2024-01-10 10:27
Australia’s consumer price index rose at an annual pace of 4.3% in November. The soft inflation reinforced the belief that there would be no need for further increases in interest rates. Fed funds futures suggest a 64% probability of the Fed easing in March. Despite signs of easing inflation in Australia, Wednesday’s AUD/USD forecast leans slightly bullish as the currency had little reaction to the news. In November, Australian consumer price inflation hit a nearly two-year low, with a big slowdown in core inflation. According to data on Wednesday, the consumer price index rose at an annual pace of 4.3% in November. It decreased from October’s 4.9% and was below the expected 4.4%. Meanwhile, the trimmed mean, a measure of core inflation, dropped from 5.3% in October to an annual rate of 4.6% in November. As a result, the soft outcome reinforced the belief that there would be no need for further increases in interest rates. On the other hand, in the US, the Fed surprised markets in December with a dovish stance, projecting 75 basis points (bps) of rate cuts in 2024. As a result, it heightened easing expectations, with traders initially anticipating up to 160 bps of cuts. However, the market has since changed, pricing in 140 bps of cuts for the year. Furthermore, Fed funds futures suggest a 64% probability of the Fed easing in March, down from 80% a week earlier. Moreover, traders are closely monitoring Thursday’s upcoming US consumer price index report to assess the likelihood of a rate cut in March. Experts expect a 0.2% increase in headline inflation for the month and a 3.2% rise annually. AUD/USD key events today Investors will keep digesting Australia’s inflation data as no more key economic reports are scheduled for today. AUD/USD technical forecast: Price trades in a triangle pattern after a bearish leg On the technical side, AUD/USD trades in a triangle after a bearish leg that paused at the 0.6674 key support level. The bias is bearish as the price has stayed below the 30-SMA since bears took control. Moreover, the RSI has respected the pivotal 50 level as resistance, staying in bearish territory. However, inside the triangle, the price has rebounded to the 30-SMA. Because bears are in control, the price will likely respect this resistance level and break out of the triangle and the 0.6674 support level. The price might then make another bearish leg, dropping to the 0.6550 support level. https://www.forexcrunch.com/blog/2024/01/10/aud-usd-forecast-australian-inflation-reaches-two-year-lows/
2024-01-10 08:58
The dollar has risen by 1% this month, recovering from a 2% drop in December. The Canadian dollar weakened to a nearly four-week low on Tuesday. Data from Canada revealed a narrowing trade surplus to C$1.6 billion in November. Wednesday’s USD/CAD price analysis painted a bullish picture, with the dollar holding its ground in a cautious trading environment ahead of crucial US inflation data. The anticipation of these inflation figures adds an extra layer of anxiety, as they can sway the direction of Federal Reserve policy. Notably, the dollar has risen by 1% this month, recovering from a 2% drop in December, as traders reassess expectations for the timing and extent of Fed rate cuts. Meanwhile, the Canadian dollar weakened against the US dollar and reached a nearly four-week low on Tuesday. Aaron Hurd, senior portfolio manager at State Street Global Advisors, noted that the impact of monetary policy is more evident in Canada than in the US, creating a consistent backdrop favoring a weaker Canadian dollar. Moreover, the BoC has stated that a slowdown in the domestic economy signals the effectiveness of its monetary policy. Consequently, money markets anticipate an interest rate cut in April. Elsewhere, Statistics Canada reported a narrowing trade surplus to C$1.6 billion in November, down from C$3.2 billion in October. The decline in exports, led by precious metals, is the first in five months. Additionally, separate data showed a 3.9% drop in the value of Canadian building permits from October to November. USD/CAD key events today The pair will likely consolidate as Canada and the US will not release any major reports today. USD/CAD technical price analysis: Bulls form a shallow channel near 1.3350 On the technical side, USD/CAD trades in a shallow, bullish channel, staying close to the 1.3350 key level. Therefore, although the bias is bullish, momentum is fading. The price is above the 30-SMA but not swinging far above it, a sign that bulls are weak. Finally, supporting the view that bullish momentum is fading is the RSI, which has made a bearish divergence. Consequently, there is a big chance the price will soon break out of the bullish channel support and the 30-SMA. Moreover, such a reversal would allow the price to break below the 1.3350 key level and retest the 1.3200 key support level. https://www.forexcrunch.com/blog/2024/01/10/usd-cad-price-analysis-dollar-stays-firm-on-eve-of-inflation-data/
2024-01-09 15:17
Activating the flag pattern indicates more gains. A new lower low invalidates the upside scenario. Returning above the median line (ml) signals a larger upward movement. The USD/JPY price dropped slightly in the short term as the US dollar remained under pressure. The pair is trading at 144.07 at the time of writing. The outlook seems neutral, with no directional bias. The greenback was in a short correction even though the US NFP, Average Hourly Earnings, and Unemployment Rate came in better than expected. Yesterday, the US Consumer Credit Came in at 23.8B, above the 8.9B expected. Today, the Tokyo Core CPI reported a 2.1% growth, matching expectations, while Household Spending dropped by 2.9%, exceeding the 2.2% drop expected. Later, the US will release the trade balance indicator, which is expected to be at -64.9B versus -64.3B in the previous reporting period. The US dollar depreciated a little, but it could take the lead again as the US Consumer Price Index m/m and CPI y/y may announce higher inflation in December versus November. The inflation figures should drive the markets on Thursday. The FED is expected to cut the Federal Funds Rate in 2024, but higher inflation could postpone such decisions. The USD/JPY price developed a minor flag pattern. The bias remains bullish in the short term as long as it stays above the 50% Fibonacci line of the ascending pitchfork. An upside breakout and activating the flag formation indicate an upside continuation. Still, only coming back above the median line (ml) and making a new higher high validates larger growth. On the contrary, taking out the 50% Fibonacci line and making a new lower low confirms more declines. https://www.forexcrunch.com/blog/2024/01/09/usd-jpy-price-lacking-bullish-conviction-near-144-0-eyes-on-cpi/
2024-01-09 09:54
Investors were mostly on the sidelines ahead of the US inflation report Investor morale in the eurozone reached its highest level since May. US consumers’ short-term inflation expectations dropped to the lowest level in nearly three years. On Tuesday, the EUR/USD price analysis revealed a subtle bearish tone, with investors opting to remain on the sidelines as the market braces for the impending US inflation report. Moreover, there was little reaction to the US and Eurozone data on Monday. A survey revealed that investor morale in the eurozone reached its highest level since May. However, a full recovery for the 20-country currency bloc is uncertain. In January, Sentix’s index for the eurozone increased to -15.8 points from December’s -16.8. However, Sentix cautioned that this may not signify a turnaround for the eurozone, mainly due to Germany’s ongoing recession. Meanwhile, the expectations index rose to -8.8 points in January from -9.8 in December. The index reflecting the current situation in the eurozone also rose, reaching -22.5 in January. Meanwhile, in the US, the New York Fed disclosed that US consumers’ short-term inflation expectations dropped to the lowest level in nearly three years in December. According to the Survey of Consumer Expectations, inflation one year from now will likely be at 3%, the lowest reading since January 2021. According to the report, inflation three years from now will be at 2.6%, down from 3% in November. Additionally, five years from now, price pressures were projected to be at 2.5%, down from 2.7% in November. EUR/USD key events today The pair will likely consolidate as investors do not expect high-impact news from the Eurozone or the US. EUR/USD technical price analysis: Price oscillates within 1.1000-1.0900 boundaries On the technical side, EUR/USD ranges between the 1.1000 resistance and the 1.0900 support levels. This consolidation comes after a solid bearish leg to the 1.0900 key support level. Although the price went above the 30-SMA, it seems ready to return below. Still, for bulls to reverse the trend, the price must break above 1.1000 to start making higher highs. Otherwise, it will keep consolidating until the previous downtrend continues with another leg lower. If the price breaks below the 1.0900 support, it will likely retest the 1.0750. https://www.forexcrunch.com/blog/2024/01/09/eur-usd-price-analysis-euro-edges-lower-with-focus-on-cpi/
2024-01-09 08:51
US consumers’ short-term inflation projections reached the lowest level in almost three years in December. Australia’s November retail sales experienced the most significant surge in two years. Swaps indicated that the RBA’s tightening campaign is likely over. On Tuesday, the AUD/USD outlook took a bearish turn, influenced by a strengthening dollar as investors strategically positioned themselves in anticipation of the upcoming US inflation report. On Thursday, the US inflation reading will likely provide additional insight into the Fed’s policy outlook in the coming months. In Australia, November retail sales experienced the most significant surge in two years due to Black Friday discounts. Despite a 425-basis-point increase in interest rates, consumer spending has remained resilient. This is attributed to rising house prices, a population surge, and savings from pandemic stimulus measures. However, the Reserve Bank of Australia will likely disregard the November retail sales result, considering the distortion caused by Black Friday sales. Meanwhile, swaps indicated that the RBA’s tightening campaign is likely over. Moreover, there will be approximately 40 basis points of easing in for 2024. Elsewhere, an ANZ survey revealed a significant increase in consumer confidence in Australia at the beginning of 2024. It reached the highest level in almost a year. Notably, confidence among homeowners increased sharply due to rising house prices and the belief that interest rates have likely peaked. Meanwhile, data on Monday showed that US consumers’ short-term inflation projections reached the lowest level in almost three years in December. Consequently, bets on Fed rate cuts edged higher. AUD/USD key events today No major events will be released today from Australia or the US. Therefore, investors might remain cautious ahead of inflation readings from both countries. AUD/USD technical outlook: Price respects 30-SMA resistance Aussie bulls failed an attempt to push above the 30-SMA, allowing bears to resume the downtrend. The pullback to the SMA came after the price paused at a strong support zone comprising the 0.6674 support and the 0.618 fib levels. Previously, the bearish move tried to break below the support zone, but the move was sharply rejected, making a big wick. A break above the 30-SMA would signal a bullish takeover, allowing the price to retest the 0.6775 resistance level. However, given that the price is still below the SMA and the RSI is below 50, the bias is still bearish. Therefore, the price will likely retest the support zone. https://www.forexcrunch.com/blog/2024/01/09/aud-usd-outlook-dollar-on-the-front-foot-ahead-of-the-us-cpi/
2024-01-08 11:43
A new lower low activates more declines. The US inflation data should shake the price. False breakdowns may bring a new rally. The gold price is trading in the green at $2,026 at the time of writing. Still, the downside pressure remains high in the short term despite Friday’s rally. Surprisingly or not, the XAU/USD jumped higher in the last trading session even though the US reported positive data. However, the yellow metal edged higher only because the US dollar was overbought after its strong swing higher. Now, the greenback has turned to the upside again, so gold erased the latest gains. The Non-Farm Employment Change, Average Hourly Earnings, Unemployment Claims, and Factory Orders came in better than expected. Gold price seems to be under pressure in the short term after Switzerland’s inflation data was released today. The Consumer Price Index reported a 0.0% growth compared to the 0.1% drop estimated after the 0.2% drop in the previous reporting period, while Retail Sales rose by 0.7%, beating the 0.0% growth forecasted. The week’s most important event is the publication of US inflation data. The CPI m/m may report a 0.2% growth versus the 0.1% growth in the previous reporting period, while CPI y/y is expected at 3.2%. Higher inflation in December compared to November could boost the USD. Technically, the gold price dropped again after registering a false breakout through the 23.6% ($2,061). Now, it has dropped below the 50% (2,030) retracement level and challenges the $2,027 static support. The metal is trading in the demand zone. So, only making a new lower low could trigger more declines. False breakdowns and coming back above 61.8% may result in a new bounce back. https://www.forexcrunch.com/blog/2024/01/08/gold-price-under-pressure-as-market-awaits-us-cpi-data/
