USD/CAD Price Analysis – Oct 22, 2024
Daily Price Outlook
During the European trading session, the USD/CAD currency pair struggled to maintain its bullish momentum, dropping to around the 1.3830 level despite a strong US dollar and a dovish stance from the Bank of Canada (BoC) regarding interest rate cuts.
However, the recent losses in the USD/CAD pair may be short-lived, as the BoC is anticipated to cut interest rates by 50 basis points to 3.75%.
Moreover, a bullish US dollar could help limit further declines in the pair. The outlook for the US dollar remains positive, with investors expecting a gradual rate-cut cycle from the Federal Reserve for the remainder of the year.
Anticipated Rate Cuts and Economic Challenges for the Canadian Dollar
On the CAD front, the USD/CAD pair experiencing fluctuations as investors await the Bank of Canada’s (BoC) interest rate decision, set to be announced on Wednesday. However, the BoC is expected to cut its key borrowing rate by 50 basis points (bps) to 3.75%.
This would mark the fourth consecutive interest rate reduction by the central bank. The larger cut is a response to a rising unemployment rate and slowing inflation, indicating the need for stronger economic support.
On the data front, the latest figures highlight ongoing challenges in the Canadian economy. The slight decrease in the unemployment rate to 6.5% suggests some improvement, but it is still above the 5% level typically associated with full employment. This indicates that many Canadians are still struggling to find jobs.
These factors have prompted discussions around the need for more stimulus to encourage spending and job creation. As a result, the anticipated rate cuts from the BoC are seen as crucial to supporting economic recovery and addressing these persistent issues.
US Dollar Strength and Its Impact on the USD/CAD Pair
On the US front, a strong US dollar has been helping the USD/CAD pair. Investors are optimistic about the USD’s outlook, as many expect the Federal Reserve (Fed) to start a gradual rate-cut cycle later this year.
According to the CME FedWatch tool, the Fed is likely to reduce interest rates by 25 basis points (bps) in both November and December. This potential rate cut is contributing to the USD's strength and helping the USD/CAD pair to limit its losses.
In addition, the upcoming presidential election, just two weeks away, is adding uncertainty to the Canadian dollar. However, the competition between former President Donald Trump and current Vice President Kamala Harris is intense, and a Trump victory could lead to higher import tariffs. This would negatively impact the currencies of the US's trading partners, including Canada.
On the economic front, investors are also keenly awaiting the flash S&P Global PMI data for October, scheduled for release on Thursday. This data will provide insights into the economic health of both the US and Canada, further influencing the currency markets.
USD/CAD – Technical Analysis
The USD/CAD pair is trading near $1.38294, slightly down by 0.02% on the 4-hour chart. Currently, the pair remains below the pivot point at $1.38441, showing a neutral-to-bearish bias in the short term. Despite the minor decline, the pair is holding above key support levels, which could provide a bounce, though resistance areas will need to be tested for further upside momentum.
Immediate resistance is positioned at $1.38623, followed by $1.38821 and $1.39030. A successful break above these resistance levels could signal renewed bullish momentum. However, failure to breach these areas may result in further consolidation or a deeper pullback.
On the downside, immediate support is at $1.38120, with subsequent support levels at $1.37911 and $1.37691. The 50-day Exponential Moving Average (EMA), located at $1.37976, is acting as a dynamic support level and will be a critical indicator for traders to watch. A move below this EMA could lead to additional downside pressure.
The Relative Strength Index (RSI) is currently at 58, indicating that there is still room for upward movement, though momentum remains moderate.
In conclusion, the technical picture for USD/CAD remains mixed, with critical support and resistance levels providing the next directional cues.
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AUD/USD Price Analysis – Oct 22, 2024
Daily Price Outlook
During the European trading session, the AUD/USD currency pair maintained its upward momentum, gaining positive traction around the 0.6687 level and reaching an intra-day high of 0.6694.
This upward movement can be attributed to the hawkish outlook from the Reserve Bank of Australia (RBA), driven by strong employment data from Australia. Additionally, China's recent rate cuts provided further support for the AUD, as China is Australia’s largest trading partner.
However, the pair gains could be limited amid sharp rise in US Treasury yields, which surged over 2% on Monday due to signs of robust economic activity and concerns about a potential resurgence of inflation in the United States.
Traders are now anticipating the upcoming Purchasing Managers Index (PMI) reports from both the US and Australia, set for release on Thursday. These reports could offer further insights into the economic outlooks and influence future monetary policy decisions.
Positive RBA Outlook and Strong Employment Data Support AUD/USD, But Future Rate Cut Expectations May Limit Gains
On the AUD front, the Australian Dollar received support from a positive outlook on the Reserve Bank of Australia’s (RBA) policy, fueled by strong employment data. China's recent interest rate cuts also benefited the AUD, as China is Australia’s largest trading partner.
RBA Deputy Governor Andrew Hauser, speaking at the CBA 2024 Global Markets Conference, highlighted the surprisingly strong employment growth and noted that while the RBA closely watches data, it remains flexible and not overly focused on short-term changes.
On the data front, Australia’s job market showed impressive gains in September, with employment rising by 64.1K, much higher than the expected 25K increase. This pushed total employment to a record 14.52 million.
Meanwhile, the unemployment rate held steady at 4.1%, below the forecasted 4.2%. In response to these developments, the National Australia Bank revised its outlook for RBA rate cuts, now predicting the first reduction in February 2025, instead of May, with rates expected to drop gradually to 3.10% by early 2026.
Therefore, the strong employment data and positive RBA outlook boosted the AUD/USD pair, but future rate cut expectations could limit gains as market focus shifts to long-term monetary easing by the RBA.
US Dollar Strengthens on Strong Economic Data and Reduced Fed Rate Cut Expectations, Pressuring AUD/USD Pair
On the US front, the US Dollar gained strength as recent economic data reduced the chances of a large interest rate cut by the Federal Reserve (Fed) in November. The CME FedWatch Tool now indicates an 89.1% likelihood of a 25-basis-point rate cut, with no expectation of a bigger 50-basis-point cut.
US Treasury bond yields also reflect this sentiment, with 2-year yields at 4.02% and 10-year yields at 4.19%. Federal Reserve officials, including Minneapolis President Neel Kashkari, have noted that while the Fed will eventually ease rates, the process will likely be gradual, not aggressive.
On the data front, US economic indicators showed strength. Retail sales increased by 0.4% month-over-month in September, better than both the previous month's 0.1% rise and market expectations of a 0.3% gain.
Additionally, Initial Jobless Claims fell by 19,000 in the week ending October 11, the largest drop in three months, with total claims at 241,000, much lower than the expected 260,000. These figures suggest a healthy labor market, further supporting the Fed’s cautious approach to cutting interest rates gradually.
Therefore, the strong US economic data and reduced chances of aggressive Fed rate cuts boosted the US Dollar, putting downward pressure on the AUD/USD pair as the USD gained strength against the Aussie Dollar.
AUD/USD – Technical Analysis
The Australian dollar is showing a modest uptick against the U.S. dollar, with the AUD/USD pair currently trading at $0.66875, up 0.44% on the day. On the 4-hour chart, the pair remains near key pivot levels, indicating potential for both upside and downside movement depending on upcoming economic data and market sentiment.
The immediate pivot point stands at $0.66985, with the pair's direction largely dictated by price action around this level.
Immediate resistance lies at $0.67233, and if breached, could lead to further upside with targets at $0.67454 and $0.67688. On the flip side, should bearish momentum take over, the price could slip toward immediate support at $0.66687, followed by $0.66512 and $0.66302.
The 50-day Exponential Moving Average (EMA), which is currently positioned at $0.66883, serves as a dynamic support level and will play a critical role in determining near-term direction.
The Relative Strength Index (RSI) is currently at 52, indicating neutral momentum, suggesting that neither buyers nor sellers have a strong grip on the market at present. With the RSI hovering around the mid-point, traders should watch for potential shifts in sentiment based on global risk factors and U.S. dollar dynamics.
In conclusion, the current price action suggests a possible short-term bearish bias if the price slips below $0.66982. A sell entry below this level with a target of $0.66681 and a stop-loss at $0.67158 may provide favorable risk-reward opportunities. However, upside potential remains viable if resistance levels are tested.
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- GOLD Price Analysis – Oct 22, 2024
GOLD Price Analysis – Oct 21, 2024
Daily Price Outlook
Gold prices (XAU/USD) started this week on a bullish trend and maintain their intraday gains during the early European session, trading around the all-time high of $2,731. However, the easing of monetary policies and ongoing geopolitical tensions in the Middle East have created a bullish environment for the non-yielding yellow metal. Moreover, uncertainty in US politics has contributed to the recent upward momentum over the past couple of weeks.
At the same time, expectations of modest rate cuts from the Federal Reserve have supported US Treasury bond yields, which, in turn, boosted the US Dollar. The USD Index (DXY) is now nearing its highest level since early August. Hence, this strength in the Dollar, along with slightly overbought technical conditions, could limit further gains in Gold in the near term.
US Dollar Strength and Geopolitical Risks Shape Gold Price Trends
On the US front, the broad-based US Dollar has gained bullish traction as expectations of modest rate cuts by the Federal Reserve (Fed) help keep US Treasury yields higher. However, the USD Index (DXY), which tracks the dollar against a basket of major currencies, is inching closer to its highest level since August. Investors have ruled out the possibility of a large interest rate cut by the Fed in November, as the US economy continues to show resilience in recent macroeconomic data.
Fed officials, like Atlanta Fed President Raphael Bostic, have indicated that they're not in a hurry to cut rates, with expectations that rates will eventually fall to around 3-3.5% by the end of next year. In contrast, weak inflation data from the UK has fueled expectations of more aggressive easing from the Bank of England. Despite higher US bond yields, the positive trend in Gold prices remains intact, driven by safe-haven demand amid geopolitical risks and broader market uncertainties.
Therefore, the strengthening US dollar and higher Treasury yields may limit further gains in Gold prices. However, ongoing geopolitical risks and market uncertainties continue to drive safe-haven demand, keeping the precious metal's upward trend intact despite these headwinds from the Dollar.
Geopolitical Tensions and Political Uncertainty Fuel Gold Prices to New Highs
On the other hand, the increasing geopolitical tensions in the Middle East continue to boost Gold prices. Despite the killing of Hamas leader Yahya Sinwar, the conflict shows no signs of easing, as Israel prepares to respond to Iran’s October strike. Israel’s Prime Minister, Benjamin Netanyahu, remains determined to continue the war despite attacks by Hezbollah.
However, the situation has escalated with Israeli airstrikes across Lebanon and intensified attacks in Gaza, raising fears of a larger regional conflict. This has heightened safe-haven demand for Gold, helping it maintain its upward momentum and reach a new all-time high during the Asian session on Monday.
In addition to geopolitical risks, political uncertainty in the US also supports Gold's rise. Recent polls show a tight race between Donald Trump and Vice President Kamala Harris, adding to market uncertainty and boosting demand for Gold. Furthermore, investors welcomed two new funding schemes launched by the People's Bank of China on Friday, aimed at supporting capital market development.
These combined factors have helped Gold reach a fresh all-time high during the Asian session on Monday, continuing its strong upward trend.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,721.90, showing an intraday increase of 0.06%. The market sentiment remains bullish as prices hold above critical support levels.
Gold continues to extend its bullish momentum, with prices maintaining an upward channel formation. On the 2-hour chart, XAU/USD has bounced off its immediate support level at $2,713.94, driven by buying interest around this key pivot zone. The precious metal is steadily climbing towards the next resistance levels, suggesting a possible rally if prices break through the critical barrier of $2,732.08.
Technical indicators also reinforce this positive outlook. The Relative Strength Index (RSI) is currently hovering at 69.44, suggesting a moderately overbought condition but still leaving room for potential gains. The 50-period Exponential Moving Average (EMA) is positioned at $2,678.89, offering solid support to the ongoing trend.
Should gold hold above $2,714.00, the immediate upside target lies at $2,732.00. A breakout above this resistance would open the door for a further advance towards the $2,740 level. However, failure to maintain the $2,713 support could result in a pullback, with next support levels at $2,703.00 and $2,693.00.
Conclusion: The overall outlook for gold remains bullish as long as prices stay above $2,714. Entry points for traders may include buying above $2,714 with a take-profit target of $2,732 and a stop-loss at $2,703. The RSI and 50 EMA suggest positive momentum, making the current price zone an attractive entry for upward positions.
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- GBP/USD Price Analysis – Oct 21, 2024
GBP/USD Price Analysis – Oct 21, 2024
Daily Price Outlook
During the European session on Monday, the GBP/USD pair struggled to maintain its upward trend, turning bearish around the 1.3026 level and hitting an intraday low of 1.3012. However, the surprise drop in the UK Consumer Price Index (CPI) has increased expectations for a 25 basis point (bps) interest rate cut at the upcoming November 7 meeting.
Meanwhile, money markets are pricing in the possibility of another BoE rate cut in December, which could further undermine the British Pound (GBP). This situation, combined with the underlying bullish sentiment surrounding the US Dollar (USD), reinforces the negative outlook for the GBP/USD pair. However, the strength of the US Dollar was supported by expectations of modest rate cuts by the Federal Reserve (Fed).
UK Inflation Decline Fuels Rate Cut Expectations, Weighing on GBP/USD Pair
On the data front, the surprising drop in the UK Consumer Price Index (CPI) has brought inflation to its lowest level since April 2021, falling below the Bank of England's (BoE) 2% target. This development has raised expectations for a 25 basis point (bps) interest rate cut at the BoE's meeting on November 7. Moreover, money markets are considering the possibility of another rate cut in December, which could further weaken the British Pound (GBP).
As a result, any short-term increase in the GBP/USD pair could be seen as a selling opportunity. However, bearish traders may choose to wait for the pair to fall below the important 1.3000 psychological level before making new bets. If the pair does drop below this mark, traders may position themselves for a further decline toward the support level at the 100-day Simple Moving Average (SMA), currently around the 1.2960 region.
US Dollar Strengthens Amid Fed's Stance and UK Inflation Data, Pressuring GBP/USD Pair
On the US front, the US dollar is gaining strength as expectations of modest rate cuts by the Federal Reserve (Fed) support higher US Treasury yields. Investors have dismissed the chance of a significant interest rate cut by the Fed in November, as recent economic data shows that the US economy remains resilient.
Fed officials, including Atlanta Fed President Raphael Bostic, have expressed that there is no rush to cut rates, with forecasts suggesting rates may eventually fall to around 3-3.5% by the end of next year. This stability in US monetary policy contrasts sharply with the weak inflation data from the UK, which has raised expectations for more aggressive easing measures from the Bank of England.
As a result, the stronger US Dollar and shifting monetary policies create a challenging environment for the GBP/USD pair. The combination of a resilient US economy and potential rate cuts from the Bank of England may lead to further declines in the British Pound's value against the dollar.
GBP/USD – Technical Analysis
GBP/USD is currently trading at $1.30431, with minor fluctuations indicating consolidation around this level. The pair faces selling pressure after peaking at $1.30816, failing to break a key resistance zone.
The GBP/USD has retraced from its resistance zone of $1.30821, and the price is currently hovering near the pivot point of $1.30322. The pattern on the chart indicates a bearish bias, especially after the pair failed to break above the resistance level at $1.30821.
Technical indicators present mixed signals. The Relative Strength Index (RSI) is currently at 55.93, indicating that the market is neither overbought nor oversold, which suggests that there’s still room for downside movement. The 50-period Exponential Moving Average (EMA) at $1.30322 acts as a dynamic support level, but the price is trending below it, hinting at potential bearish pressure.
Key levels to watch include the immediate support at $1.30148. A break below this level could accelerate selling towards the next support levels at $1.29953 and $1.29733. Conversely, if prices rebound from $1.30148, immediate resistance stands at $1.30816, with a key upside target of $1.31301.
Conclusion: GBP/USD’s outlook remains bearish below $1.30559. Traders may consider entering short positions below this level, targeting $1.30148 with a stop-loss at $1.30821. The bearish sentiment is reinforced by the pair trading below the pivot point and immediate resistance zone.
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EUR/USD Price Analysis – Oct 21, 2024
Daily Price Outlook
During the European trading session, the EUR/USD pair is struggling to maintain its gains from the previous week and turned bearish on Monday, trading around the 1.0857 level and reaching an intra-day low of 1.0846. However, this downward trend is likely to continue, driven by the expectation that the US dollar will strengthen as modest rate cuts by the Federal Reserve (Fed) support higher US Treasury yields.
Moreover, the declines in the pair will likely accelerate as investors anticipate further interest rate easing by the European Central Bank (ECB). Market participants will closely monitor the upcoming two-day speech by ECB President Christine Lagarde, starting Tuesday.
Bearish Outlook for EUR/USD Amid ECB Rate Cut Expectations
As we mentioned above, the EUR/USD pair could face further selling pressure as investors think the European Central Bank (ECB) will cut interest rates again. The Eurozone’s economic growth is slowing, and inflation is below the ECB’s target of 2%. Many believe the bank will lower borrowing rates in December. Meanwhile, Estonian central bank Governor Madis Müller mentioned that weak economic growth could lead to lower inflation. The ECB’s recent survey also lowered next year's inflation forecast to 1.9%, down from 2%.
Moreover, Gediminas Šimkus, a member of the ECB Governing Council, shared a cautious view on interest rates. He said that if disinflation continues, rates might go below what’s considered normal. Investors will be paying close attention to ECB President Christine Lagarde’s two-day speech starting Tuesday. After the recent 25 basis point rate cut, Lagarde didn’t provide a clear plan for future rates, saying that decisions will depend on new economic data.
Therefore, the expectation of further interest rate cuts by the ECB, combined with slowing economic growth and lower inflation forecasts, is likely to weaken the EUR/USD pair.
US Dollar Strengthens Amid Rate Cut Expectations and Upcoming Elections
On the US front, the US dollar maintained its upward trend and recently reached an 11-week high near 104.00. Traders are feeling positive about the dollar's future, believing the Federal Reserve (Fed) will slowly lower interest rates. Data from the CME FedWatch tool shows that the market expects the Fed to cut rates by a total of 50 basis points this year, with 25 basis points likely in both November and December.
Meanwhile, the expectations for a slower rate-cutting approach from the Fed have grown after strong US economic data for September. Investors will be looking closely at the preliminary S&P Global Purchasing Managers’ Index (PMI) data for October, set to be released on Thursday.
Moreover, the US dollar could see some ups and downs as the presidential elections get closer. Recent polls indicate that Democratic candidate and current Vice President Kamala Harris is ahead of Republican nominee and former President Donald Trump.
EUR/USD – Technical Analysis
EUR/USD is currently trading around $1.0861, reflecting a slight downward trend of 0.04%.
On the 2-hour chart, EUR/USD faces a key resistance level around $1.0869, corresponding to the 50-period Exponential Moving Average (EMA), which continues to act as a barrier for upward momentum. Recent trading sessions indicate a slight recovery attempt in EUR/USD, bouncing off from its immediate support at $1.0835. However, price action remains constrained below a descending trendline, suggesting ongoing selling pressure.
The Relative Strength Index (RSI) at 45.13 reflects neutral conditions, with slight bearish momentum. This signals potential room for further decline if selling pressure persists. Any failure to clear the immediate resistance could lead to renewed downward movement.
If EUR/USD breaks below $1.0868, it would face the next support level at $1.0813, followed by a critical base at $1.0794. On the upside, clearing the immediate resistance would open the door to $1.0894, followed by another key hurdle at $1.0916.
Conclusion:
If EUR/USD fails to surpass the $1.0869 resistance level, traders may consider selling below $1.0868, targeting $1.0813 as the next key support. However, a stop-loss should be placed above $1.0894 to manage risk.
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EUR/USD Price Analysis – Oct 18, 2024
Daily Price Outlook
The EUR/USD currency pair managed to halt its downward trend and gained positive traction on Friday, recovering from a four-day losing streak to trade around the 1.0846 level, even reaching an intra-day high of 1.0849. The shared currency is working to maintain its footing as the recent rally in the US Dollar (USD) seems to have paused. The US Dollar Index (DXY), which measures the Greenback's value against six major currencies, is struggling to push above the immediate resistance level of 103.90.
However, the overall outlook for the EUR/USD remains bearish, with expectations of further interest rate cuts from the European Central Bank (ECB) likely to put additional selling pressure on the Euro (EUR). As market participants monitor these developments, the currency pair may continue to experience volatility in the days ahead.
US Dollar Weakens Amid Positive Economic Data and Political Uncertainty, Providing Opportunity for EUR/USD Recovery
On the US front, the broad-based US dollar is losing its traction, but its outlook remains strong after Thursday’s positive economic data showed the country’s resilience. Retail sales, a key indicator of consumer spending, increased by 0.4% in September, surpassing expectations. Meanwhile, initial jobless claims for the week ending October 11 fell to 241,000, lower than the anticipated 260,000, suggesting a stable job market.
In recent weeks, the US dollar has outperformed its major peers as traders have scaled back expectations for a larger-than-usual interest rate cut of 50 basis points by the Federal Reserve (Fed) in November. Strong economic data from September has eased fears of a slowdown, leading traders to anticipate more gradual rate cuts instead. The CME FedWatch tool indicates that traders are now pricing in two rate cuts of 25 basis points in November and December, potentially lowering interest rates to between 4.25% and 4.50% by the end of the year.
Looking ahead, investors are paying close attention to market expectations surrounding the upcoming US presidential elections. Currently, there is a tight race between Donald Trump and Kamala Harris, with Harris leading by 2.4 percentage points, according to FiveThirtyEight’s daily election poll tracker. This political landscape may influence market sentiment in the coming months.
EUR/USD Pair Faces Bearish Outlook Amid ECB Rate Cuts and Political Concerns
On the EUR front, the EUR/USD pair has seen a mild recovery on Friday after hitting a fresh 10-week low near 1.0800 on Thursday. Despite this slight rebound, the overall outlook for the currency pair remains bearish. The Euro (EUR) could face additional selling pressure as expectations grow for further interest rate cuts from the European Central Bank (ECB). Recently, the ECB cut its Deposit Facility Rate by 25 basis points to 3.25%, marking the second consecutive rate reduction and the third this year.
The ECB's recent actions reflect growing concerns about reviving economic growth, with officials expressing confidence that inflation is under control. In a press conference following the rate decision, ECB President Christine Lagarde did not provide clear guidance on potential interest rate moves in December. However, market participants are anticipating another 25-basis point cut at the last meeting of the year, which could further impact the Euro’s value.
EUR/USD – Technical Analysis
The EUR/USD pair is trading slightly higher today, up 0.11% at $1.08375. The market is hovering below the key pivot point at $1.0848, which serves as a critical level for short-term direction. Immediate resistance is seen at $1.0868, followed by higher resistance levels at $1.0892 and $1.0916. A break above these levels could signal further bullish momentum for the euro against the dollar, with buyers targeting the next resistance zones.
On the downside, immediate support is at $1.0811, with further support levels at $1.0794 and $1.0779. A sustained move below these support areas could push EUR/USD into a deeper correction, where a more bearish outlook would prevail.
The 50-day Exponential Moving Average (EMA) at $1.0877 is acting as a resistance level, keeping the euro in check. Meanwhile, the Relative Strength Index (RSI) is currently at 39, indicating mildly oversold conditions but not yet signaling a significant reversal. Given this context, traders are likely watching for a potential breakdown below the pivot point to enter short positions.
A selling opportunity arises below $1.08488, with a take-profit target set at $1.07941. A stop loss should be placed at $1.08766 to manage risk, as a break above the 50-day EMA would invalidate the bearish setup.
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GOLD Price Analysis – Oct 18, 2024
GOLD Price Analysis – Oct 18, 2024
Daily Price Outlook
Gold prices (XAU/USD) soared to a new record high near the 2,710 level on Friday, continuing an impressive bullish bias. This surge reflects growing expectations that major central banks might cut interest rates soon, a move that often boosts demand for gold, which doesn’t pay interest.
At the same time, rising tensions in the Middle East and the uncertainty surrounding the upcoming US Presidential election are making gold more attractive as a safe haven for investors. With all these factors at play, it’s no surprise that many are turning to gold in these turbulent times.
In addition to this, the recent decline of the US Dollar from its highest levels since early August has been a boost for gold prices. On top of that, the positive US macroeconomic data released on Thursday has reinforced the idea that the Federal Reserve might opt for modest interest rate cuts. This situation could help stabilize the dollar's downward trend while also making gold a more appealing option for investors looking for a safe place to park their money.
Fed Rate Cuts and Positive Economic Data Drive Gold Demand Amid Market Uncertainty
On the US front, the Federal Reserve (Fed) is expected to lower interest rates again after a significant cut in September. At the same time, weak inflation data from the UK has increased expectations that the Bank of England may cut rates more aggressively. Meanwhile, the European Central Bank (ECB) recently lowered rates for the third time this year, marking the first back-to-back cuts in 13 years due to worsening economic conditions. These moves by central banks, along with a slight drop in the US Dollar, have supported rising gold prices, as lower interest rates tend to make gold more attractive.
In addition to central bank actions, positive US economic data is also influencing the market. The US Census Bureau reported that retail sales rose by 0.4% in September, beating expectations of 0.3%, and initial jobless claims dropped to 241,000, better than the forecasted 260,000. Furthermore, the Philadelphia Federal Reserve's business conditions index increased significantly in October, reaching 10.3.
As traders focus on upcoming US housing data and a speech by Fed Governor Christopher Waller, the combination of expected interest rate cuts and positive economic news is likely to keep boosting demand for gold, as investors turn to it for stability during uncertain times.
Geopolitical Uncertainty Fuels Gold's Rise Amid Middle East Tensions and US Election Concerns
On the geopolitical front, escalating tensions in the Middle East and uncertainty surrounding the upcoming US Presidential election are also driving up gold prices. The tight race between Donald Trump and Kamala Harris has added to the unpredictability, prompting investors to seek the safety of gold. As a result, this increased demand has pushed gold prices to a new all-time high.
The situation in the Middle East intensified after the Israeli military confirmed the death of Hamas leader Yahya Sinwar, following a long pursuit. Additionally, Hezbollah, backed by Iran, has escalated its conflict with Israel, further heightening regional instability. Hence, these geopolitical tensions have had a stronger impact on market sentiment, with investors focusing more on safe-haven assets like gold.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) continues its upward momentum, rising by 0.39% to trade at $2,704.52. Currently, the pivot point stands at $2,720, a key level to watch as it could determine whether gold pushes further into resistance zones. Immediate resistance is at $2,714.04, followed by stronger barriers at $2,723.35 and $2,733.55. A successful breach of these levels would set the stage for a continuation of the bullish trend.
The 50-day EMA, currently at $2,671, provides solid support, underpinning the broader uptrend. On the downside, immediate support is found at $2,684.56, with further backing at $2,673.03 and $2,660.17. Should gold prices fall below these levels, a deeper retracement could materialize.
The Relative Strength Index (RSI) stands at 66, suggesting the metal is nearing overbought conditions, but still has some room to rally before facing significant selling pressure. Traders eyeing this level may see opportunities to buy on dips, particularly if prices remain above the $2,696 mark. A break below $2,685, however, could trigger a more bearish sentiment.
Conclusion:
The technical outlook suggests buying above $2,696, targeting the $2,720 pivot with a stop loss set at $2,685. Gold remains bullish, supported by strong technical indicators, but traders should be mindful of resistance levels and overbought signals from the RSI.
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S&P500 (SPX) Price Analysis – Oct 18, 2024
S&P500 (SPX) Price Analysis – Oct 18, 2024
Daily Price Outlook
The S&P 500 index is trading robustly around the 5,850 level, demonstrating a bullish trend driven by optimism in the market. Investors are reacting positively to expectations that major central banks will implement interest rate cuts. Lower interest rates generally enhance the attractiveness of equities as an investment choice, as they reduce borrowing costs and boost corporate profitability.
Alongside this, positive economic data from the U.S. has bolstered confidence. Strong retail sales and resilient job market indicators have painted a picture of economic strength, encouraging traders to buy into the market. The combination of low interest rates and solid economic indicators is encouraging investors to allocate more capital to the stock market, further driving the index upward.
Central Banks' Rate Cuts and Positive Economic Data Impact on the S&P 500
Central banks globally, including the Federal Reserve and the European Central Bank, are expected to implement interest rate cuts in response to weakening economic indicators. The prospect of lower rates typically supports equity markets as borrowing costs decline, making it cheaper for companies to invest and expand.
In the meantime, the recent economic data, such as better-than-expected retail sales and low initial jobless claims in the U.S., indicate a strong consumer base, which is crucial for economic expansion. On the data front, the US Census Bureau showed that retail sales increased by 0.4% in September, surpassing expectations of 0.3%. Furthermore, initial jobless claims fell to 241,000, lower than the anticipated 260,000.
Meanwhile, the Philadelphia Federal Reserve reported an increase in the business conditions index from 1.7 to 10.3 in October, beating consensus estimates. Traders are now focusing on upcoming US housing market data and Fed Governor Christopher Waller's speech for short-term trading opportunities.
Consequently, these factors are reinforcing the positive outlook for the S&P 500, making it an appealing option for investors seeking stability in their portfolios.
Geopolitical Uncertainty and Its Impact on the S&P 500 Index
Despite the positive trends, geopolitical uncertainties loom, impacting market sentiment around the S&P 500 index. Ongoing tensions in the Middle East and uncertainty surrounding the upcoming U.S. Presidential election have made investors wary. These geopolitical issues can lead to market volatility and may prompt investors to seek safe-haven assets, potentially impacting stock prices negatively.
However, the tight race between Donald Trump and Kamala Harris adds to the unpredictability, influencing traders' strategies. As geopolitical developments unfold, the S&P 500 could experience fluctuations, highlighting the need for investors to stay vigilant amid these uncertainties.
S&P 500 - Technical Analysis
The S&P 500 (SPX) is trading marginally lower at $5,841.48, marking a 0.02% decline in today's session. Despite the dip, the index remains in a consolidation phase, hovering around the key pivot point of $5,807.87. Immediate resistance is set at $5,878.04, with further hurdles at $5,912.64 and $5,939.55. A break above these levels could spark a bullish rally toward the $5,900 region, where traders may look to take profits.
On the downside, the immediate support level sits at $5,772.26, with additional support at $5,727.47 and $5,689.71. Should the index dip below these support zones, a steeper correction could be on the horizon, pushing prices toward the $5,600 range.
The 50-day Exponential Moving Average (EMA) is positioned at $5,775.78, offering solid support that aligns closely with the pivot point, reinforcing the current price consolidation. Meanwhile, the Relative Strength Index (RSI) is at 58, indicating neutral market conditions, with neither overbought nor oversold signals dominating. This suggests potential buying opportunities, particularly if prices hold above $5,828.
A technical breakout above $5,828 is expected to trigger a bullish trend, targeting $5,905 with a stop loss placed at $5,778. However, if prices slip below the immediate support, the outlook could turn bearish.
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AUD/USD Price Analysis – Oct 17, 2024
Daily Price Outlook
The AUD/USD currency pair reversed its three-day bearish streak, climbing to an intra-day high of 0.6711. This upward movement followed the release of a robust Australian employment report on Thursday, which revealed a seasonally adjusted Employment Change of 64.1K in September. This figure significantly exceeded market expectations of a 25.0K increase and brought total employment in Australia to a record 14.52 million, following a revised rise of 42.6K in the previous month.
Meanwhile, the US dollar gained strength from solid labor and inflation data, which has tempered expectations for aggressive easing by the Federal Reserve (Fed). Consequently, the bullish outlook for the USD may limit further gains for the AUD/USD pair.
Australian Dollar Strengthens on Employment Report Amid Weak Consumer Confidence
On the AUD front, the Australian Dollar (AUD) ended its three-day losing streak against the US Dollar (USD) after a strong employment report was released. In September, Australia saw a surge of 64.1K in seasonally adjusted Employment Change, bringing total employment to a record 14.52 million. This was well above the market expectation of a 25.0K increase and followed a revised gain of 42.6K in the previous month. The unemployment rate held steady at 4.1%, which was better than the anticipated 4.2%.
Despite these positive employment figures, consumer confidence in Australia showed little improvement. The ANZ-Roy Morgan Consumer Confidence index remained unchanged at 83.4 this week, continuing a trend of being below 85.0 for 89 consecutive weeks. Although this week’s reading was slightly higher than the 2024 weekly average of 82.1, overall consumer sentiment remains weak.
Looking ahead, the Commonwealth Bank of Australia predicts a 25 basis point rate cut by the Reserve Bank of Australia (RBA) by the end of 2024. This expectation hinges on a stronger disinflationary trend than the RBA currently anticipates. Meanwhile, in China, the Consumer Price Index (CPI) remained unchanged at 0% in September, and the Producer Price Index (PPI) dropped by 2.8% year-on-year, both indicating economic pressures that could influence Australia's economic outlook.
Impact of US Economic Strength on AUD/USD Dynamics
On the US front, the US dollar gained strength from solid labor and inflation data, reducing expectations for aggressive interest rate cuts by the Federal Reserve (Fed). According to the CME FedWatch Tool, there is now a 92.1% chance of a 25-basis-point rate cut in November, but markets do not expect a larger 50-basis-point reduction. This sentiment reflects a cautious approach to monetary policy.
On Tuesday, Raphael Bostic, the President of the Federal Reserve Bank of Atlanta, shared his view that he anticipates only one more interest rate cut of 25 basis points this year. He mentioned that during last month’s central bank meeting, the median forecast indicated a potential for 50 basis points of cuts in addition to the 50 basis points already implemented in September. Bostic's projection aligns with a more measured approach to adjusting rates.
In addition to this, Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, reassured markets by emphasizing the Fed's data-driven strategy. He noted the strength of the US economy and the ongoing easing of inflationary pressures, despite a recent slight increase in the overall unemployment rate. This perspective supports a stable outlook for the dollar as the Fed evaluates future policy moves.
Therefore, the strengthening USD, driven by solid labor data and tempered rate cut expectations, may limit gains for the AUD/USD pair. As the Fed adopts a cautious monetary stance, the Australian Dollar could face downward pressure against the stronger US Dollar.
AUD/USD – Technical Analysis
The AUD/USD pair is trading at $0.66843, up 0.35% for the day, as it hovers below the key pivot point of $0.6704. The immediate resistance at $0.6732 is crucial; a break above this level could lead to further gains toward the next resistance levels of $0.6758 and $0.6781. However, with the price currently below the 50-day Exponential Moving Average (EMA) at $0.6711, there is potential for bearish momentum to reassert itself.
On the downside, immediate support lies at $0.6662, with further support levels at $0.6639 and $0.6617. The RSI is currently at 45, indicating a neutral market sentiment but leaning toward bearish territory as it remains below the midpoint. This suggests that further downward pressure could build if the pair fails to break above the pivot point.
Traders should be cautious of the 50-day EMA as it represents a critical barrier for any bullish attempts. A move below the immediate support at $0.6662 could trigger selling pressure, potentially driving the price toward $0.6639. The pivot point at $0.6704 will be a key indicator for future direction, with selling opportunities emerging below this level.
Given the current technical setup, a short position could be considered if the price remains below $0.6704. Traders could target $0.66603 for profit, while placing a stop-loss at $0.67256 to manage risk in case of a bullish breakout.
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- GOLD Price Analysis – Oct 17, 2024
GOLD Price Analysis – Oct 17, 2024
Daily Price Outlook
Gold prices (XAU/USD) maintained a bullish trend, climbing for the third consecutive day and reaching a fresh all-time high of 2,685 ahead of the European session on Thursday. This bullish momentum is supported by weak inflation data from Europe and the UK, which have heightened expectations for more aggressive monetary easing by both the European Central Bank (ECB) and the Bank of England (BoE). Apart from this, the ongoing speculation of a 25 basis point (bps) rate cut by the Federal Reserve in November has bolstered demand for the non-yielding yellow metal.
Moreover, the escalating conflicts in the Middle East have heightened the appeal of gold as a safe haven. Nevertheless, traders have moderated their expectations for more aggressive easing by the Fed, which has led to higher US Treasury bond yields. This keeps the US Dollar (USD) near its highest level since early August, limiting the upside for gold.
Weak Inflation and Central Bank Actions Heighten Gold Demand
As we mentioned, weak inflation data from Europe and the UK has increased expectations for more aggressive policy easing by the European Central Bank (ECB) and the Bank of England (BoE). This aligns with predictions of a 25 basis point (bps) rate cut by the Federal Reserve (Fed) in November, supporting demand for gold, a non-yielding asset.
Notably, the ECB is expected to announce its third interest rate cut of the year this Thursday, while falling UK inflation strengthens the case for a BoE rate cut next month. Meanwhile, the CME Group's FedWatch Tool shows over a 90% probability of a 25 bps rate cut from the Fed, which has lowered US bond yields to a one-week low.
As a result, the US Dollar has continued its upward trend, reaching its highest level since early August, but this hasn’t deterred gold buyers. Moving ahead, traders will watch key US economic data, including Retail Sales, Weekly Initial Jobless Claims, and the Philly Fed Manufacturing Index. In the meantime, the ECB’s monetary policy decision may also increase market volatility and provide opportunities for traders, especially in the safe-haven gold market.
Geopolitical Tensions and Central Bank Purchases Drive Demand for Gold
Apart from this, recent comments from officials at the London Bullion Market Association's annual conference indicate that central banks are continuing to purchase gold. They are doing this to diversify their reserves for both financial stability and strategic reasons. This trend highlights gold's ongoing importance as a safe-haven asset amid global uncertainties.
In southern Lebanon, the United Nations (UN) reported that Israeli forces have fired at its peacekeeping position, forcibly entered a base, and halted critical logistical movements. This situation has resulted in injuries to more than a dozen UN troops. The escalating tensions in this region raise concerns about stability and security in the area.
Furthermore, a source familiar with the situation revealed that Israel has prepared a plan to respond to Iran’s attack on October 1. This development heightens the risk of further geopolitical tensions and could lead to a full-scale war in the Middle East.
In another part of the world, China’s housing minister announced plans to add 1 million village urbanization projects and implement monetization measures for these initiatives, reflecting the government's commitment to urban development.
Therefore, the ongoing geopolitical tensions, particularly in the Middle East, coupled with central banks' increased gold purchases for diversification, are likely to boost demand for gold as a safe-haven asset, driving prices higher amid market uncertainties and global instability.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is showing bullish momentum, trading at $2,682.10, up 0.36% on the day. The 4-hour chart reveals that the price is approaching a critical resistance at $2,674.26, which, if broken, could trigger further gains toward the next resistance levels at $2,685.25 and $2,694.23. However, a failure to break this level may see gold retreat to immediate support at $2,655.79, with further support lying at $2,646.42 and $2,637.84.
From a technical perspective, the 50-day Exponential Moving Average (EMA) at $2,659.66 is providing solid support, suggesting a positive outlook for gold as long as the price remains above this level. The Relative Strength Index (RSI) is currently at 63, indicating a bullish trend without reaching overbought territory, leaving room for further upward movement.
The pivot point at $2,693.00 serves as a key indicator, with potential gains if prices surpass this level. Traders may look to enter positions above $2,674, aiming for a take-profit target around $2,693. However, caution is advised if the price falls below $2,665, where a stop-loss could help mitigate risks in a downward scenario.
Overall, gold remains bullish as long as the price holds above the $2,674 mark, supported by strong technical indicators. A break above immediate resistance could see gold testing new highs, while a drop below key support may signal a short-term pullback.
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