutes, which will be released later today. We've been hearing a hawkish message from some FOMC members of late, and the minutes could well reflect the hawkish pivot that the Fed has reluctantly embraced due to red-hot inflation. Fed Chair Jerome Powell recently abandoned his stance that inflation was transitory and a March liftoff for hikes is essentially a done deal. The markets have priced in six hikes, although some FOMC members have suggested that three or four hikes will suffice to rein in inflation close to the Fed's target of 2 per cent. There is weak resistance at 115.56. Above, there is resistance at 114.52 There is support at 112.87 and 112.26
by OANDA
GBP fall below 1.38, Fed minutes loomThe British pound has fallen for a second straight day. Currently, GDP/USD is trading at 1.3717, down 0.28% on the day. The pair is down about 1 percent since Monday and has dropped into 1.37-territory. The pound is under pressure, and even a strong Services PMI was not enough to prevent losses on Wednesday. Service providers reported growth in March, with the PMI rising from 49.5 to 56.3. A reading over the 50-level indicates growth. The PMI reading was the highest in seven months, although it did miss the estimate of 56.8, which may have soured some investors. With the government gradually relaxing health restrictions, pent-up demand is now translating into economic activity and stronger business optimism.  Last week, Manufacturing PMI rose to 58.9, its highest level since 2011. Construction PMI will be released on Thursday (8:30 GMT), and expectations are for an acceleration to 55.0, up from 53.3 points. If the economy is improving, what's wrong with the pound? One possible explanation focuses on the EU announcement of an improved vaccination outlook. This led to stronger demand for the EUR/GBP cross and sent the pound lower. According to this scenario, the pound's current downswing should be temporary in nature. Recent employment numbers are pointing to a rapidly improving labour market. Nonfarm payrolls blew the estimate of 652 thousand out of the water, with gain of 915 thousand. This was followed on Tuesday by JOLTS job openings, which improved from 6.92 million to 7.37 million, well above the forecast of 6.91 million. This points to the labor market creating jobs at a much faster pace than expected. The Fed has repeatedly said that it would not raise rates until the labor market recovered, telling the markets not to expect any hikes prior to 2024. With that recovery looking like it could be ahead of schedule, will the Fed change its timeline for rate hikes? Investors will be looking for such clues in the FOMC minutes later today (18:00 GMT).  GBP/USD is testing support at 1.3742. Below, there is support at 1.3650. On the upside, 1.3889 is the next resistance line, followed by resistance at 1.3944.
by OANDA
1
FED vs. POTUS... who will push the dollar more? Find out on the next episode of Dragon Ball DXY... Or we could just guess with what we know now like any analyst. Expecting fed meeting minutes to state what the fed members are stating already, they believe the economy is still resilient and does not need too much expansionary policy, cuts above standard aren't necessary, etc. These statements will reassure many regional institutional investors who put faith in the FED and are confident in their outlook... but investors in other parts of the world who don't like the current leadership of the country or what said leadership is doing to economic relations may not feel the same. It's possible we could see similar unrest in the markets like last week depending on whatever tweet happens to be sent out between Thursday and Friday. While I believe were no where near a scenario where a 100bp cut is necessary, with bond yields inverting and Trump's war on China grinding the global economy, international outlook for the dollar may not be as optimistic. All the same I've drawn out a possible double top scenario I'm picturing as the dollar approaches exhaustion towards the upperside of its range and supply pressure increases from international investors searching for better options. Previous bearish analysis was invalidated so I'll be watching with a neutral perspective as I avoid the dollar this week. But I wouldn't be surprised to see an overall bearish move by end of the week.
TVC:DXY
by david_eke
DXY/ USD: FOMC MINUTES & FED TARULLO/ DUDLEY SPEECH HIGHLIGHTSJune FOMC Minutes Highlights: - FOMC Minutes: Fed Officials Divided on Rate Path Amid Uncertain Economic Outlook -FOMC Minutes: Members Said Prudent to Wait for More Labor Market Data, Brexit Vote Before Raising Rates -FOMC Minutes: Prior to Brexit Vote, Staff Saw Uncertainty Holding Down Investment in U.K. -FOMC Minutes: Members Judged It Appropriate to Continue to Leave Policy Options Open, Maintain Flexibility -FOMC Minutes: Staff Saw 2H GDP 'a Little Slower' Than in Previous Forecast -FOMC Minutes: Most Officials Said UK Referendum on EU Could Generate Financial Turbulence -FOMC Minutes: Staff Saw Risks to Forecast from Developments Abroad 'Skewed to the Downside' -FOMC Minutes: Officials in June Said Pace of Labor Market Gains Slowed, Economic Growth Picked Up -FOMC Minutes: Most Participants Saw Risks to Economic Projections as 'Broadly Balanced' -FOMC Minutes: Many Participants saw Risk to GDP, Inflation Forecasts 'Weighted to the Downside' -FOMC Minutes: Officials Said Job Gains Diminished in Intermeeting Period Although Unemployment Rate Fell -FOMC Minutes: Some Participants Saw Risks to Unemployment Rate Forecast 'Tilted to the Upside' -FOMC Minutes: Soft Readings on Business Investment Behind Lowered Participant GDP Forecasts -FOMC Minutes: Most Members Indicated Recent Slowdown in Payroll Gains Increased Uncertainty About Labor -Market -FOMC Minutes Showed Officials Divided on Reasons For Weaker May Payrolls Growth -FOMC Minutes: However Many Participants Said Underlying Pace of Job Gains Slowed From Recent Months -FOMC Minutes: Many Participants Said Neutral Rate of Interest Likely to Be Lower Than Estimated Earlier -FOMC Minutes: Most Officials Expected to See 'Continued Progress' Toward 2% Inflation Target -FOMC Minutes: Some Participants Said Sluggish Business Investment Could Portend Slowdown Fed Tarullo & Dudley Speech highlights: NY Fed Dudley: Current Treasury Yield A Concern Tarullo: Global Financial System 'Reasonably Well Prepared' For Brexit Shock Tarullo: Have to Watch to See How Brexit Macroeconomic Developments Play Out Tarullo: Brexit Response in U.S. Gone About As We Expected Tarullo: There Won't Be A Moment Where We Say 'Brexit Is Done' Tarullo: Right Level of Interest Rate Depends on Factors Affecting Economy Tarullo: 'This Is Not An Economy That's Running Hot' Tarullo: Fed Probably Not Providing As Much Accommodation As People Think Tarullo: Were Economy to Pick Up Rapidly, Fed Has Tools to Respond Appropriately Tarullo: Better For Fed to Wait For More Evidence of Rising Inflation Tarullo: Want to Be More Convinced Underlying Inflation Closer to 2% Tarullo: Low Rates Can Create Financial Instability, But That May Not Justify Raising Rates Tarullo: No 'Immediate Concerns' About Financial Instability, Asset Bubbles Tarullo: Still Has Concerns About Liquidity Broadly, Especially Outside Banks Tarullo: Cutting Capital Buffer Could Make Loans More Available 'If There Is Demand' Tarullo: Policy Easing by Other Central Banks Can Have Disinflationary Effect on U.S. Economy Tarullo: Wants More Evidence of Inflation Before Raising Interest Rates
TVC:DXY
by QuantumLogicTrading
3