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.
Related News
GOLD Price Analysis – Oct 01, 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.
Related News
GOLD Price Analysis – Sep 30, 2024
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.
Related News
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.
Related News
GBP/USD Price Analysis – Sep 30, 2024
S&P500 (SPX) Price Analysis – Sep 27, 2024
Daily Price Outlook
The S&P 500 index has recently shown impressive performance, reaching around 5,745.37 and hitting an intra-day high of 5,767.37, driven by strong corporate earnings and resilient economic data.
Investors have reacted favorably to earnings reports, especially from major tech companies that surpassed market expectations. This trend highlights the ongoing strength of the U.S. economy, with sectors like technology and consumer discretionary showing robust growth.
In the meantime, the key economic indicators, such as a 3% GDP growth rate in the second quarter, have bolstered investor confidence.
This optimism has led to heightened buying pressure, pushing the S&P 500 to new highs and signaling a broader recovery in market sentiment.
Anticipated Fed Rate Cuts Fuel Optimism in the S&P 500 Index
Market participants are increasingly betting on a 50 basis points (bps) interest rate cut by the Federal Reserve in November, and this has a noticeable impact on the S&P 500 index.
The anticipation of this shift toward a more lenient monetary policy stems from mixed economic signals and ongoing worries about inflation.
The Bureau of Economic Analysis (BEA) reported 3% growth in the US economy for the second quarter, while new orders for durable goods stagnated in August.
However, orders excluding transportation rose by 0.5%. Meanwhile, initial claims for unemployment benefits dropped to 218,000, the lowest since mid-May.
Recently, comments from Fed officials like Governor Michelle Bowman and Atlanta Fed President Raphael Bostic have highlighted a cautious approach, but they also recognize that rate cuts might be necessary to support economic growth.
When interest rates drop, it usually gives a boost to equity markets because cheaper borrowing costs can encourage both businesses to invest and consumers to spend.
This speculation around potential cuts has added to the upward momentum of the S&P 500, with investors positioning themselves optimistically, hoping for a more supportive monetary environment in the near future.
China's Stimulus Measures and Their Impact on the S&P 500
China's recent announcement of new stimulus measures has brought a wave of positivity to the S&P 500 index.
In response to ongoing global uncertainties, the Chinese government is rolling out policies aimed at boosting economic growth, including tax cuts and increased infrastructure spending. These initiatives are designed to stimulate domestic demand and support local businesses.
As the world’s second-largest economy, China's economic health significantly influences global markets.
The introduction of these stimulus measures has rekindled investor confidence, resulting in a surge of capital flowing into U.S. equities.
Many investors believe that an uptick in China’s growth could lead to greater demand for U.S. exports, which would further bolster the S&P 500.
Therefore, the combination of strong economic indicators from the U.S., expectations of a rate cut from the Fed, and China’s proactive approach to stimulating its economy is creating a positive atmosphere for the S&P 500, helping it reach new heights.
S&P 500 - Technical Analysis
The S&P 500 (SPX) is trading at $5,745.36, down 0.40% in today’s session, as markets remain cautious amid lingering economic uncertainty.
The index is hovering below its pivot point at $5,778.74, with immediate support seen at $5,704.50. If this level holds, the index could bounce back toward resistance at $5,766.23, and further gains may lead it to challenge $5,792.65 and $5,819.96.
Technical indicators are mixed, with the 50-day Exponential Moving Average (EMA) at $5,707.61 acting as a critical support level. A sustained move above the 50 EMA could indicate the resumption of the broader uptrend.
However, a failure to hold this level could see the index slipping further, with the next support at $5,676.00 and a deeper one at $5,648.18.
The Relative Strength Index (RSI) is currently at 61, signaling relatively strong bullish momentum. This suggests that the S&P 500 could find buying interest if it manages to stay above the key support areas.
However, given the current economic backdrop and the index trading below the pivot point, investors should remain cautious, as downside risks persist.
In conclusion, while the technical outlook remains slightly bullish, the S&P 500’s price action will largely depend on its ability to hold above the 50 EMA and immediate support levels. Traders should watch key levels closely, as any move below $5,704.50 could signal deeper corrections.
Related News
EUR/USD Price Analysis – Sep 27, 2024
GOLD Price Analysis – Sep 27, 2024
Daily Price Outlook
Gold prices (XAU/USD) came under selling pressure on the final trading day of the week, pulling back from the record high of $2,686 set on Thursday. The drop was primarily driven by renewed demand for the US Dollar (USD), which typically weakens gold's appeal.
In the meantime, the positive market sentiment, fueled by China's new stimulus measures, also turned investor interest away from the safe-haven asset.
Nevertheless, expectations of more aggressive Federal Reserve rate cuts are keeping the US dollar close to last week’s year-to-date low. Furthermore, the escalating geopolitical tensions in the Middle East limit gold's downside.
Traders are now focused on the upcoming US Personal Consumption Expenditure (PCE) Price Index for further market direction.
Impact of US Economic Data and Fed Commentary on Gold Prices
On the US front, the broad-based US Dollar saw a slight uptick due to increased buying, which typically reduces demand for gold. Federal Reserve Governor Michelle Bowman defended her decision to vote against a substantial rate cut in September, citing ongoing inflation risks.
Atlanta Fed President Raphael Bostic also urged caution against rushing into rate cuts, while other officials suggested that larger cuts could be on the horizon.
Meanwhile, Fed Governor Lisa Cook supported the recent 50-basis-point cut, acknowledging a decrease in inflation risks but raising concerns over rising employment challenges.
Market participants now see a more than 50% chance of the Federal Reserve cutting interest rates by 50 basis points at its November meeting.
Recent data from the Bureau of Economic Analysis revealed that the US economy grew at an annual rate of 3% in the second quarter, in line with initial estimates.
Meanwhile, the Census Bureau reported flat new orders for manufactured durable goods in August, though orders excluding transportation rose by 0.5%.
Moreover, initial jobless claims dropped to 218,000, the lowest since mid-May. While this data temporarily supported the USD, the Fed's overall dovish outlook has kept gold prices steady, with the upcoming release of the Personal Consumption Expenditure (PCE) Price Index potentially providing further support for gold.
Therefore, the mixed signals from US economic data and Fed commentary have created uncertainty, supporting gold prices.
Dovish Fed expectations could limit USD strength, making gold an attractive safe-haven asset, especially ahead of the upcoming Personal Consumption Expenditure Price Index release.
Geopolitical Tensions and Market Optimism Drive Gold Prices to New Highs
On the geopolitical front, escalating tensions in the Middle East and the potential for a wider regional conflict are driving gold prices to new all-time highs.
As a safe-haven asset, gold typically appreciates during periods of uncertainty as investors seek protection. However, a positive market sentiment, fueled by new stimulus measures from China, is diverting funds away from gold and into riskier assets.
This shift is diminishing demand for gold, as investors increasingly seek higher returns in other areas of the market.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is trading at $2,670.84, down 0.16% during today’s session, as it struggles to maintain its recent bullish momentum.
The precious metal is hovering around key technical levels, with immediate support found at $2,659.88. A drop below this could see further downside toward $2,653.43, while strong resistance at $2,677.76 will be the first hurdle for bulls to overcome.
The 50-day Exponential Moving Average (EMA) is currently at $2,664.45, providing short-term support. If Gold prices remain above this level, the bullish trend could resume, targeting the next resistance at $2,685.83.
A decisive break above this could open the door to test the psychological $2,700 mark. However, failure to hold the EMA could lead to further declines, with the next support seen at $2,646.49.
The Relative Strength Index (RSI) sits at 53, indicating neutral conditions. With room for further upward movement, the RSI suggests that Gold could still have some upside potential, especially if upcoming U.S. economic data triggers safe-haven demand.
However, a cautious approach is recommended as any break below $2,660 could trigger a sharper selling trend.
In conclusion, Gold’s near-term outlook hinges on its ability to stay above the 50 EMA and immediate support levels.
Related News
EUR/USD Price Analysis – Sep 27, 2024
EUR/USD Price Analysis – Sep 27, 2024
Daily Price Outlook
During the European trading session, the EUR/USD currency pair continued its downward trend, remaining under pressure around the 1.1158 level and hitting an intra-day low of 1.1125. This decline is attributed to the renewed strength of the US dollar, which gained momentum following positive US economic data.
Meanwhile, the euro's performance against other major currencies remains weak, influenced by the release of the flash French Consumer Price Index (CPI) and the Spanish Harmonized Index of Consumer Prices (HICP), both of which indicated that price pressures increased at a slower-than-expected pace in September.
US Dollar Strengthens Amid Positive Economic Data, Pressuring EUR/USD Pair
Despite Fed's overall dovish outlook, the US dollar is gaining momentum as the recent positive economic data reflects the strength of the US economy. The Bureau of Economic Analysis (BEA) reported a notable 3% growth in the US economy for the second quarter, indicating robust economic performance.
This growth, along with other favorable indicators, has increased confidence among investors and traders in the dollar's prospects.
In addition to the GDP growth, new orders for durable goods remained flat in August. However, a closer look reveals that orders excluding transportation increased by 0.5%, signaling resilience in certain sectors of the economy.
This suggests that businesses are still making investments despite broader economic challenges.
Moreover, initial claims for unemployment benefits dropped to 218,000, the lowest level since mid-May, highlighting a strengthening labor market.
A decrease in unemployment claims typically signals improved job security and economic stability, further supporting the dollar's upward trajectory.
Collectively, these indicators paint a positive picture of the US economy, reinforcing the dollar's position against other currencies and fostering optimism among market participants. Thus, the strengthening US dollar, driven by positive economic data, puts downward pressure on the EUR/USD pair.
EUR/USD Losses Intensify Amid Weaker Eurozone Inflation Data
Apart from this, the losses in the EUR/USD pair were further bolstered by the recent economic data indicating weaker inflation in the Eurozone. The flash French Consumer Price Index (CPI) showed an annual increase of only 1.5%, falling short of the expected 1.9% and significantly lower than the previous reading of 2.2%. On a monthly basis, the CPI also experienced a sharper decline of 1.2%, compared to the anticipated decrease of 0.8%.
Similarly, Spain's Harmonized Index of Consumer Prices (HICP) revealed an annual rise of just 1.7%, below the forecast of 1.9% and down from 2.4% in August, while the monthly HICP dropped by 0.1%, diverging from expectations for it to remain stable.
These disappointing inflation figures have heightened expectations that the European Central Bank (ECB) may implement another interest rate cut at its upcoming October meeting, marking the third reduction in its current policy-easing cycle that commenced in June.
With inflation pressures decelerating in both France and Spain, investors are now closely monitoring the preliminary German and Eurozone HICP data set to be released on Monday and Tuesday. The results of these reports will likely influence future ECB policy decisions and the trajectory of the EUR/USD pair.
EUR/USD - Technical Analysis
The EUR/USD pair is currently trading at $1.11672, down 0.14% in today’s session, as traders remain cautious ahead of key macroeconomic data releases. The pair is hovering around the pivot point of $1.1164, a critical level that could dictate the direction of the next move.
Immediate resistance is seen at $1.1183, followed by $1.1198 and a more significant level at $1.1214. A breakout above these levels could trigger bullish momentum, driving the pair higher.
On the downside, immediate support lies at $1.1154, with further supports at $1.1140 and $1.1126. These levels will be crucial in maintaining the pair’s current uptrend.
The 50-day Exponential Moving Average (EMA) at $1.1162 is providing immediate support, aligning closely with the pivot point. A sustained move above this EMA could signal bullish continuation, while a break below could lead to a deeper correction.
The Relative Strength Index (RSI) is at 51, indicating neutral momentum. This suggests the pair could go either way, depending on how it interacts with immediate support and resistance levels.
If the RSI rises above 60, it could indicate a stronger bullish trend. However, a dip below 50 could shift the sentiment to bearish.
In conclusion, EUR/USD is at a critical juncture, with the potential for both bullish and bearish scenarios.
Related News
GOLD Price Analysis – Sep 27, 2024
USD/JPY Price Analysis – Sep 26, 2024
Daily Price Outlook
During the European trading session, the USD/JPY currency pair has recently experienced a downward trend due to various economic factors and central bank signals.
Traders expect the US Federal Reserve (Fed) to cut interest rates further as inflation eases, which has weakened confidence in the US Dollar (USD) and led to its depreciation against the Japanese Yen (JPY).
In the meantime, the sharp drop in the US Consumer Confidence Index, from 105.6 in August to 98.7 in September, reflects this sentiment.
Meanwhile, the comments from Fed officials about potential rate cuts in 2024 have increased uncertainty, putting further downward pressure on the USD/JPY pair as traders await more economic data.
Japanese Yen Faces Downward Pressure Amid BoJ Delays
On the JPY front, the Japanese Yen (JPY) is facing downward pressure primarily due to expectations that the Bank of Japan (BoJ) will postpone further interest rate hikes.
Recent meeting notes from the BoJ showed that members agree on the importance of watching inflation closely. Some even proposed raising rates to 0.25% to lessen monetary support.
However, most members favor a careful approach, expecting interest rates to stay low for a longer time.
This uncertainty is affecting the JPY's value, making it less strong against other currencies, particularly the US Dollar (USD). Traders are waiting for more data to better understand the BoJ's future plans.
However, the market anticipates that the BoJ will maintain its accommodative stance, creating a challenging environment for the currency pair.
Traders are keenly awaiting upcoming inflation data from Tokyo, as it may offer valuable insights into the BoJ's future policy direction and potentially influence the JPY's performance in the near term.
US Dollar Faces Pressure from Rate Cut Speculations
On the US front, the broad-based US dollar is experiencing additional downward pressure due to increasing expectations for interest rate cuts by the Federal Reserve. The CME FedWatch Tool indicates about a 50% probability of a total of 75 basis points being cut by the end of the year, which has created uncertainty among investors. Federal Reserve officials, including Governor Adriana Kugler and Chicago Fed President Austan Goolsbee, have expressed support for additional rate cuts, which could further weaken the US dollar..
This environment of declining interest rates tends to diminish the attractiveness of the US dollar for investors seeking yield, resulting in reduced demand for the currency. Consequently, the expectations surrounding Fed policy shifts are adversely impacting the USD/JPY pair, leading to a challenging landscape for the dollar amidst ongoing market volatility and economic data releases.
USD/JPY - Technical Analysis
The USD/JPY pair is trading slightly higher at 144.877, marking a modest increase of 0.04% for the day. The pair is hovering near a crucial pivot point at 145.398, which could serve as a turning point for future price action.
Immediate resistance is found just above at 145.409, with further resistance levels at 145.973 and 146.514, which could become significant if the current upward momentum persists.
On the downside, immediate support stands at 143.968, followed by deeper supports at 143.475 and 142.910.
The 50-day Exponential Moving Average (EMA), currently at 144.016, is providing strong dynamic support, suggesting the pair will remain buoyed above this level.
Meanwhile, the Relative Strength Index (RSI) is at 66, signaling that the pair is nearing overbought conditions, a potential indicator of short-term exhaustion.
Traders may consider a buy limit at 144.478, targeting the pivot point at 145.398, with a stop loss at 143.978 to mitigate downside risks. The overall trend remains bullish, as long as the price stays above the 50-EMA.
Related News
GOLD Price Analysis – Sep 26, 2024
GOLD Price Analysis – Sep 26, 2024
Daily Price Outlook
Gold (XAU/USD) continued its upward momentum, trading firmly around the $2,675 level and reaching an intra-day high of $2,675. This rally was fueled by several factors, including declining global interest rates, rising tensions in the Middle East, and a weakening US Dollar.
However, the speculation has increased regarding the US Federal Reserve's potential continuation of an aggressive monetary easing strategy.
Moreover, recent interest rate cuts by central banks, such as the People's Bank of China, Sweden's Riksbank, and the Czech National Bank, have enhanced gold's attractiveness.
Lower interest rates decrease the opportunity cost of holding gold—a non-yielding asset—making it more appealing to investors.
Fed Chair Jerome Powell's speech on Thursday is expected to attract significant attention from traders looking for hints about future rate cuts and their impact on XAU/USD.
At the same time, important US economic data, including the final Q2 GDP numbers, Weekly Initial Jobless Claims, and Durable Goods Orders, will provide more context about the economy.
Fed Rate Cut Expectations and Weak Dollar Propel Gold Higher
On the US front, the broad-based US Dollar has been losing momentum as markets increasingly expect another 50 basis point (0.50%) interest rate cut from the Federal Reserve in November.
Despite stronger-than-expected New Home Sales data for August and solid Mortgage Applications, there's little evidence the US economy is heading for a hard landing.
However, the Labor market data, like Thursday's Jobless Claims report, could play a crucial role in shaping market expectations, influencing both the US Dollar and Gold prices.
Currently, market-based odds for a 50 bps rate cut remain above 60%, according to the CME FedWatch tool, adding further pressure on the Dollar and boosting Gold, which is primarily traded in USD.
Another factor impacting sentiment is the sharp drop in consumer confidence. On Tuesday, the Conference Board's Consumer Confidence Index fell to 98.7 in September, well below expectations and August's upwardly revised 105.6.
Concerns about the labor market were a key driver of this decline. Traders are now looking ahead to Fed Chairman Jerome Powell's speech on Thursday for more clues about future Fed policy, which could have a big impact on Gold prices.
This news has boosted Gold prices as expectations of a 50 basis point rate cut and a weaker US Dollar increase Gold's appeal as a safe-haven asset. Dovish Fed comments and falling consumer confidence further support Gold's upward momentum.
Geopolitical Tensions and Global Rate Cuts Drive Gold Near Record High
On the geopolitical front, the escalating conflict between Israel and Hezbollah is pushing investors towards safe-haven assets like gold.
On Wednesday, Israeli Defense Forces chief Herzi Halevi told troops in northern Israel to prepare for a possible ground invasion of Lebanon, following continued missile exchanges.
If this invasion happens, it could increase global risk concerns, driving more demand for gold.
At the same time, gold is trading just below its record high of $2,670 per ounce, supported by recent interest rate cuts from central banks like the People’s Bank of China, Sweden's Riksbank, and the Czech National Bank.
Lower interest rates reduce the cost of holding gold, which doesn’t earn interest, making it more appealing to investors. These combined factors of geopolitical tension and lower rates are giving gold a strong boost in the market.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) continues its steady climb, trading near $2,662.67, up 0.18% for the day. The precious metal is navigating just below a critical pivot point at $2,670.00, reflecting strong bullish momentum, but immediate resistance at $2,670.90 could challenge further upward movement.
Should gold break this resistance, the next target lies at $2,681.48, followed by a higher ceiling at $2,691.20.
On the downside, immediate support is anchored at $2,643.40, offering a cushion for any pullbacks. Further support can be found at $2,633.40 and $2,623.81, levels that could come into play if the metal faces selling pressure.
The 50-EMA is currently positioned at $2,650.99, acting as a strong dynamic support. As long as gold remains above this level, the bullish trend is likely to continue. The Relative Strength Index (RSI) stands at 58, signaling neutral to slightly bullish momentum.
This suggests there is room for further upside without overbought conditions limiting the price action.
Traders are advised to consider entry points above $2,655, with a target of $2,670. A prudent stop loss around $2,645 would provide protection against downside risks. Overall, the outlook remains cautiously optimistic, with strong technical backing for further gains.
Related News
AUD/USD Price Analysis – Sep 26, 2024
AUD/USD Price Analysis – Sep 26, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair halted its downward trend and turned bullish around the 0.6882 level, reaching an intra-day high of 0.6887.
This rebound is largely fueled by contrasting monetary policy outlooks from the Reserve Bank of Australia (RBA) and the Federal Reserve.
Moreover, the Australian Dollar received a notable boost after China, its largest trading partner, announced new stimulus measures aimed at reviving its economy.
Moreover, the RBA's decision to keep the Official Cash Rate steady at 4.35% provided further support for the AUD.
On the other hand, the Federal Open Market Committee (FOMC) recently cut the federal funds rate, which has heightened market expectations for more cuts before the year ends.
This divergence in policy direction has created a favorable environment for the Australian Dollar.
Potential Impacts of China's Stimulus on AUD/USD Pair Amid Domestic Challenges
China is set to inject over CNY 1 trillion into its largest state banks, which are struggling with shrinking margins, declining profits, and rising bad loans. This move marks the first major capital boost since the 2008 global financial crisis.
Meanwhile, the Reserve Bank of Australia's September 2024 Financial Stability Review indicates that the Australian financial system remains resilient, although concerns persist about stress in China’s financial sector and its limited responses to these challenges.
In Australia, a small but growing number of home borrowers are falling behind on payments, with about 2% of owner-occupier borrowers facing serious default risks.
In addition, Australian Treasurer Jim Chalmers plans to visit China this week to strengthen economic ties, highlighting the need to engage with key Chinese officials due to Australia’s vulnerability to the Chinese economy.
JP Morgan recently advised investors to keep an eye on commodities and bond yields, as China's stimulus measures could enhance global growth and reduce recession risks. However, they also warned about the potential for reinflation.
In Australia, the Monthly Consumer Price Index rose by 2.7% year-over-year in August, down from 3.5%, indicating shifting economic conditions.
Therefore, the news of China’s capital injection and stimulus measures could strengthen the AUD/USD pair, as improved economic prospects in China may boost demand for Australian exports. However, concerns over rising default risks in Australia may limit AUD gains.
Impact of Federal Reserve Rate Cuts on AUD/USD Trends
On the US front, Federal Reserve Governor Adriana Kugler expressed strong support for the Fed's recent decision to cut interest rates by half a percentage point. She indicated that if inflation continues to decrease as expected, further rate cuts would be appropriate.
This significant cut lowered the federal funds rate to a range of 4.75% to 5.0%, marking the first rate reduction in over four years.
The market is now pricing in about a 50% chance of an additional 75 basis points cut by the end of the year, potentially bringing the rate down to between 4.0% and 4.25%.
Traders are particularly attentive to the upcoming release of the final US Gross Domestic Product (GDP) Annualized report for the second quarter (Q2), which is set to be announced later in the North American session.
This data will be crucial in shaping expectations about the US economy and could influence future decisions by the Federal Reserve regarding interest rates.
Therefore, the Federal Reserve's interest rate cut and potential for further reductions may weaken the US dollar, potentially boosting the AUD/USD pair. However, the upcoming GDP report could introduce volatility, influencing market sentiment and short-term trading strategies.
AUD/USD - Technical Analysis
The Australian Dollar (AUD/USD) has gained 0.32% on the day, trading around $0.68417, reflecting some positive momentum in an otherwise cautious market.
The pair is currently moving below the pivot point at $0.6860, with the 50-day Exponential Moving Average (EMA) also aligned at this level, acting as a significant technical barrier.
Immediate resistance stands at $0.6907, which, if breached, could open the door for further gains towards $0.6946 and $0.6983, respectively.
On the downside, immediate support lies at $0.6819, with additional supports at $0.6783 and $0.6744. Traders are carefully monitoring the $0.6860 level, as it serves as both a pivot point and a key resistance zone.
A break above this level would likely invalidate the current bearish setup. The Relative Strength Index (RSI) is currently at 46, signaling neutral momentum with a slight tilt towards oversold conditions, which suggests the possibility of a rebound in the near term.
For traders, a sell limit entry at $0.6860 is advised, with a take-profit target at $0.68189, supported by the immediate downside levels. A stop-loss at $0.68879 would help mitigate risk in case of an upward breakout.
Overall, the AUD/USD pair remains vulnerable to downside pressure as long as prices stay below the 50-EMA.
Related News
GOLD Price Analysis – Sep 26, 2024