XAUUSD Gold price is moving in the Descending channel and the market has reached the lower high area of the channel
XAUUSD – Gold price rises as investors await US data and Fedspeak for catalyst.
The Gold prices are moving flat after the Middle east tensions are increased by Israel, rejecting the hamas deal of negotiations. China so far bought 60K Troy Ounces of Gold in the consecutive 18 Months.
Gold’s price (XAU/USD) is exhibiting a positive trend this Thursday, buoyed by the absence of significant economic data releases midweek. However, several factors, including a strengthening US Dollar (USD) and hawkish statements from the US Federal Reserve (Fed), may hinder the precious metal’s upward momentum in the short term.
Conversely, the recent surge in global gold demand can be attributed to robust over-the-counter market investments, consistent central bank acquisitions, and heightened purchasing activity from Asian markets, particularly China and India, as highlighted in the latest report from the World Gold Council (WGC). Additionally, amidst a risk-averse climate and ongoing geopolitical tensions in the Middle East, traditional safe-haven assets like gold may experience increased demand.
Market participants are eagerly awaiting fresh catalysts. Notably, Thursday brings the release of the US weekly Initial Jobless Claims data, alongside anticipated remarks from San Francisco Fed President Mary Daly, known for her dovish stance within the central bank. Such dovish commentary from Fed officials could help temper any potential downturn in the price of gold for the time being.
In related news:
– Boston Fed President Susan Collins has suggested that it will take longer than previously anticipated to bring inflation down to the Fed’s 2% target, signaling a potential extended period of elevated inflation.
– New York Fed President John Williams and Minneapolis Fed President Neel Kashkari have expressed preferences for maintaining current interest rate levels for an extended period.
– Market sentiment regarding a quarter-percentage-point rate cut from the Fed in September has shifted to a 55% likelihood, down from 85% before the recent US employment report, according to CME’s FedWatch Tool.
– The initial reading of the University of Michigan Consumer Sentiment Index for May is expected to decrease from 77.2 in April to 76.0.
– Hamas has reportedly agreed to a draft ceasefire agreement that falls short of meeting Israel’s demands, according to Israeli Prime Minister Benjamin Netanyahu.
– The People’s Bank of China (PBoC) has increased its gold reserves by 60,000 troy ounces in April, marking the 18th consecutive month of purchases.
EURUSD – nears 1.0750 amid Fed’s hawkish stance
The Euro zone retail sales data for the month of March came at 0.80% versus 0.30% printed in the previous month. YoY Retail sales came at 0.70% in March month versus 0.50% printed in the previous month. ECB Chief economist Philip Lane said inflation will move towards to 2% target by this year end.
EURUSD is moving in the Descending channel and the market has fallen from the lower high area of the channel
The US Dollar (USD) is gaining ground amid expectations that the Federal Reserve (Fed) will maintain its stance on higher interest rates. Additionally, the rise in US Treasury yields is providing further support to the US Dollar (USD), consequently exerting downward pressure on the EUR/USD pair.
The recent hawkish remarks from Federal Reserve officials have contributed to the strength of the US Dollar. Federal Reserve Bank of Boston President Susan Collins emphasized the need for a period of moderation in the US economy to achieve the central bank’s 2% inflation target. Similarly, Minneapolis Fed President Neel Kashkari indicated that the consensus is for interest rates to remain unchanged for a considerable duration, with minimal likelihood of rate hikes.
On the European front, there has been a notable increase in monthly Retail Sales, which surged by 0.8% in March, rebounding from the previously revised 0.3% decline in February. This uptick marks the most significant rise in retail activity since September 2022, indicating resilience in the European consumer sector. Additionally, Retail Sales (YoY) recorded a growth of 0.7% compared to the revised 0.5% drop in February, signaling the first positive growth in retail since September 2022 and hinting at a favorable shift in consumer spending patterns.
However, despite these positive indicators, there are expectations that the European Central Bank (ECB) will initiate a reduction in borrowing costs starting in June. Chief Economist Philip Lane of the ECB has remarked that recent data reinforce his belief that inflation is gradually moving towards the 2% target, suggesting a potential shift in the ECB’s monetary policy stance.
USDJPY – Kanda of Japan stays silent on FX intervention.
The Japan Top Currency Diplomat Masato Kanda said FX Intervention happen any time in the market, we did not speculate it and FX prices moving according to the Fundamentals. Denied FX Intervention in this month after asked by reporters. We are closely monitor the FX moves in the Market.
USDJPY has broken the Descending channel in upside
Masato Kanda, Japan’s leading currency diplomat responsible for directing the Bank of Japan (BoJ) to intervene in currency markets when deemed necessary, stated on Thursday that he remains prepared to take appropriate action if required. However, he refrained from providing any commentary specifically on the topic of foreign exchange (FX) intervention.
In his statements, Kanda made several key remarks:
– He declined to comment on any potential interventions in the FX market.
– Kanda emphasized his readiness to engage in currency intervention whenever deemed appropriate.
– He avoided discussing any speculation surrounding potential interventions.
– Kanda denied engaging in discussions related to intervention measures.
Overall, Kanda’s comments indicate a cautious approach to discussing potential FX interventions while affirming his readiness to act decisively if the need arises.
USDCHF – bullish above 0.9050; attention on Fed’s Daly.
The Swiss Franc is appreciated against counter pairs after the Middle East tensions are fired up. US Intelligence minister William Burns visited to Israel today to solve the issues between Israel and Hamas. Until cease fire of the War the Swiss Franc will be moving in the Upside against counter pairs.
USDCHF is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
This uptick is supported by a modest rebound in the Greenback, which has been bolstered by hawkish remarks from officials at the US Federal Reserve (Fed). Investors are particularly focused on the upcoming speech by Fed’s Daly later in the day, given the absence of major economic data releases from both the US and Switzerland.
Throughout this week, several Fed policymakers have adopted a hawkish stance, contributing to the strength of the US Dollar (USD). On Wednesday, Boston Fed President Susan Collins remarked that it will take longer than previously anticipated to bring inflation down to the Fed’s 2% target, implying that higher inflation rates may persist for an extended period. Similarly, New York Fed President John Williams and Minneapolis Fed President Neel Kashkari have expressed their preference for maintaining current interest rate levels for a prolonged period.
Earlier in the week, Fed’s Williams emphasized that monetary policy is currently well-positioned, suggesting that further data collection is necessary before any adjustments. On Tuesday, Fed’s Kashkari indicated his belief that interest rates may need to remain unchanged for an extended period and did not rule out the possibility of a hike if inflation hovers around 3%. These statements have collectively boosted the Greenback, providing tailwinds for the USD/CHF pair.
On the Swiss front, recent data released by the State Secretariat for Economic Affairs indicates a decline in the nation’s unemployment rate to 2.3% month-on-month in April, marking its lowest level in four months.
Additionally, market participants are closely monitoring developments in geopolitical tensions, particularly in the Middle East. The US has expressed optimism about bridging the gap between Israel and Hamas in discussions surrounding a ceasefire in Gaza. CIA Director William Burns visited Israel on Wednesday, holding talks with Israeli Prime Minister Benjamin Netanyahu. The persistence of geopolitical uncertainties and risks could potentially elevate the appeal of the Swiss Franc (CHF) as a safe-haven currency.
USDCAD – bounces back close to 1.3750 on hawkish Fed remarks.
The Canadian Ivey PMI data came at 63.0 in the April month versus 57.5 in the March month makes ninth consecutive higher reading in the Business sector. The Private sector improvement makes Doubts for BoC to rate cut sooner than later.
USDCAD is moving in the Descending channel and the market has reached the lower high area of the channel
Investors’ anticipation of the Federal Reserve (Fed) maintaining higher interest rates for an extended period has propelled US Treasury yields upwards. This dynamic has lent support to the US Dollar (USD), consequently bolstering the USD/CAD pair.
Moreover, hawkish comments from Fed officials have reinforced the strength of the Greenback. Federal Reserve Bank of Boston President Susan Collins emphasized on Wednesday the necessity of a period of moderation in the US economy to achieve the central bank’s 2% inflation target. Collins highlighted the need for demand to ease to reach this objective and expressed confidence in the alignment of Fed policy with the prevailing economic outlook.
On Tuesday, Minneapolis Fed President Neel Kashkari indicated that the prevailing expectation is for interest rates to remain unchanged for a considerable period. While the likelihood of rate hikes is minimal, it has not been entirely ruled out.
Meanwhile, the probability of a Bank of Canada (BoC) interest rate cut has diminished following the release of better-than-expected Ivey Purchasing Managers Index (PMI) figures. Canada’s seasonally-adjusted Ivey PMI for April surged to 63.0 from 57.5, surpassing the forecast of 58.1. This marked the ninth consecutive monthly increase, reaching its highest level in two years and signaling robust sentiment within the private sector. Consequently, discussions regarding a potential rate cut by the Bank of Canada have moderated, reflecting the positive momentum in economic indicators.
Thursday’s data calendar does not feature any releases pertaining to Canada, leaving the Canadian Dollar (CAD) vulnerable to broader market movements. However, Bank of Canada (BoC) Governor Tiff Macklem is scheduled to deliver the BoC’s Financial System Review in Ottawa. This report provides a comprehensive assessment of financial system developments and analyzes policy directions within the financial sector. Macklem’s commentary may offer insights into the BoC’s assessment of economic conditions and potential policy implications.
USD INDEX – USD adds more gains on subdued Wednesday.
The FED members hawkish speech in the recent days made US Dollar moving in the strong uptrend against counter pairs. The FED Powell said inflation will be eased slowly and employment numbers are more stronger than expected. Consumer spending is more in the US economy so rate cuts are not appropriate for this time.
USD INDEX is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
This upward movement is partly attributed to cautious statements made by Federal Reserve (Fed) members, indicating a commitment to maintaining elevated interest rates until inflation is sufficiently mitigated. Notably, the US economic calendar remains relatively quiet until next week when April’s Consumer Price Index (CPI) data is scheduled for release.
The US economy faces a degree of uncertainty, with Fed Chair Jerome Powell acknowledging persistent high inflation levels, despite significant moderation over the past year. The Fed’s stance has shifted towards a more hawkish outlook, as evidenced by the recent weak Nonfarm Payrolls report failing to convince the central bank that its objectives have been met. However, ongoing soft data could potentially prompt future rate cuts.
In market movements:
– DXY retains its position amidst growing bets on a hawkish Fed stance and rising US Treasury yields.
– Internal discussions within the Fed suggest deliberation over the neutral rate level, with indications of potential adjustments to interest rates in response to factors such as a resilient housing market and escalating inflation.
– Anticipated shifts in economic dynamics suggest a potential upward adjustment of the median neutral rate in the future.
– Market expectations regarding rate cuts reflect a 10% probability of a cut at June’s meeting, with a slight reduction in probabilities for subsequent months. Despite this, a rate cut in November remains fully priced in.
– US Treasury bond yields demonstrate varying trends, with the 2-year yield slightly decreasing to 4.82%, while the yields for the 5-year and 10-year bonds, at 4.48% and 4.47% respectively, indicate a marginal upward trend overall.
GBPUSD – BoE Decision Preview: UK inflation cooling, but interest rates likely unchanged
The Bank of England is expected to keep the rates at 5.25% today and The inflation in the March month came at 3.2% and Core CPI stands at 4.2%. So Cooling inflation makes BoE kept the rates at steady manner today.
GBPUSD is moving in the Descending channel and the market has fallen from the lower high area of the channel
The Bank of England (BoE) is expected to maintain its policy rate at the current level for the sixth consecutive meeting as it faces persistent disinflationary pressures in the UK and a shift in investors’ expectations towards earlier interest rate reductions than previously anticipated.
Anticipating a Dovish Hold
The BoE is widely expected to announce its decision to keep the benchmark interest rate steady at 5.25% following its policy meeting scheduled for Thursday at 11:00 GMT. Alongside the rate announcement, the bank will release the Monetary Policy Minutes and the Monetary Policy Report, followed by a press conference led by Governor Andrew Bailey.
Initially trailing behind the Federal Reserve (Fed) and the European Central Bank (ECB) in the timeline for easing measures, the BoE now appears inclined to initiate interest rate cuts sooner than initially expected due to mounting disinflationary pressures.
Investors are increasingly pricing in the possibility of a reduction in the BoE’s interest rates, with expectations for a potential cut in August or September followed by another decrease in December, with a probability of around 70%.
March Disinflation Trends
In March, disinflationary trends in the UK accelerated, with the headline Consumer Price Index (CPI) decreasing to 3.2% from 3.4%, and the core CPI, excluding food and energy costs, declining to 4.2% from 4.5%.
The recent inflation data challenges the BoE’s narrative of “higher for longer,” and the upcoming meeting is expected to see the central bank maintaining rates while possibly extending its cautious approach.
Governor Bailey’s Remarks
Governor Bailey recently indicated at an Institute of International Finance event that upcoming inflation figures are likely to show a significant decrease, hinting at some loosening in the labor market.
The latest Decision Maker Panel survey conducted by the BoE showed decreases in one-year ahead CPI inflation expectations to 3.2% and three-year ahead CPI inflation expectations to 2.7% over the three months leading to March. Expected year-ahead wage growth also declined to 4.9%.
Market Expectations
At the BoE’s March meeting, Governor Bailey acknowledged financial markets’ anticipation of interest rate reductions, expressing optimism about inflation’s trajectory and suggesting the possibility of two or three rate cuts this year.
Ahead of the BoE meeting, analysts at TD Securities and Danske Bank expect the BoE to maintain rates unchanged in May, with a potential softening in communication signaling the onset of a cutting cycle, possibly beginning with a 25 bps cut in June.
AUDUSD – AUD holds ground after China import data rise in April
The Australian Dollar moved higher after the China imports grew by 8.4% in the April month from 5.4% in the March month, Exports grew by 1.5% from 1.0% in the March month. US Trade Balance shows 72.55 Billion in the April month from 58.55 Billion in the March month and expected is 76.77 Billion. Anyhow, US Tariffs on China Goods made Trade balance higher is good thing for Australian exports and imports. China economy growing is helpful for branches like Australia and NZ economy booster.
AUDUSD is moving in the Box pattern and the market has fallen from the resistance area of the pattern
The Australian Dollar (AUD) remains relatively subdued on Thursday, reflecting the Reserve Bank of Australia (RBA)’s less hawkish tone, notably following last week’s inflation data surpassing expectations. However, the RBA noted a halt in recent progress in inflation control, maintaining a flexible approach. The RBA decided to hold its interest rate steady at 4.35% on Tuesday.
In March, Australian inflation rose, contrary to market forecasts, prompting RBA Governor Michele Bullock to underscore vigilance regarding inflation risks. Bullock believes that current interest rates are suitably positioned to guide inflation back within its target range of 2-3% by the second half of 2025, reaching the midpoint by 2026.
The US Dollar Index (DXY), which measures the USD against six major currencies, strengthened on the sentiment of the Federal Reserve (Fed) potentially maintaining higher interest rates for an extended period. This drove US Treasury yields higher, providing support for the USD.
In market news, the AUD remained subdued due to the RBA’s less hawkish stance. Chinese Imports (YoY) surged by 8.4% in April, surpassing expectations, while exports increased by 1.5%, slightly higher than anticipated. However, concerns lingered over potential additional US tariffs on Chinese goods. Australian Retail Sales (QoQ) declined by 0.4% in Q1 2024, contrasting with the growth in Q4 2023.
The ASX 200 Index ended a five-day winning streak, driven by declines in bank stocks due to regulatory concerns and influenced by a weaker performance on Wall Street amidst mixed corporate earnings and the Fed’s hawkish stance.
Societe Generale expressed skepticism about the RBA’s economic growth optimism, foreseeing a downturn, partly due to the effects of RBA rate hikes. Federal Reserve Bank of Boston President Susan Collins emphasized the need for moderation in the US economy to achieve the central bank’s inflation target, while Minneapolis Fed President Neel Kashkari suggested a steady rate outlook with minimal likelihood of hikes.
Analysts anticipate the RBA’s interest rate to peak at 4.35% in November 2023 before declining to 3.10% by December 2025.
NZDUSD – edges up close to 0.6000 following Chinese Trade data.
The RBNZ is planned to do rate cuts in 2025 due to inflation in Q12024 shows stronger than expected downfall reading. China shows resilient in the Exports and imports trade data today. So NZ Dollar performed well against counter pairs.
NZDUSD is moving in the Descending channel and the market has fallen from the lower high area of the channel
The New Zealand Dollar (NZD) is bolstered by the release of Chinese data, highlighting the strong trade ties between New Zealand and China.
Chinese Imports (Year-on-Year) surged by 8.4% in April, surpassing expectations of a 5.4% increase. Meanwhile, Exports expanded by 1.5%, exceeding analysts’ forecasts of a 1.0% rise. These robust figures provide a positive surprise amidst concerns over potential additional tariffs on Chinese goods by the US. However, the Trade Balance USD widened to $72.35 billion from March’s $58.55 billion, slightly below the anticipated $76.7 billion.
In New Zealand, the Reserve Bank of New Zealand (RBNZ) signaled a delay in potential monetary easing moves until 2025, citing higher-than-expected inflation pressures in the first quarter as a factor. This stance could lend support to the New Zealand Dollar (NZD).
On the US Dollar (USD) front, expectations of prolonged higher interest rates by the Federal Reserve (Fed) have driven up US Treasury yields, bolstering the USD and thereby limiting the NZD/USD pair’s upward momentum.
Furthermore, hawkish comments from Federal Reserve officials have contributed to the strength of the Greenback. Federal Reserve Bank of Boston President Susan Collins emphasized the importance of a period of economic moderation to achieve the central bank’s 2% inflation target during remarks on Wednesday, as reported by Reuters.
Additionally, Minneapolis Fed President Neel Kashkari indicated on Tuesday that the prevailing expectation is for rates to remain unchanged for an extended period. While the likelihood of rate hikes is low, it is not entirely ruled out.
CRUDE OIL – WTI edges up near $79.00 following US crude stock draw.
The Crude oil moved in the Flat ahead of Ceasefire talks discussion by US with Israel on last day. US Intelligence minister William Burns Visit to Israel PM last day and discuss about the Hamas deal.OPEC+ and Russia made meeting about Oil supply scheduled on June 01. Russia Deputy PM said there is no Oil supply increasing plan among OPEC+ nations.
XTIUSD Oil price is moving in the Descending channel and the market has rebounded from the lower low area of the channel
Western Texas Intermediate (WTI), the benchmark for US crude oil, is currently trading around $78.95 on Thursday, showing a modest increase. This rise comes following a surprise drawdown in crude oil inventories in the United States.
The Energy Information Administration (EIA) released data on Wednesday indicating that crude inventories for the week ending May 3 decreased by 1.4 million barrels to 459.5 million barrels, contrasting with the 7.3 million barrel build observed in the previous week. Market expectations had projected a similar decline of 1.4 million barrels. A reduction in oil inventories typically signals increasing demand, which can bolster WTI prices.
In geopolitical developments, efforts to negotiate a ceasefire in Gaza between Israel and Hamas are ongoing, with the United States actively involved in facilitating discussions. CIA Director William Burns visited Israel on Wednesday and met with Israeli Prime Minister Benjamin Netanyahu, indicating potential progress in easing tensions in the Middle East. However, any significant de-escalation could potentially exert downward pressure on WTI prices.
Furthermore, hawkish remarks from US Federal Reserve officials regarding the intention to maintain higher interest rates for an extended period have contributed to broad strength in the US Dollar (USD). This strength may limit the upside potential of USD-denominated oil, including WTI. Boston Fed President Susan Collins highlighted on Wednesday that it will take longer than previously anticipated to address inflation concerns, reflecting a cautious approach to monetary policy.
Looking ahead, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are scheduled to meet on June 1 to discuss their production policy. Despite recent oil price increases, Russian Deputy Prime Minister Alexander Novak stated on Tuesday that there are currently no discussions within OPEC+ about increasing oil supply, suggesting a continuation of current production levels for the time being.
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