2024-06-14 09:55

Last week, the Bank of Canada became the first G7 central bank to cut interest rates. Investors are pricing in a 55% chance that the Bank of Canada will cut rates in July. Safe-haven demand for the dollar increased with the recent snap election announcement in France. The USD/CAD price analysis indicates a bullish trend as the Canadian dollar depreciates following the BoC’s reaffirmation of its intention to cut rates. The loonie was also weighed down by a stronger dollar, which rose on safe-haven demand. Notably, the Bank of Canada became the first G7 central bank to cut interest rates last week, weakening the Canadian dollar. Moreover, on Thursday, Bank of Canada Deputy Governor Sharon Kozicki signaled more rate cuts if inflation continues to ease. However, she noted that policy decisions will heavily rely on incoming data. Currently, investors are pricing in a 55% chance that the Bank of Canada will cut rates in July. Meanwhile, the dollar was on the front foot on Friday as safe-haven demand increased with the recent announcement of a snap election in France. At the same time, investors were still digesting the Fed’s forecast for only one rate cut in December despite cooling inflation. Fed policymakers sounded more hawkish than expected on Wednesday, emphasizing the need for patience with rate cuts. Fed Chair Powell noted that the US economy remains robust despite lower inflation, a more hawkish assessment than the market had expected after the softer consumer inflation figures. However, investors are holding on to bets that there will be two rate cuts this year. Notably, unemployment claims rose last week, and wholesale inflation fell more than expected. USD/CAD key events today Prelim UoM consumer sentiment USD/CAD technical price analysis: Bulls eye 1.3780 resistance On the technical side, the USD/CAD price has broken above the 30-SMA and is approaching the 1.3780 resistance level. At the same time, the RSI has broken above 50 and now supports solid bullish momentum. This move comes after the price met a solid barrier at 1.3780 and pulled back to retest the recently broken channel resistance and the 1.3700 level. After the pullback, bulls will be looking for a new high. This means the price might soon challenge the 1.3780 resistance level. A break above this level would strengthen the bullish bias and confirm a bullish trend with a higher high. https://www.forexcrunch.com/blog/2024/06/14/usd-cad-price-analysis-bocs-rate-cut-plan-weighs-on-loonie/

2024-06-14 08:37

The USD/JPY outlook weakens as BoJ said it would continue buying government bonds at the current rate. The dollar was strong due to safe-haven inflows from the Eurozone. The US Producer Price Index report showed softer-than-expected wholesale inflation. The USD/JPY outlook remains optimistic as the yen hovers close to a one-month low after the Bank of Japan’s surprisingly dovish stance. At the same time, the dollar was firm as investors sought safety amid political uncertainty in the Eurozone. The Bank of Japan kept rates unchanged on Friday and said it would continue buying government bonds at the current rate. Meanwhile, market participants had expected the central bank to announce a reduction in its bond purchases. The central bank, however, said it plans to trim these purchases next month. Consequently, the yen and Japanese bond yields plunged. Furthermore, investors expect the BoJ to raise rates sometime this year. However, there is uncertainty about the timing, given that recent data shows weak consumption in the country. Elsewhere, the dollar was strong due to safe-haven inflows from the Eurozone. Investors have been worried since French President Emmanuel Macron announced a snap election. This led to political uncertainty, which drove traders away from risky assets. Meanwhile, economic data throughout the week reinforced expectations that the Fed will cut rates in September. Notably, on Thursday, data revealed more cracks in the US labor market, with unemployment claims increasing from 229,000 to 242,000 in the previous week. At the same time, the Producer Price Index report showed softer-than-expected wholesale inflation, which will likely put more pressure on the Fed to cut interest rates. The PPI fell from 0.5% in the previous month to -0.2 % in May. This came after the consumer inflation report revealed a lower-than-expected figure. Although the Fed was cautious at the policy meeting, investors expect at least two rate cuts in 2024. USD/JPY key events today Prelim UoM consumer sentiment USD/JPY technical outlook: Bulls surpass 157.50 resistance On the technical side, the USD/JPY price has broken above the 157.50 resistance level to make a higher high. This has put the price well above the 30-SMA, and the RSI is nearer the overbought region, which supports a solid bullish bias. At the same time, the price is trading in a bullish channel, with the current move heading for the channel resistance. However, before that, USD/JPY might retest the recently broken 157.50 level before climbing the channel resistance. https://www.forexcrunch.com/blog/2024/06/14/usd-jpy-outlook-dovish-boj-sends-yen-to-1-month-lows/

2024-06-13 10:36

Data revealed that US consumer prices remained unchanged in May. Experts believe the downtrend in inflation could continue as major US retailers slash goods prices. After the inflation report, the likelihood of a Fed rate cut in September rose from 54% to 70%. The GBP/USD outlook is mildly bearish as the price pulls back after rising to new highs in the previous session. The retreat comes as the dollar recovers following hawkish sentiment at the Federal Reserve’s policy meeting. The pound rallied on Wednesday after data revealed that US consumer prices remained unchanged in May due to cheaper gasoline. This was a significant drop from the previous month when there had been a 0.3% increase. Meanwhile, economists had expected prices to increase by 0.1% during the month. Furthermore, core inflation significantly declined, leading to a surge in bets for two Fed rate cuts this year. Experts believe this downtrend could continue since major US retailers are slashing goods prices. This is also a sign that demand and consumer spending are weakening. Therefore, there is more pressure on the Fed to lower borrowing costs. After the inflation report, the likelihood of a rate cut in September rose from 54% to 70%. However, this outlook shifted slightly after the FOMC policy meeting, where policymakers were more hawkish than expected. Fed officials believe the economy remains robust. Therefore, they project the first rate cut in December. Meanwhile, data from the UK on Wednesday showed that UK economic growth stalled at the start of Q2 due to heavy rains. Markets are pricing in a 70% chance that the Bank of England will implement the first rate cut in September. GBP/USD key events today US core PPI m/m US PPI m/m US unemployment claims GBP/USD technical outlook: Bulls make a new high above 1.2800 On the technical side, the GBP/USD price temporarily breached the 1.2800 resistance level before falling back below. This indicates a sudden shift in sentiment that allowed bears to return to the market. However, the bullish bias remains strong, with the price above the 30-SMA and the RSI above 50. For some time, the price has traded in a range with support at 1.2700 and resistance at 1.2800. However, since the consolidation came after a bullish trend, there is a high chance bulls will take the lead again. Therefore, the price might retest the 1.2800 resistance. A break above would open the path to the 1.2900 psychological level. https://www.forexcrunch.com/blog/2024/06/13/gbp-usd-outlook-pound-retreats-after-cpi-led-gains/

2024-06-13 08:49

The dollar plunged on Wednesday after softer-than-expected consumer inflation data. Fed policymakers projected only one rate cut in 2024. Data on Thursday showed a bigger-than-expected increase in Australia’s employment in May. The AUD/USD forecast shows new bearish sentiment as the dollar recovers after the FOMC policy meeting. Meanwhile, the Australian dollar barely reacted to news that Australia’s labor market remained resilient in May. The dollar plunged on Wednesday after softer-than-expected consumer inflation data. The Consumer Price Index was flat in May compared to forecasts of a 0.1% increase. This was the second month of easing inflation, which led to a surge in confidence that the Fed would cut rates in September. Consequently, Treasury yields fell. If the downtrend in inflation is back, policymakers will be in a better position to shift to a more dovish tone. However, the move soon reversed when Fed officials concluded their policy meeting. Policymakers projected only one rate cut in 2024, compared to market expectations of at least two. Moreover, they noted that the outlook will depend heavily on incoming data. Still, the decline in inflation was a step in the right direction that will pave the way for rate cuts in the US. The outcome of the policy meeting boosted the dollar, which weighed on the Australian dollar. Meanwhile, data on Thursday showed a bigger-than-expected increase in Australia’s employment in May. The country added 39,700 jobs, well above economists expectations for 30,000. Meanwhile, the unemployment rate fell from 4.1% to 4.0%, showing resilience in the labor market. However, the Australian dollar barely reacted as traders already do not expect RBA rate cuts any time this year. There is less than a 50% chance that the RBA will cut rates in December. AUD/USD key events today US PPI report US unemployment claims AUD/USD technical forecast: Bulls puncture solid resistance On the technical side, the AUD/USD price made a sharp, bullish move that punctured its channel resistance before it retreated. This is a sign that bulls are gaining momentum and might soon break out of the bearish channel. Notably, the price sits above the 30-SMA while the RSI is above 50, supporting solid bullish momentum. Although it is back inside the channel, bulls might soon retest the channel resistance and the 0.6680 resistance level. A break above these levels would allow the price to retest the 0.6720 resistance. https://www.forexcrunch.com/blog/2024/06/13/aud-usd-forecast-dollar-bounces-back-post-fomc/

2024-06-12 12:12

The EIA updated its demand growth forecasts to project a more positive outlook. A bigger-than-expected drop in US crude oil inventories signaled rising demand. Investors are positioning themselves for the US Consumer Price Index report and the Fed meeting. The USD/CAD forecast is bearish, with the Canadian dollar benefitting from an improved demand outlook for oil. Meanwhile, the US dollar has paused its recent rally as investors await the upcoming consumer inflation report and the Fed meeting. On Wednesday, the Canadian dollar was on the front foot, with oil climbing as the EIA updated its demand growth forecasts to project a more positive outlook. At the same time, a bigger-than-expected drop in crude oil inventories signaled rising demand. Meanwhile, the dollar retreated slightly after reaching a four-week peak in the previous session due to reduced Fed rate cut expectations. Last week’s jobs report showed a still-tight labor market that will likely keep the central bank from signaling early rate cuts. As a result, there is only a 56% chance of a cut in September, a significant drop from around 77% a week ago. Furthermore, the dollar’s retreat comes as investors position themselves for the US Consumer Price Index report and the Fed meeting. If the inflation report confirms that demand remains high in the economy, the dollar will rally with a decline in rate cut expectations. On the other hand, if it shows a slowdown, the greenback will collapse with an increase in rate-cut bets. Markets will then pay attention to the Fed’s projections for growth and inflation. This will give clues on when the central bank might be ready to start lowering borrowing costs. USD/CAD key events today US Consumer Price Index FOMC policy meeting FOMC press conference USD/CAD technical forecast: Bulls pause rally for a temporary retreat On the technical side, the USD/CAD price has paused its surge near the 1.3780 resistance level and is pulling back to retest the 30-SMA support. This move comes after bulls broke out of a bearish channel and took control, so the bullish bias is strong. As such, the price will likely soon find support and continue higher. Notably, there is support at the 30-SMA, the 1.3720 level, and the recently broken channel resistance. Consequently, there is a high chance that the price will bounce higher to seek a new high above 1.3780. https://www.forexcrunch.com/blog/2024/06/12/usd-cad-forecast-loonie-gains-on-upbeat-oil-demand/

2024-06-12 08:48

Investors were cautious before the US inflation report and the FOMC policy meeting. Economists expect headline inflation to fall from 0.3% to 0.1% in May. GDP data on Wednesday revealed no growth in the UK in April. The GBP/USD price analysis shows little movement, reflecting investor caution ahead of the pivotal US inflation report. The pound edged higher despite data showing a slowdown in the UK economy. The dollar paused its rally to a four-week high in the previous session as investors adopted a cautious stance before the US consumer inflation report and the FOMC policy meeting. Economists expect headline inflation to fall from 0.3% to 0.1% in May. Meanwhile, the Fed will probably keep interest rates unchanged and give projections of continued economic growth. Elsewhere, GDP data on Wednesday revealed no growth in the UK in April, down from a 0.4% expansion in March. The decline came due to rainy weather and relieved the Bank of England, which is planning to cut interest rates later this year. However, it had little impact on the pound because all focus was on the US inflation report. Employment data in the previous session also showed that the UK economy was declining. The unemployment rate rose from 4.3% to 4.4% in Q1. Moreover, the report showed that the number of those with jobs has dropped by 207,000 since the end of 2023, while the unemployed have risen by 190,000. GBP/USD key events today US CPI report FOMC meeting FOMC press conference GBP/USD technical price analysis: Bulls confront 30-SMA resistance On the technical side, the GBP/USD price is pushing up against the 30-SMA resistance as bulls attempt to take control. At the same time, the RSI has risen above 50, indicating a surge in bullish momentum. This move started when the price met the 1.2700 support level. If bulls succeed, the price will retest the 1.2800 resistance level. The previous bullish trend paused when it reached the 1.2800 resistance. It entered a consolidation period, but the RSI showed a bearish divergence, indicating weaker bullish momentum. Therefore, if bulls break above 1.2800, it will confirm a continuation of the uptrend. On the other hand, if the level holds firm, the price will fall back to retest the 1.2700 support. https://www.forexcrunch.com/blog/2024/06/12/gbp-usd-price-analysis-investors-on-edge-before-us-inflation/