USD/JPY Price Analysis – Oct 03, 2024
Daily Price Outlook
During the Asian trading session, the USD/JPY currency pair maintained its upward trend, remaining well-bid around the 146.72 level and hitting an intraday high of 147.24.
The upward movement can be attributed to dovish comments from Prime Minister Ishiba, along with uncertainty surrounding the Bank of Japan's monetary policy, which has weakened the Japanese Yen (JPY).
Consequently, the USD/JPY pair is likely to experience upward momentum, reflecting increased demand for the US Dollar amid growing market uncertainty.
Moreover, the US dollar has received support from safe-haven flows due to rising geopolitical tensions in the Middle East, further boosting the USD/JPY pair.
Strengthening US Dollar and Its Impact on the USD/JPY Pair
On the US front, the US dollar is gaining strength as recent economic data shows a resilient labor market. This has led to lower expectations for aggressive interest rate cuts by the Federal Reserve (Fed).
According to the CME FedWatch Tool, there is a 65.4% chance of a 25 basis point rate cut in November, while the likelihood of a 50 basis point cut has dropped to 34.6%, down from 57.4% a week ago.
Tom Barkin, President of the Federal Reserve Bank of Richmond, emphasized that the fight against inflation isn’t over. He noted that while a 50 basis point cut in September was justified, risks still exist.
Positive employment trends, such as a reported increase of 143,000 jobs in September, have also contributed to the dollar's strength.
However, while the AiG Industry Index shows slight improvement, it still indicates contraction for the 29th consecutive month, and the AiG Manufacturing PMI has reached its lowest level.
Fed Chairman Jerome Powell mentioned that the central bank is not rushing to cut rates further, suggesting that any future rate changes will be modest.
As a result, the strengthening US dollar, supported by solid labor market data and tempered rate cut expectations, is likely to apply further upward pressure on the USD/JPY pair.
Impact of Japan's Dovish Monetary Policy on the USD/JPY Pair
On the other side, Japan's new Prime Minister, Shigeru Ishiba, has made clear comments about the country's monetary policy after meeting with Bank of Japan (BoJ) Governor Kazuo Ueda.
Ishiba stated, "I do not believe that we are in an environment that would require us to raise interest rates further," which has raised concerns among investors.
Following his remarks, the Japanese Yen (JPY) fell nearly 2% against the US Dollar (USD), marking its biggest drop since February last year.
Japan’s Chief Cabinet Secretary, Yoshimasa Hayashi, clarified that Ishiba did not ask Ueda for specific monetary policy details during their meeting, indicating a cautious approach.
Furthermore, Japan's Economic Revitalization Minister, Ryosei Akazawa, mentioned that Ishiba expects the BoJ to conduct thorough economic assessments before considering any interest rate hikes. Market futures show less than a 50% chance that the BoJ will raise rates by 10 basis points by December.
Meanwhile, projections suggest that interest rates will only reach 0.5% by the end of next year, up from the current 0.25%.
This lack of urgency regarding interest rate increases is likely to continue putting downward pressure on the yen as investors seek stronger returns elsewhere.
Therefore, the dovish comments from Japan’s Prime Minister Shigeru Ishiba, coupled with reduced expectations for interest rate hikes, are likely to weaken the Japanese Yen (JPY).
This scenario is expected to support the USD/JPY pair, driving it higher as investors favor the US Dollar (USD).
USD/JPY - Technical Analysis
The U.S. Dollar (USD) is maintaining its upward trajectory against the Japanese Yen (JPY), currently trading at 146.768, up 0.22% for the session.
The pair’s strength can be attributed to a combination of favorable U.S. economic data and continued monetary policy divergence between the Federal Reserve and the Bank of Japan.
The 4-hour chart shows USD/JPY trading above its pivot point of 146.231, with bullish momentum pushing the price towards the immediate resistance level at 147.248. Further resistance is noted at 147.866 and 148.567, where a breakout could spark another leg higher.
Technical indicators reveal a mixed outlook. The Relative Strength Index (RSI) has surged to 70, suggesting that the pair is now approaching overbought territory.
This could result in a short-term pullback or consolidation phase as traders look to lock in profits. On the support side, the 50-day Exponential Moving Average (EMA) is positioned at 144.045, providing a solid floor that could limit any downward movement.
Immediate support stands at 145.585, followed by additional support levels at 145.104 and 144.609.
A break below 145.585 could see the pair testing the 50 EMA near 144.045, though the overall uptrend remains intact as long as prices hold above the pivot point at 146.231.
Conclusion: With the pair nearing overbought conditions, traders may consider short positions if the price drops below 147.255, targeting 145.620, while placing a stop-loss at 148.227 to limit potential losses.
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GBP/USD Price Analysis – Oct 02, 2024
GOLD Price Analysis – Oct 02, 2024
Daily Price Outlook
During the early European trading session, Gold (XAU/USD) faced challenges in sustaining its overnight upward momentum, turning bearish around the 2,655 level and hitting an intra-day low of 2,644.
However, the precious metal had rebounded over 1% on Tuesday amid escalating tensions in the Middle East, prompted by Israel's attack on Hezbollah and Iran's subsequent response, which included nearly 200 missile launches. However, this bullish trend proved short-lived as the US dollar gained strength and contributing to gold's current decline.
Escalating Middle East Tensions Drive Gold Demand Amid Conflict and Economic Uncertainty
Tensions in the Middle East have reached new heights following Iran’s recent missile strikes against Israel. This military action is seen as a response to Israel's aggressive operations against Hezbollah in Lebanon, a group that receives substantial backing from Iran.
In light of these developments, Israeli Prime Minister Benjamin Netanyahu warned of significant consequences for Iran, while Iranian authorities cautioned that further attacks would lead to catastrophic retaliation. Such escalation raises concerns about a wider conflict in the region and has fueled demand for gold, which is often viewed as a safe-haven asset during turbulent times.
Therefore, the escalating tensions in the Middle East, driven by Iran's missile strikes against Israel and potential retaliation, have heightened demand for gold as a safe-haven asset, leading to increased buying interest amid fears of a broader regional conflict.
Strengthening US Dollar Caps Gold Gains Amid Labor Market Resilience and Rate Cut Speculation
On the US front, the broad-based US dollar is gaining strength, supported by a resilient labor market. The Job Openings and Labor Turnover Survey (JOLTS) indicated an unexpected increase in job openings, reaching 8.04 million in August. Meanwhile, the Institute for Supply Management (ISM) reported that the Manufacturing PMI remained steady at 47.2 in September, signaling a continued contraction in business activity for the sixth consecutive month.
Investors are now closely monitoring the likelihood of additional interest rate cuts by the Federal Reserve. Although Fed Chair Jerome Powell recently indicated the potential for two more rate cuts of 25 basis points each this year, there is still speculation about a more significant 50 basis point cut in November.
However, the CME Group's FedWatch Tool currently assigns a 35% probability to this larger cut. Furthermore, Atlanta Fed President Raphael Bostic has noted that larger reductions might be warranted if the labor market shows signs of weakness.
Market participants are closely watching the upcoming US ADP private-sector employment report, expected to reveal an addition of 120,000 jobs in September, alongside the Nonfarm Payrolls report, both of which could significantly impact market trends.
Consequently, the stronger US dollar, supported by a robust labor market, has constrained gold's recent upward momentum. Moreover, ongoing speculation about potential rate cuts adds uncertainty to the market, typically reducing gold's attractiveness. Rising interest rates and a stronger dollar tend to suppress demand for this non-yielding asset.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,654.30, down 0.35% for the day, as the metal faces renewed selling pressure. Despite a modest recovery attempt, gold failed to breach the immediate resistance level at $2,669.37, which aligns with its descending trendline and the 50-day Exponential Moving Average (EMA) at $2,656.41. This has reinforced bearish sentiment among traders.
The Relative Strength Index (RSI) is holding at 50, indicating a lack of strong momentum in either direction. If gold prices break below the immediate support at $2,648.16, it could trigger a deeper correction toward the next support levels at $2,639.79 and $2,631.27. Conversely, if gold manages to clear the $2,669.37 resistance, it could set the stage for a move higher to $2,677.74 and potentially $2,685.39.
Short-term technical indicators suggest a cautious outlook, with gold needing to maintain support above $2,648.16 to avoid further declines. Traders should watch for a clear break above $2,669.37 to confirm any renewed bullish momentum.
Gold remains under bearish pressure. An entry position could be considered below $2,660, targeting support at $2,648. For upside potential, a break above $2,669 is required to open further gains.
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GBP/USD Price Analysis – Oct 02, 2024
Daily Price Outlook
Despite a bullish US dollar, the GBP/USD pair is struggling to maintain its upward momentum, though it’s still trading positively around 1.3291, with an intra-day high of 1.3306. The recent gains in the pair can be attributed to the Bank of England's reassurance regarding financial stability, highlighting the resilience of households and businesses despite high interest rates, as well as the robust position of the UK banking system, which has bolstered investor confidence.
However, the pair's upside potential may be constrained by concerns that a consumption-driven recovery could trigger inflation, especially as the Bank of England is anticipated to cut rates in the near future.
Conversely, the US dollar has gained support following recent comments from Federal Reserve Chairman Jerome Powell, who signaled that the central bank intends to gradually lower interest rates over time. Additionally, the dollar is bolstered by a robust labor market, which further restricts the GBP/USD pair's potential for significant gains.
Impact of Bank of England's Financial Outlook on GBP/USD Pair
On the GBP front, the Bank of England's Financial Policy Committee (FPC) recently reported that risks to the UK’s financial stability have remained largely unchanged since June. They noted that valuations of equities and other assets are "stretched," suggesting a potential for sharp corrections. However, the survey also indicated that a record number of financial firms are concerned about geopolitical risks.
Despite these challenges, the BoE has maintained a counter-cyclical capital buffer at 2%, ensuring that the UK banking system is well-positioned to support lending. While households and corporate borrowers exhibit resilience to high interest rates, some small businesses and private equity-backed firms continue to experience pressure.
Besides this, BoE policymaker Megan Greene cautioned that a recovery driven by consumer spending could lead to renewed inflation. However, she noted that further interest rate cuts are likely, as prices are trending in the right direction. Greene mentioned that the neutral interest rate has likely increased since the inflation shock, although she didn’t provide a specific figure.
Traders will be watching the upcoming US ADP Employment Change report and comments from Federal Reserve officials for insights, while the BoE's Monetary Policy Report Hearings on Thursday will also be closely monitored for guidance.
Therefore, the Bank of England's cautious stance on financial stability and potential interest rate cuts may weaken the GBP against the USD. If inflation concerns persist, traders might anticipate further rate adjustments, leading to increased volatility in the GBP/USD pair.
Impact of Federal Reserve's Stance on GBP/USD Pair
On the US front, the US dollar is getting stronger because Federal Reserve Chairman Jerome Powell said the central bank will slowly lower interest rates. He clarified that the recent half-point cut doesn’t mean there will be big cuts soon; instead, future cuts will be smaller. The US dollar is also supported by a strong job market, as shown by a report that job openings increased unexpectedly to 8.04 million in August. This means more people are needed for jobs, which is a good sign for the economy.
Furthermore, the Institute for Supply Management (ISM) reported that the Manufacturing PMI remained steady at 47.2 in September, indicating a continued contraction in business activity for the sixth month in a row.
Investors are closely monitoring the potential for further interest rate cuts by the Federal Reserve. While Chairman Powell hinted at the possibility of two additional cuts of 25 basis points each this year, speculation persists regarding a larger 50 basis point cut in November, with the CME Group's FedWatch Tool indicating a 35% probability for this scenario.
Therefore, the US Dollar's strength, driven by Powell's comments on gradual interest rate cuts and a resilient labor market, weaken the GBP/USD pair. If the Fed maintains a hawkish stance, it could further pressure the GBP against the USD.
GBP/USD - Technical Analysis
GBP/USD is currently trading at $1.32756, down 0.07% for the day, reflecting bearish sentiment amid concerns over potential interest rate decisions by the Bank of England (BoE). The pair has been under pressure since failing to sustain above the 50-day Exponential Moving Average (EMA) at $1.33647, a critical resistance that capped recent bullish attempts. The Relative Strength Index (RSI) stands at 34, indicating weak momentum, but not yet oversold, suggesting room for further declines.
On the downside, immediate support is seen at $1.32724, closely followed by $1.32368 and $1.32084. If the pair breaks below these levels, it could trigger additional selling pressure, pushing GBP/USD further down.
Conversely, on the upside, the pivot point at $1.32951 will be crucial for the pair to reclaim a bullish bias. Immediate resistance is pegged at $1.33299, with subsequent resistance levels at $1.33569 and $1.33889. A sustained break above these levels would indicate renewed bullish momentum.
The 50-day EMA at $1.33647 remains a key barrier for GBP/USD. If the pair can rise above this level, it would signal a potential trend reversal. Until then, the outlook remains cautiously bearish.
The pair remains under bearish pressure, with an entry above $1.32722 offering potential profit at $1.33299. Monitor resistance at $1.33299 for signs of a bullish reversal.
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EUR/USD Price Analysis – Oct 02, 2024
Daily Price Outlook
During the European trading session, the EUR/USD pair is trading slightly lower in the 1.1070s on Wednesday, following a sharp decline from 1.1135 on Tuesday. This downturn can be largely attributed to disappointing inflation data from the Eurozone. The Harmonized Index of Consumer Prices (HICP) reported a year-over-year increase of only 1.8% in September, a drop from 2.2% previously and below expectations of 1.9%.
Meanwhile, core inflation fell to 2.7%, slightly down from August’s 2.8%. These figures suggest that inflation is now trailing the European Central Bank's (ECB) target of 2.0%, raising concerns about the economic outlook. Consequently, the likelihood of further interest rate cuts by the ECB has increased, which could lead to capital outflows and exert additional pressure on the euro.
Impact of Eurozone Economic Data on EUR/USD Pair
As we mentioned, the previously released Eurozone unemployment rate has had a minimal impact on the pair, remaining steady at 6.4% in August, unchanged from July and in line with economists' expectations. However, the recent inflation figures have heightened concerns regarding the economic outlook in the region, suggesting that further ECB rate cuts could weaken the euro.
Moreover, the EUR/USD pair has faced additional downward pressure due to the strengthening US dollar, which rebounded sharply on Tuesday following positive job data. The JOLTS Job Openings report revealed an unexpected increase in job openings to 8.04 million in August, significantly above the revised figure of 7.71 million in July and exceeding expectations of 7.66 million.
This robust labor market data offsets weaker manufacturing activity in the US, as indicated by the ISM Manufacturing PMI, which remained in contraction territory for September.
Therefore, the steady Eurozone unemployment rate has done little to support the euro amid rising inflation concerns, while strengthening US labor market data, particularly the surge in job openings, has boosted the dollar, increasing downward pressure on the EUR/USD pair.
Geopolitical Tensions and Economic Indicators Weigh on EUR/USD Outlook
The recent sell-off in the EUR/USD pair has intensified, driven largely by escalating geopolitical tensions in the Middle East. Iran's recent missile strikes on Israel have prompted a surge in safe-haven investments, pushing traders toward the US dollar and putting further downward pressure on the EURUSD pair.
As we look ahead, traders will be keeping a keen eye on the US ADP Employment Change data for September, along with statements from Federal Reserve officials, for further clues about market direction. Additionally, the ongoing situation in the Middle East and its repercussions on global markets will play a crucial role in shaping future movements of the EUR/USD pair.
EUR/USD - Technical Analysis
EUR/USD is currently trading at $1.10651, down 0.02% in today’s session. The pair has struggled to gain traction, reflecting the broader uncertainty in global currency markets. After testing the $1.10832 resistance level earlier today, EUR/USD failed to break higher, suggesting that bearish momentum is still intact. The 50-day Exponential Moving Average (EMA) at $1.11405 continues to act as a strong resistance, capping further upside potential.
The Relative Strength Index (RSI) has dipped to 32, indicating bearish momentum and suggesting that EUR/USD could face additional downward pressure if it drops below 30. On the downside, immediate support is seen at $1.10461. A break below this level could accelerate declines toward $1.10254 and $1.10051. Conversely, for a bullish reversal to take hold, the pair must decisively break above the pivot point at $1.10695 and test the resistance levels at $1.10832 and $1.10952.
Short-term technical indicators suggest that EUR/USD may experience further declines if it fails to regain ground above $1.10695. The pair remains under selling pressure, with an entry below $1.10694 offering potential profit at $1.10453. Traders should watch for a move above $1.10832 to signal a potential bullish reversal.
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USD/CAD Price Analysis – Oct 01, 2024
Daily Price Outlook
During the early European session on Tuesday, the USD/CAD pair prolonged its upward rally and climbing close to 1.3535. This uptick is largely supported by a stronger US Dollar, following comments from Federal Reserve Chair Jerome Powell.
He indicated that the central bank isn't in a rush and plans to lower its benchmark rate gradually. Investors are eagerly awaiting the US ISM Manufacturing Purchasing Managers Index (PMI), which is expected to rise to 47.5 in September from 47.2 in August, potentially providing fresh momentum for the markets.
On the Canadian side, the economy experienced faster-than-anticipated growth in July, but the pace seems to be slowing down in August.
This has led to increasing expectations of a significant interest rate cut by the Bank of Canada (BoC) in October.
As concerns about the economy and the labor market grow, financial markets are betting that the BoC will continue to lower rates, which could exert downward pressure on the Canadian Dollar (CAD). This scenario is likely to create a favorable environment for the USD/CAD pair to gain further traction.
USD/CAD Pair Strengthens Amid Fed Chair Powell's Gradual Rate Cut Remarks
On the US front, the USD/CAD pair is gaining strength, largely due to a stronger US Dollar (USD).
This boost follows remarks from Federal Reserve Chair Jerome Powell, who stated that the central bank is not in a hurry to make aggressive cuts and will lower its benchmark rate gradually over time.
Investors are now looking ahead to the US ISM Manufacturing Purchasing Managers Index (PMI), which is expected to improve slightly from 47.2 in August to 47.5 in September, as a potential catalyst for market movement.
Recently, Powell clarified that the recent half-percentage point interest rate cut should not be seen as a signal for more aggressive future moves.
Instead, he mentioned that upcoming changes will likely be smaller. Following the Fed's decision to cut rates by 50 basis points, officials have projected a total of half a point in additional cuts for the remainder of 2024 and one percentage point more in 2025.
However, some officials believe that only a modest amount of easing will occur by year’s end, which offers some support to the US Dollar. Overall, these developments create a cautious but optimistic outlook for the USD in the near term.
Therefore, the positive remarks from Fed Chair Powell and the projected gradual rate cuts support the USD, boosting the USD/CAD pair. As expectations for a modest economic recovery grow, the CAD may weaken, further enhancing the upward momentum for USD/CAD.
USD/CAD - Technical Analysis
The U.S. dollar is holding steady against the Canadian dollar, with the USD/CAD pair currently trading at $1.35264, a marginal dip of 0.01% as traders await key economic data releases.
The pair is hovering near its pivot point of $1.35174, which suggests that the market is seeking directional clarity amid fluctuating crude oil prices and shifts in U.S. interest rate expectations.
With the pair’s Relative Strength Index (RSI) sitting at 61, momentum is slightly in favor of the bulls, but the market is approaching overbought territory, which could cap any immediate upside movement.
Immediate resistance is noted at $1.35440, a level that aligns with recent highs and may act as a short-term barrier for further gains. A break above this resistance would pave the way for the next upside targets at $1.35811 and $1.36118.
On the downside, immediate support stands at $1.34900, followed by $1.34631, which coincides closely with the 50-day Exponential Moving Average (EMA) at $1.34861. A sustained move below these levels would likely trigger additional selling pressure, driving the pair towards the lower support at $1.34328.
The technical landscape suggests a potential buy setup above the $1.35150 mark, with a take-profit target at $1.35500 and a stop-loss at $1.34900. As long as the pair remains above the 50-EMA, the bias is slightly bullish, with buyers likely to defend the key $1.34900 support level.
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GOLD Price Analysis – Oct 01, 2024
GOLD Price Analysis – Oct 01, 2024
Daily Price Outlook
Gold (XAU/USD) maintained its upward trend and found some positive momentum on Tuesday, rising to $2,644 after reaching an intraday high of $2,645, representing a 0.39% increase for the day.
However, the recent surge in geopolitical tensions in the Middle East has heightened demand for safe-haven assets, particularly gold. Furthermore, expectations of a slowdown in US inflation suggest that the Federal Reserve may continue to cut interest rates, while hopes for China's economic stimulus are also contributing to a boost in physical demand for precious metals.
These factors are collectively creating a favorable environment for gold upward trend, making it an attractive option for investors seeking stability amid uncertainty.
At the same time, the gains in the gold price could be faded as Fed Chair Jerome Powell's hawkish comments on Monday prompted investors to reassess their expectations for aggressive rate cuts.
This shift led to a strengthened demand for the US dollar, which has limited upward momentum for gold. Besides this, the positive sentiment in global financial markets cap gold's potential as investors focus on key US economic data releases this week.
Federal Reserve Outlook and Geopolitical Tensions Impacting Gold and Silver Markets
On the US front, hopes for a continued slowdown in inflation had fueled expectations that the Federal Reserve might cut interest rates further.
However, Fed Chair Jerome Powell's hawkish remarks on Monday prompted investors to rethink those expectations. He indicated that two more 25 basis point rate cuts could be on the table this year, provided the economy performs as anticipated.
This shift in sentiment has bolstered the US Dollar for the second consecutive day, following its rebound from the lowest level seen since July 2023.
Despite this, markets continue to price in the possibility of a larger Federal Reserve rate cut by the end of the year. Meanwhile, the ongoing geopolitical tensions are further bolstering demand for safe-haven assets like gold.
As investors seek clarity on the Fed’s future actions, they are turning their attention to upcoming US economic data, including the ISM Manufacturing PMI and JOLTS Job Openings.
Consequently, the uncertainty surrounding the Fed's rate cuts and ongoing geopolitical tensions are likely to keep gold in demand as a safe-haven asset. However, a stronger US Dollar may limit gold's upward potential as investors await key economic data for further guidance.
GOLD (XAU/USD) - Technical Analysis
Gold prices are trading in a narrow range, reflecting a consolidation phase as the market digests recent comments from the U.S. Federal Reserve and awaits pivotal economic data releases. The precious metal is currently hovering around $2,638.40, showing a modest uptick of 0.14%.
The recent price action has positioned gold just below its immediate resistance at $2,650.27, which coincides closely with the 50-day Exponential Moving Average (EMA) of $2,651.13.
This technical confluence suggests a robust barrier to any upside moves unless a substantial catalyst emerges.
The Relative Strength Index (RSI) reads 45.00, indicating that momentum is neutral, with a slight bearish tilt. Given the lack of strong directional momentum, gold is likely to continue oscillating between key support and resistance levels in the short term.
On the downside, immediate support is observed at $2,633.19, a level that, if breached, could accelerate declines toward $2,624.76 and potentially $2,615.24.
For traders, the pivot point at $2,643.35 is crucial. A sustained break below this level could signal further downside risk, making a short position attractive with a target of $2,630.
Conversely, a rebound above the 50-EMA resistance could pave the way for gold to test $2,660.86 and $2,671.02, offering a possible bullish reversal.
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AUD/USD Price Analysis – Oct 01, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward momentum, trading strongly around the 0.6920 level and reaching an intraday high of 0.6935, driven by strong Retail Sales data.
However, the Australian Bureau of Statistics (ABS) reported a month-over-month increase in consumer spending of 0.7% for August, significantly exceeding market expectations of a 0.4% rise.
This positive development, coupled with the Reserve Bank of Australia's (RBA) hawkish stance on interest rates, has further supported the Australian Dollar.
It should be noted that RBA held its cash rate steady at 4.35% for the seventh consecutive meeting, highlighting the necessity of a restrictive policy to combat inflation.
Moreover, China’s recent stimulus measures have bolstered the demand outlook in Australia’s largest trading partner, driving up commodity prices and further strengthening the commodity-linked Australian Dollar.
Australian Dollar Supported by RBA's Hawkish Stance and China's Stimulus Measures
As we mentioned above the Australian dollar gained traction after the hawkish stance by the Reserve Bank of Australia (RBA) regarding interest rates.
The RBA has held its cash rate steady at 4.35% for the seventh consecutive meeting, emphasizing the need for a restrictive policy to keep inflation in check.
Meanwhile, China’s recent stimulus measures have improved demand from Australia’s largest trading partner, driving up commodity prices and bolstering the Australian Dollar.
However, there are mixed signals emerging from China’s manufacturing sector. The Caixin Manufacturing Purchasing Managers' Index (PMI) fell to 49.3 in September, signaling contraction, while the NBS Manufacturing PMI showed improvement at 49.8, surpassing expectations.
During his recent visit to China, Australian Treasurer Jim Chalmers addressed the country’s economic slowdown, expressing optimism about the new stimulus measures as a positive step forward.
China plans to inject over CNY 1 trillion into its largest state banks to tackle issues like shrinking profit margins and rising bad loans, marking the first major capital infusion since the 2008 financial crisis.
Meanwhile, the RBA reported that Australia’s domestic financial system remains resilient, although concerns linger about stress in China’s financial sector and a small but growing number of Australian borrowers struggling with mortgage payments.
Therefore, the hawkish stance of the RBA and China's stimulus measures support the Australian Dollar, strengthening the AUD/USD pair. However, mixed manufacturing data from China and concerns about domestic borrower defaults may limit significant gains for the AUD.
Impact of Federal Reserve's Rate Cut Stance on AUD/USD Pair
On the US front, recent comments from Federal Reserve Chairman Jerome Powell indicate that the central bank is not in a hurry to implement aggressive rate cuts. He emphasized that any reductions to the benchmark rate will be made gradually over time, reassuring markets that the recent half-point cut should not be interpreted as a signal for more drastic actions in the future.
Current market expectations, reflected in the CME FedWatch Tool, show a 61.8% chance of a 25 basis point rate cut in November. Meanwhile, the likelihood of a larger 50 basis point cut has fallen to 38.2%. This cautious approach underscores the Fed's commitment to carefully navigating the economic landscape, ensuring that any adjustments align with broader economic conditions.
Additionally, St. Louis Federal Reserve President Alberto Musalem emphasized that the Fed should consider implementing gradual interest rate cuts after the significant half-point reduction in September. He acknowledged the possibility of economic weakness and suggested that a quicker pace of cuts might be necessary if conditions deteriorate.
On the data front, the US Core Personal Consumption Expenditures (PCE) Price Index rose by just 0.1% month-over-month in August, falling short of the expected 0.2% increase. This softer inflation reading aligns with the Fed's outlook of easing inflation in the US and reinforces the idea that a more aggressive rate-cutting cycle could be on the horizon.
Therefore, the cautious approach of the Federal Reserve regarding rate cuts, combined with lower-than-expected inflation data, may bolster the US Dollar. This could limit the upward potential of the AUD/USD pair, as the Australian Dollar faces pressure from a stronger USD.
AUD/USD - Technical Analysis
The Australian dollar (AUD) continues to edge higher against the U.S. dollar (USD), maintaining a cautious upward trajectory. As of the latest trading session, the AUD/USD pair is trading at $0.69223, marking a slight 0.15% increase.
This recent climb positions the pair above its pivot point at $0.69069, suggesting a potential for further gains if key resistance levels are breached.
Immediate resistance is observed at $0.69403, followed by additional hurdles at $0.69622 and $0.69823. The 50-day Exponential Moving Average (EMA) is currently situated at $0.69140, serving as a critical support area that underpins the current bullish bias.
A sustained hold above this level could reinforce the bullish outlook, encouraging further buying interest.
The Relative Strength Index (RSI) reads 48, signaling neutral momentum with a slight inclination towards the upside. This neutral reading suggests that the market is not yet overbought or oversold, offering room for additional price movement in either direction.
On the downside, immediate support is identified at $0.68886. Should the price break below this level, it could trigger a deeper correction towards $0.68696 and $0.68478, where buyers might step in.
Given the technical setup, a potential buy entry above $0.69069 appears favorable, targeting $0.69406 while maintaining a stop-loss just below immediate support at $0.68886.
The AUD/USD’s recent resilience hints at a measured bullish sentiment, provided it remains above the 50-EMA.
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GBP/USD Price Analysis – Sep 30, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair maintained its upward momentum, climbing to approximately 1.3394 and reaching an intraday high of 1.3423. This surge coincided with a weakening US dollar, which fell to near-yearly lows.
The dollar's decline was driven by data released on Friday, revealing a further slowdown in US inflation for August.
Meanwhile, the British Pound showed strength against major currencies as the week began. Investor optimism is growing, fueled by expectations that the Bank of England (BoE) will implement interest rate cuts at a slower pace and to a lesser extent compared to other G-7 central banks.
This positive outlook is boosting confidence in the Pound and enhancing its strength in the currency market.
Weaker US Dollar and Rate Cut Expectations Fuel GBP/USD Surge
On the US front, the broad-based US dollar has fallen to near yearly lows, propelling the GBP/USD pair higher. This decline follows data released on Friday indicating a further slowdown in US inflation for August, leading to increased expectations for interest rate cuts.
However, the market remains skeptical about a substantial 50 basis points (bps) cut, as the Federal Reserve is adopting a more cautious stance regarding potential risks in the labor market and a slowing economy.
This week, investors will closely monitor several key economic reports from the US, including the ISM Manufacturing and Services PMIs, ADP Employment figures, and September's Nonfarm Payrolls (NFP) data, as well as August's JOLTS Job Openings data.
These reports will provide valuable insights into the current job market and overall economic conditions.
Apart from this, Federal Reserve Chair Jerome Powell is scheduled to speak. His remarks could offer new guidance on interest rates, indicating whether the Fed is considering another significant cut of 50 basis points, similar to the September 18 decision, or a more measured reduction of 25 basis points.
Consequently, the weakening US dollar and increasing expectations for interest rate cuts are likely to bolster the GBP/USD pair.
However, the positive economic data from the UK and cautious comments from the Fed could further support the Pound's strength against the dollar.
Pound Sterling Strength Supported by BoE Rate Cut Expectations Amid Slower GDP Growth
On the other hand, the Pound Sterling is starting the week on a strong note against major currencies. Investors are feeling optimistic that the Bank of England (BoE) will be more measured in its approach to interest rate cuts compared to other G-7 central banks.
Many believe there’s likely to be one more cut of 25 basis points (bps) in one of the BoE’s upcoming meetings this year.
On the economic front, revised estimates for the UK's Q2 Gross Domestic Product (GDP) indicate that the economy grew by 0.5%, which is slower than the initial estimate of 0.6% quarterly.
Besides, the annual GDP growth for Q2 has also been revised down to 0.7%, compared to the preliminary estimate of 0.9%.
These figures suggest that while the UK economy is growing, the pace is slower than previously thought, which may impact future monetary policy decisions by the BoE.
Hence, the Pound Sterling's strength against major currencies, driven by expectations of slower interest rate cuts from the BoE, could support the GBP/USD pair. However, slower-than-expected GDP growth may temper gains, leading to cautious sentiment among investors in the currency market.
GBP/USD - Technical Analysis
GBP/USD is trading at $1.34054, up 0.15% for the day, indicating a mild bullish bias as it trades above its pivot point at $1.3390. The pair has been gaining traction, supported by positive UK economic data, and is now eyeing key resistance levels.
Immediate resistance is seen at $1.3427, followed by $1.3456 and $1.3487. A break above $1.3427 could pave the way for further gains, potentially targeting $1.3456 in the near term.
On the downside, immediate support lies at $1.3359, with subsequent support levels at $1.3334 and $1.3312.
The 50-day Exponential Moving Average (EMA) at $1.3390 serves as a key short-term support level, and any sustained move below this point could shift the sentiment back to bearish.
Additionally, the Relative Strength Index (RSI) is currently at 58, indicating that the pair is not overbought, leaving room for potential further upside before reaching overextended levels.
Traders looking to capitalize on the current momentum might consider entering long positions above $1.3390, targeting $1.3448 with a stop-loss set around $1.3362 to limit downside risk.
The GBP/USD outlook will remain dependent on upcoming economic data releases from both the UK and the U.S., with particular focus on U.S. jobs data and any potential shifts in Federal Reserve policy.
In summary, GBP/USD is trading with a slight bullish bias, holding above its pivot point. A break above $1.3427 could further strengthen the pair’s upward momentum. However, any move below $1.3359 would negate this bias and possibly lead to a retest of lower support levels.
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GOLD Price Analysis – Sep 30, 2024
GOLD Price Analysis – Sep 30, 2024
Daily Price Outlook
Despite various supportive factors, Gold XAU/USD continues to face selling pressure, trading around $2,650 after hitting an intraday low of $2,647.
This decline was driven by a shift toward risk-on sentiment, which diminishes gold's appeal as a safe-haven asset. The sentiment has been bolstered by China’s recent announcement of additional stimulus measures over the weekend.
Conversely, ongoing geopolitical risks, including the Israel-Lebanon conflict and significant political developments in Japan and the U.S., have kept some demand for safe-haven assets alive, which is helping to cushion gold from more severe losses.
Moreover, a dovish outlook from the Federal Reserve, along with a weaker U.S. dollar, is offering partial support for gold prices, easing some of the downward pressure.
China's Stimulus Measures and Market Sentiment Impact on Gold
Global market sentiment has improved significantly, particularly after the People's Bank of China announced plans to reduce mortgage rates for existing home loans by October 31.
This move follows China’s recent major stimulus package, the largest since the pandemic, which has bolstered market confidence.
Notably,, China’s official Manufacturing PMI rose to 49.8 in September from 49.1, surpassing expectations. However, the Non-Manufacturing PMI dipped slightly to 50.0 from 50.3.
Meanwhile, the Caixin Manufacturing PMI contracted to 49.3, and the Caixin Services PMI fell to 50.3, down from August’s 51.6.
Therefore, the improvement in market sentiment and China’s stimulus measures may reduce gold's safe-haven appeal, as investors seek riskier assets. However, weaker manufacturing data could still drive some demand for gold as a hedge against economic uncertainty.
Geopolitical Tensions and Their Impact on Gold Prices
On the other hand, tensions in the Middle East are heating up as Israel steps up its military operations against Iran's allies, specifically targeting the Houthis in Yemen and Hezbollah in Lebanon.
Recent Israeli airstrikes have struck various locations, including ports and power plants in Yemen, leading to the death of Nabil Kaouk, the deputy head of Hezbollah’s Central Council. His death marks the seventh Hezbollah leader killed in just over a week, highlighting the escalating conflict.
These rising tensions are likely to boost demand for gold as a safe-haven asset, especially in light of the ongoing geopolitical instability.
This increased demand may help offset the reduced appeal of gold due to China's stimulus measures, resulting in mixed pressures on gold prices in the short term.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2,650.58, reflecting a slight decline of 0.08% as bearish sentiment persists. The metal is struggling to break above its pivot point at $2,658.20, indicating a lack of upward momentum.
Gold faces immediate resistance at $2,666.42, followed by a stronger barrier at $2,685.82. Any move above these levels could signal a potential bullish reversal; however, with the 50-day Exponential Moving Average (EMA) positioned at $2,663.47, this area remains a significant resistance zone for gold in the short term.
On the downside, immediate support is at $2,645.13, with further levels to watch at $2,634.74 and $2,624.02.
A break below $2,645.13 could open the door to a deeper retracement, possibly testing the 200-day EMA around $2,628.98. The Relative Strength Index (RSI) is currently at 41, suggesting a bearish bias but not yet oversold, leaving room for further declines.
From a technical perspective, sellers seem to have the upper hand as long as prices remain below the $2,658 pivot level. Traders might consider short positions below this level with a target of $2,640 and a stop-loss set at $2,665.
The broader market sentiment will likely be influenced by key events like the upcoming Non-Farm Payrolls (NFP) report and Fed Chair Powell’s speech, which could inject volatility into gold prices.
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GBP/USD Price Analysis – Sep 30, 2024
EUR/USD Price Analysis – Sep 30, 2024
Daily Price Outlook
Despite the downbeat flash annual Consumer Price Index (CPI) data from six German states showing a continued slowdown in inflation, the EUR/USD currency pair is maintaining its upward momentum, climbing to around 1.1193 and even reaching an intra-day high of 1.1208.
This rise can be largely attributed to a weakening US dollar, which is losing strength as traders look ahead to Federal Reserve Chair Jerome Powell's upcoming speech at 17:00 GMT.
Easing Inflation in the Eurozone Sparks Rate Cut Speculation Ahead of ECB Meeting
On the EUR side, recent data indicates that six German states experienced a further slowdown in inflation for September, as the flash annual Consumer Price Index (CPI) showed a decline in price growth.
Although month-on-month inflation increased at a quicker pace than in August, it still fell within the modest 0.2% range.
Moreover, data released on Friday from France and Spain revealed that price pressures also rose at a slower-than-expected rate, strengthening the belief that inflation is easing across the Eurozone.
This trend could be a positive sign for consumers and the broader economy as it suggests that price stability is gradually returning.
This slowdown in inflation has sparked rising expectations that the European Central Bank (ECB) may cut interest rates in its upcoming meeting on October 17.
Market participants have ramped up their bets, now pricing in a roughly 75% chance of a rate cut, a significant increase from just 25% a week ago.
It's worth noting that the ECB had already lowered its Deposit Facility Rate by 25 basis points to 3.5% during its policy meeting on September 12.
These developments suggest that the central bank is closely monitoring economic conditions and may take further action to support growth.
Moving ahead, investors are anticipating the release of the preliminary Harmonized Index of Consumer Prices (HICP) data for Germany and the Eurozone later this week. Furthermore, ECB President Christine Lagarde's speech scheduled for 13:00 GMT today is expected to shed light on the potential interest rate cut trajectory for the rest of the year.
US Dollar Pressure and Potential Rate Cuts: Impact on EUR/USD Pair
On the US front, the broad-based US dollar is facing downward pressure as investors await Federal Reserve Chair Jerome Powell's speech scheduled for 17:00 GMT. Many are hoping for clues about possible interest rate cuts at the Fed's upcoming November meeting.
According to the CME FedWatch tool, there's currently a 41.6% chance of the Fed reducing interest rates by 50 basis points to a range of 4.25% to 4.50%.
However, this probability has slipped from about 53.0% last Friday, following the release of the August Personal Consumption Expenditures Price Index (PCE) report. On the data front, the latest PCE report revealed that annual inflation unexpectedly fell to 2.2%, down from July’s 2.5%.
This marks the lowest inflation reading since February 2021. However, core PCE inflation, which excludes volatile food and energy prices, rose to 2.7%, raising concerns about the need for cautious rate cuts moving forward.
Recently, Fed policymakers have shifted their focus toward preventing job losses and economic slowdowns, expressing confidence that inflation will eventually return to the 2% target.
As a result, investors are closely monitoring upcoming economic indicators, including the JOLTS Job Openings for August and the ADP Employment Change and Nonfarm Payrolls (NFP) figures for September, as these will provide valuable insights into the health of the labor market.
Therefore, the easing inflation in the US, alongside cautious Fed signals, may strengthen the EUR/USD pair as the probability of rate cuts increases, attracting investors seeking higher yields in the Eurozone.
EUR/USD - Technical Analysis
EUR/USD is currently trading at $1.11937, reflecting a modest gain of 0.03% as it hovers above the pivot point at $1.1184. The pair has been in a steady upward trajectory, suggesting mild bullish sentiment in the near term.
Immediate resistance is observed at $1.1200, followed by $1.1214 and $1.1232, making these levels critical for further upward momentum. A break above $1.1214 could lead to a test of $1.1232, indicating a stronger bullish continuation.
On the downside, immediate support lies at $1.1171, with subsequent levels at $1.1150 and $1.1133. The 50-day Exponential Moving Average (EMA) is positioned at $1.1166, indicating that the pair is trading above its short-term trend line and suggesting continued bullish momentum.
However, the Relative Strength Index (RSI) is at 61, nearing overbought territory, which could limit further gains unless there is a strong catalyst, such as positive economic data from the Eurozone or dovish commentary from the Federal Reserve.
From a technical perspective, traders may consider long positions above $1.1184, targeting resistance at $1.1214 and setting a stop-loss around $1.1169 to manage risk.
The focus will be on key economic releases, such as the Eurozone inflation data and U.S. employment numbers, which could significantly influence the pair’s direction in the coming days.
For now, the EUR/USD remains supported above $1.1184, but any break below this pivot point could shift sentiment to bearish, bringing $1.1150 back into play as a key support level. Until then, the pair looks poised to test resistance levels as it sustains its upward momentum.
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GOLD Price Analysis – Sep 30, 2024