XAUUSD is moving in the Box pattern and the market has fallen from the resistance area of the pattern
XAUUSD – Gold dips on Fed’s hawkish stance
The US Core PCE index is scheduled this Friday and expected 0.30% MoM and 2.8% in the April high is expected. So Gold prices are moved lower against USD. Yesterday US Consumer confidence data came at higher than expected boosted USD against Gold.
Gold prices (XAU/USD) dipped today, ending a three-day rise, as the US Dollar (USD) rebounded slightly. The tone shifted after several Federal Reserve (Fed) officials made hawkish comments and US economic data surpassed expectations, reducing the likelihood of a September rate cut. This strengthened the USD and pressured gold, a USD-denominated asset. However, geopolitical tensions may still support gold’s safe-haven appeal. Central bank demand remains a bullish factor for gold. Traders await the Fed’s Beige Book and a speech by Fed’s John Williams today. Friday’s US Core Personal Consumption Expenditures Price Index (Core PCE) release is critical, expected to show a 0.3% MoM and 2.8% YoY increase for April. Elevated inflation could delay a Fed rate cut, impacting gold. Additionally, Israeli Prime Minister Benjamin Netanyahu pledged to continue the war against Hamas amid international outcry over an airstrike in Rafah. Last week, global physically-backed gold exchange-traded funds (ETFs) saw a net outflow of 11.3 metric tonnes. UBS analysts predict gold to reach $2,500 an ounce by September and $2,600 by year-end, exceeding initial estimates.
EURUSD – Stalls Ahead of German CPI Data
The German CPI data is expected to ease at 0.20% MoM in the May month versus 0.50% printed in the April month. Easing pressures on inflation give the perfect way for ECB to rate cuts in the near month. US GDP Data is expected to slump at 1.3% QoQ in the Q1 when compared to 1.6% QoQ printed in the last quarter.
EURUSD is moving in an Ascending channel and the market has reached the higher low area of the channel
The pair’s stability persists as Euro traders await the release of fresh German Consumer Price Index (CPI) data. Meanwhile, attention is also drawn to upcoming key US economic indicators, with Gross Domestic Product (GDP) data and Personal Consumption Expenditure (PCE) Price Index inflation figures scheduled for Thursday and Friday, respectively.
Projections suggest that German CPI inflation for May could moderate to 0.2% month-on-month (MoM), a decline from the previous month’s 0.5%. Investors are optimistic that CPI trends in major European economies will continue to soften, potentially prompting the European Central Bank (ECB) to consider a quarter-point rate cut at its upcoming meeting in June.
In the US, investors are grappling with uncertainties regarding the timing of the Federal Reserve’s (Fed) first rate cut. While earlier expectations in December hinted at the possibility of up to six rate cuts of at least 25 basis points each, with the first anticipated in March, current market sentiment indicates approximately even odds of a quarter-point cut occurring in September. Hopes for a total of two rate cuts in 2024 appear to be diminishing.
US Annualized Q1 Gross Domestic Product (GDP) data, expected on Thursday, is forecasted to show a decline to 1.3% from the previous 1.6%. On Friday, attention will shift to the US PCE Price Index inflation figures, which are anticipated to remain steady at 0.3% MoM.
USDJPY – BoJ’s Adachi on Yen’s Impact Uncertainty
The BoJ Member Seiji Adachi said when BoJ can stop Bond Buying operations and not clear path, because inflation is lower than expected 2% target. Whether rate hike in the recent month is sustained is more doubtful, rising interest rates and continuous bond purchases from BoJ is contrary decision, So JPY weakness is not stoppable by reduction of Bond purchases in single day. BoJ is in Difficult situation to pull back inflation to 2% target by respective rate hikes and wage pressures to increase in the market.
USDJPY is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
Bank of Japan (BoJ) board member Seiji Adachi shared insights on Wednesday regarding the central bank’s monetary policy and exchange rate outlook. Here are the key points from his statements:
– The recent single-day decrease in bond buying by the BoJ does not carry any policy implications.
– Adachi does not hold a strong opinion on whether the reduction in BoJ’s bond buying should occur sooner or later.
– Long-term interest rate movements will be closely monitored.
– Persistent FX movements could certainly impact the economy and prices, prompting potential monetary policy responses.
– Adachi cannot definitively state whether Yen movements would affect the economy and prices.
– Decisions regarding BoJ’s ETF holdings will require extensive time and input from various experts.
– Bond buying reduction should occur gradually to ensure that long-term yields effectively signal market dynamics.
– There is no predetermined plan or timeline for reducing BoJ’s bond buying.
– Adachi’s inflation forecasts have remained relatively consistent since April.
– Adjusting interest rates should occur gradually if underlying inflation trends toward the target of 2%.
– It is premature to determine the specific timing for the next rate adjustment.
– There is no specific viewpoint on where Japan’s terminal rate will settle.
– The sustainability of the recent increase in Japan’s long-term interest rate is uncertain.
– Predicting the pace at which BoJ could reduce bond buying is challenging at this stage.
USDCHF – Steady Above 0.9100 Before Swiss GDP Data
The USDCHF hold at higher area ahead of Swiss Q1 GDP data is scheduled tomorrow and expected 0.30% QoQ reading expansion from the previous quarter. The Israel killed another 21 people last day in Rafah region. This news created tensions in the Middle east area and Safe Haven currency CHF value is supported by this fears.
USDCHF is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
Traders exhibited caution as they awaited crucial inflation data scheduled for release later in the week. Additionally, attention was on the upcoming release of the Fed’s Beige Book and a speech by the Fed’s John Williams.
With inflation maintaining its firm stance, the US Federal Reserve (Fed) is not expected to implement rate cuts until later this year. Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, emphasized on Tuesday that while the central bank’s policy stance is restrictive, the possibility of further rate hikes cannot be dismissed. Currently, investors are pricing in nearly a 50% chance that the Fed will maintain rates in September, according to the CME FedWatch tool.
In data released on Tuesday by the US Conference Board, Consumer Confidence for May surpassed expectations, rising to 102.0 from 97.5 in April, exceeding the forecast of 95.9. Despite this positive trend, concerns regarding inflation persisted, leading consumers to anticipate higher interest rates in the coming year. This continued to bolster the Greenback and provide momentum for the USD/CHF pair.
On Thursday, Switzerland’s State Secretariat for Economic Affairs (SECO) is set to publish the nation’s Gross Domestic Product (GDP) data. Forecasts suggest a 0.3% quarter-on-quarter expansion in GDP growth for the first quarter (Q1) of 2024. A stronger-than-expected GDP reading could offer support to the Swiss Franc (CHF).
Moreover, geopolitical tensions in the Middle East garnered attention after Israeli forces reportedly shelled a tent camp in a designated “safe zone” west of Rafah, resulting in the deaths of at least 21 individuals, including 13 women and girls, as per Al Jazeera reports. Investors are monitoring these developments closely, as any signs of escalating risks may further elevate safe-haven assets such as the CHF and constrain upward movement for the USD/CHF pair.
USDCAD – Nears 1.3650 Amid Oil Price Correction
The Canada Industrial product price increased by 1.5% MoM in the April month versus 0.90% increase in the March month and 0.60% is expected. The Raw material price index rose to 5.5% compared to 4.3% printed in the March month and 3.2% is expected.The Canadian Dollar moved down on the downplay of rates from Boc in the June month is expected.
USDCAD is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
The prevailing risk aversion in the market is prompting investors to seek refuge in the US Dollar (USD), providing support to the USD/CAD pair.
The shift in market sentiment occurred on Tuesday following remarks from Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, suggesting that a rate hike remains a possibility. Kashkari’s statement, indicating that rate increases have not been ruled out entirely, coupled with uncertainties surrounding the disinflationary process, has led to renewed interest in the USD.
Additionally, the appreciation in US Treasury yields has contributed to the strength of the Greenback. The US Dollar Index (DXY), which measures the USD against a basket of six major currencies, is trading higher around 104.70. This is supported by the 2-year and 10-year US Treasury yields, currently at 4.96% and 4.54% respectively.
In economic news, the mid-tier US Housing Price Index (MoM) for March fell short of expectations, coming in at 0.1% compared to February’s 1.2%, with a forecast of 0.5%. Looking ahead, New York Fed President John Williams is scheduled to speak, and the Fed’s Beige Book will be released, providing insights into the current economic landscape based on interviews with key stakeholders.
On the Canadian Dollar (CAD) front, a downward correction in crude oil prices is exerting pressure on the commodity-linked currency. Canada, being a major oil exporter to the United States, is directly impacted by fluctuations in oil prices.
In Canada’s economic data, the Industrial Product Price index recorded a 1.5% month-over-month increase in April, surpassing market expectations of 0.6%. This marks an eight-month high, following an upwardly revised 0.9% uptick in March. Additionally, the Raw Materials Price Index rose by 5.5% month-over-month in April, exceeding the previous increase of 4.3% and surpassing the anticipated 3.2% rise.
USD INDEX – USD soft as markets await Fed’s Beige Book
The US Core PCE index is scheduled this Friday and expected 0.30% MoM and 2.8% in the April high is expected. Yesterday US Consumer confidence data came at higher than expected boosted USD against counter pairs. US Q1 GDP is scheduled and less than expected data this time. FED Members are speaking in the Hawkish favors for USD against counter pairs.
USD INDEX is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
The US Dollar Index (DXY) is experiencing a gradual decline as markets gear up for the release of key economic indicators throughout the week. Despite upbeat Confidence and Housing sector reports released on Tuesday, the USD remains relatively weak in anticipation of significant data releases later in the week.
Although the USD is facing mild losses, the resilience of the US economy and the diminishing expectations for an interest rate cut in June or July are providing some support. The Federal Reserve (Fed) is maintaining a cautious stance, bolstering the USD’s stability. Market focus is now on Thursday’s Gross Domestic Product (GDP) and Personal Consumption Expenditures (PCE) data, which will influence expectations for upcoming Fed decisions. Currently, market odds suggest the possibility of a rate cut in September.
In the daily digest of market movers, it’s noted that despite strong low-tier data, the DXY is experiencing mild losses, indicating the market’s attention to the Fed’s cautious approach. The Consumer Confidence index exceeded expectations at 102, while the S&P/Case-Shiller Home Price Indices reported a 7.4% year-on-year increase in March, surpassing forecasts.
Looking ahead, April’s Personal Consumption Expenditure (PCE) data, a key inflation metric for the Fed, is expected to remain steady at 2.7% year-on-year for headline inflation and 2.8% for core inflation. Additionally, the Q1 GDP figures are anticipated to be revised higher. These outcomes will continue to shape market expectations regarding the Fed’s easing cycle, thereby influencing the trajectory of the USD.
GBPUSD – retreats above 1.2750 as US Dollar strengthens
The US Consumer confidence data for the April month came at 102.0 when compared to 97.5 printed in the March month created US Dollar stronger against GBP Yesterday. IMF said BoE will do 2 or 3 more rate cuts in this year is possible makes GBP dragged lower against counter pairs.
GBPUSD is moving in the Symmetrical triangle pattern and the market has reached the top area of the pattern
The GBP/USD pair is experiencing slight declines, hovering around 1.2760 during the Asian trading session on Wednesday. This modest downtrend is attributed to the US Dollar’s (USD) mild recovery and the uptick in US yields, as market sentiment regarding a potential rate cut by the US Federal Reserve (Fed) in September diminishes.
Investors are awaiting the release of the Fed’s Beige Book later in the day, along with a scheduled speech by Fed official John Williams.
In terms of economic indicators, there was a slight improvement in Consumer Confidence in May, as reported by the Conference Board on Tuesday. The index rose to 102.0 from 97.0 in April, surpassing expectations of 95.9. However, concerns about inflation persist among US consumers, with many anticipating higher interest rates in the coming year.
Furthermore, recent hawkish comments from US Fed officials have bolstered the US Dollar. Fed Governor Michelle Bowman expressed support for either delaying the start of tapering or implementing a more gradual tapering process. Meanwhile, Fed Minneapolis President Neel Kashkari emphasized the need for substantial progress on inflation before considering interest rate cuts, predicting no more than two cuts in 2024.
Conversely, expectations of the Bank of England (BoE) initiating interest rate cuts in June are weighing on the Pound Sterling (GBP). Despite the International Monetary Fund (IMF) raising UK growth forecasts, it anticipates two to three rate cuts by the BoE.
Amid a lack of significant economic releases from the UK, speculation surrounding the upcoming elections could influence GBP/USD movement. Political uncertainty concerns may negatively impact the GBP, acting as a headwind for the GBP/USD pair.
AUDUSD – Australia’s April CPI Inflation Hits 3.6% YoY, Beats 3.4% Forecast
The Australian Consumer Price Index (CPI) data for April came in at 3.6%, compared to 3.5% in March and higher than the 3.4% expected by economists. Additionally, the data for construction work done in Q1 showed a decline of 2.9% quarter-on-quarter, a significant drop from the 0.5% growth recorded in the previous quarter. Following the release of this data, the Australian Dollar moved higher against other currencies.
AUDUSD has broken the Descending channel in upside
Australia’s monthly Consumer Price Index (CPI) increased at an annual pace of 3.6% in the year to April, rising slightly from the 3.5% recorded in March, according to data published by the Australian Bureau of Statistics (ABS) on Wednesday.
Economists had anticipated a more moderate increase, with market consensus forecasting a 3.4% rise for the reported period.
In other economic news, the Australia Construction Work Done data for the first quarter showed a decline of 2.9% quarter-on-quarter, significantly missing expectations of a 0.5% growth. The previous quarter had seen a growth rate of 0.7%.
NZDUSD – stabilizes around 0.6140 post-reaching 11-week peak
This Week NZ Budget plan is scheduled and Friday RBNZ Governor Orr speech is scheduled. The Other datas like US Q1 GDP and Core PCE index is scheduled, this data only moved NZ Dollar against USD.
NZDUSD is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
The economic calendar remains relatively sparse, with attention turning to the NZ government’s Budget Release scheduled for Thursday. Until then, the NZD market lacks clear direction, with anticipation building for a speech by Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr on Friday.
In the latter part of the week, market sentiment will likely be shaped by US economic data releases. Investors will closely monitor updates to the US quarterly Gross Domestic Product (GDP) and the latest figures on the Personal Consumption Expenditure (PCE) Price Index inflation.
The market sentiment regarding potential rate cuts by the Federal Reserve (Fed) remains uncertain. Despite a series of appearances by Fed officials earlier in the week, hopes for rate cuts are diminishing amid a cautious stance from the central bank. Rate markets currently indicate roughly even odds of a quarter-point rate reduction by the Federal Open Market Committee (FOMC) in September.
CRUDE OIL – WTI Drops Below $80.00 Amid Fed’s Hawkish Tone
The CrudeOil prices are moved higher after the IMF Predicted China Growth will be 4.5% in the 2025 from 4.1% at present year. The China is the second largest Oil importer and accounts 80% imports of Oil in the China.
XTIUSD Crude oil price is moving in the Descending channel and the market has reached the lower high area of the channel
In recent weeks, several Fed officials have expressed hawkish views, particularly following data indicating persistent US inflation. Fed Minneapolis President Neel Kashkari, for instance, emphasized on Tuesday that the central bank should await significant progress on inflation before considering interest rate cuts. This ongoing narrative of potentially prolonged higher US interest rates weighs on crude oil prices by increasing borrowing costs, potentially dampening economic activity and oil demand.
Meanwhile, attention is on the upcoming virtual meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia (OPEC+), scheduled for June 2. Analysts anticipate that OPEC+ will maintain its crude supply curbs at 2.2 million barrels per day. This expectation may help limit the downside for WTI prices. According to Deutsche Bank analyst Michael Hsueh, OPEC+ is unlikely to increase production, especially given that the current Brent price is closer to $80 per barrel rather than $90 per barrel.
Additionally, there is positive news regarding China’s economic outlook, as the International Monetary Fund (IMF) upgraded its 2025 economic growth forecast for China from 4.1% to 4.5%. This favorable development could potentially lift WTI prices, as China represents 80% of non-OECD oil consumption and stands as the world’s largest oil importer.
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