Articles

Greece Producer Price Index (YoY) dipped from previous -1% to -1.4% in May

399016   June 28, 2024 17:12   FXStreet   Market News  

Italy Consumer Price Index (MoM) below expectations (0.2%) in June: Actual (0.1%)

399015   June 28, 2024 17:09   FXStreet   Market News  

Italy Consumer Price Index (EU Norm) (MoM) meets forecasts (0.2%) in June

399014   June 28, 2024 17:09   FXStreet   Market News  

AUD/USD: Trading in range for the time being – UOB Group

399013   June 28, 2024 17:07   FXStreet   Market News  

The Australian Dollar (AUD) is likely to trade in a range, probably between 0.6625 and 0.6675, UOB Group FX strategists suggest.

Momentum indicators are flat

24-HOUR VIEW: “Two days ago, AUD soared to 0.6689 before pulling back sharply. Yesterday, we held the view that ‘the sharp pullback has scope to extend, but given the lackluster momentum, any decline is unlikely to reach 0.6600.’ Our view did not materialise, as AUD traded in a range of 0.6640/0.6673, closing unchanged at 0.6648. Momentum indicators are most flat, and AUD is likely to continue to trade in a range today, probably between 0.6625 and 0.6675.”

1-3 WEEKS VIEW: “We continue to hold the same view as Monday (24 Jun, spot at 0.6640). As highlighted, the current price action is likely part of a rangetrading phase. For the time being, AUD is likely to trade between 0.6600 and 0.6685.”

Gold could witness volatility after release of PCE inflation data

399011   June 28, 2024 17:06   FXStreet   Market News  

• Gold is likely to witness increased volatility after the US PCE inflation data release on Friday. 
• A lower PCE reading would support the yellow metal as it would, in turn, result in lower interest rates – a benefit to non-yielding Gold. 
• XAU/USD has broken above a key trendline, further invalidating the bearish H&S topping pattern that had been forming.  

Gold (XAU/USD) edges marginally lower, trading in the $2,320s on Friday, ahead of the main economic data event for the week, the US Personal Consumption Expenditures (PCE) – Price Index for May. 

The PCE is the US Federal Reserve’s (Fed) preferred inflation gauge, and since the Fed is in charge of setting interest rates, the result could influence their trajectory. 

Gold is a non-interest-bearing asset so the level of interest rates impacts its value. Higher interest rates make Gold less attractive to investors whilst the opposite is true of lower rates. 

Gold could see volatility from PCE data

Gold will probably experience volatility after US PCE data is released at 12:30 GMT. The consensus estimate is for PCE inflation to fall to 2.6% year-over-year (YoY) in May from 2.7% in April, and to stay unchanged at 0.0% month-over-month (MoM) after rising 0.3% in April.

Core PCE is expected to cool to 2.6% from 2.8% previously on a YoY basis and  0.1% from 0.2% on a MoM basis. 

“Our US economists think that core PCE should increase by +0.17% (MoM), based on the CPI and PPI data that we’ve already got. In turn, that would cut the year-on-year rate to 2.63% (YoY), the lowest in over three years,” says Jim Reid, Global Head of Macro at Deutsche Bank. 

Fed speakers sounding more optimistic

Commentary from Fed speakers regarding the outlook for interest rates also influences Gold prices, and these were mixed on Thursday.

Atlanta Fed President Raphael Bostic said the Fed had started penciling in future rate cuts, which suggests more concrete plans rather than the vague data dependency of previous Fed-speaker comments. 

Bostic expected an interest-rate cut in the fourth quarter as likely followed by four quarter-point cuts in 2025, adding that when the Fed starts cutting rates, it will be the “first in a series; that is a reason for the patience.” 

Bostic also dismissed concerns flagged regarding the weakening labor market, saying, “businesses say they see no cliff ahead for the job market.”

Another bugbear for the Fed has been high services-sector inflation. However, there are signs this is also cooling, according to the Atlanta Fed President. 

His colleague, Fed Board of Governors member Michelle Bowman, however, was more cautious on Thursday, saying, “The Fed is not at a point yet where it can consider making a rate cut.”

Market-based gauges of what the Fed will do next are a bit more optimistic, seeing a relatively high circa 64% probability of the Fed cutting interest rates at (or before) the Fed’s September meeting. The estimate is from the CME FedWatch tool, which calculates chances using 30-day Fed Funds futures prices. 

GoldÂ’s longer-term prospects look bright

Gold’s long-term prospects remain positive according to most analysts. Geopolitical uncertainty in the Middle East, Ukraine, from climate change and tech-driven economic challenges, are all risk factors that feed the demand for Gold as a safe haven.    

Gold also has a complex relationship with the US Dollar (USD). Whilst a strong US Dollar is negative for Gold because it is priced in USD, it has also lifted demand from mainly Asian central banks as a hedge against their own currencies’ devaluation against the US Dollar. 

The BRICS trade confederation is also using Gold as a replacement for the US Dollar as the primary medium for global trade. Given its position as a stable, safe store of value, Gold is the most reliable alternative as a means of exchange between nations with different, often volatile domestic currencies. 

“The rest of the world is trying to make sure they’re not as dependent on the US Dollar. For them, gold offers another opportunity to hold an asset that is still a pretty significant store of value,” said Joy Yang, Head of Index Product Management & Marketing at MarketVector Indexes, in a recent interview with Kitco News. 

Yang thinks these “global trends” will push Gold higher in the future – back up to  $2,400, although the kicker will be the Fed’s decision to finally begin cutting interest rates. 

Technical Analysis: Gold breaks above trendline, further invalidating H&S

Gold makes another breach of the downsloping trendline that connects the “Head” and “Right Shoulder” of the now invalidated bearish Head and Shoulders (H&S) pattern that formed on the precious metal during April, May and June.

XAU/USD Daily Chart

 

Although the breaches have invalidated the case for an orthodox H&S reversal pattern forming, it is still possible a more complex “multi-shouldered” topping pattern may have formed that might still prove bearish. Overall, the probabilities are lower, however. 

If the upside trendline break holds, Gold will likely rise to the $2,369 level (high of June 21). A break above that would be an even more bullish sign, with the next target at $2,388, the June 7 high. 

Alternatively, assuming the compromised topping pattern’s neckline at $2,279 is broken, a reversal lower may still follow, with a conservative target at $2,171 and a second target at $2,105 – the 0.618 ratio of the high of the pattern and the full ratio of the high of the pattern extrapolated lower. 

There is a risk that the trend is now sideways in both the short and medium term. In the long term, Gold remains in an uptrend. 

Italy June preliminary CPI +0.8% vs +1.0% y/y expected

399010   June 28, 2024 17:04   Forexlive Latest News   Market News  

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Italy Consumer Price Index (EU Norm) (YoY) meets forecasts (0.9%) in June

399009   June 28, 2024 17:03   FXStreet   Market News  

Italy Consumer Price Index (YoY) came in at 0.8% below forecasts (1%) in June

399008   June 28, 2024 17:02   FXStreet   Market News  

GBP/USD: Risk to fall towards 1.2550 – UOB Group

399007   June 28, 2024 16:57   FXStreet   Market News  

The Pound Sterling (GBP) is expected to trade between 1.2620 and 1.2670. Downward momentum is picking up again. The next level to watch is 1.2550, UOB Group analysts note.

The next level to watch is 1.2550

24-HOUR VIEW: “We highlighted yesterday that GBP could break below 1.2600. We added, ‘oversold conditions suggest that the next major support at 1.2550 is unlikely to come into view.’ However, after dipping to a low of 1.2613, GBP rebounded strongly to 1.2670 before easing to close at 1.2639 (+0.14%). The price movements are likely part of a sideways trading phase. Today, we expect GBP to trade between 1.2620 and 1.2670.”

1-3 WEEKS VIEW: “We have held a negative view in GBP since early last week. After GBP fell sharply two days ago, we highlighted yesterday (27 Jun, spot at 1.2620) that ‘downward momentum is picking up again, and a break of 1.2600 would not be surprising.’ We also highlighted that ‘the next level to watch below 1.2600 is at 1.2550.’ We did not quite expect the strong rebound that came close to our ‘strong resistance’ level at 1.2680 (high has been 1.2670). While we continue to hold the same view, given the increased in volatility, we are raising the ‘strong resistance’ level to 1.2800.”

Australian Dollar declines after dovish comments from RBA Deputy Governor Hauser

399005   June 28, 2024 16:56   FXStreet   Market News  

• The Australian Dollar loses ground as RBA Deputy Governor Hauser advises against formulating policy based on a single inflation report.
• AustraliaÂ’s high inflation has fueled speculation that the RBA might raise interest rates again in August.
• The US Dollar appreciates due to higher yields ahead of FridayÂ’s release of Core PCE inflation.

The Australian Dollar (AUD) depreciates against the US Dollar (USD) on Friday, which could be attributed to the dovish comments from the Reserve Bank of Australia’s (RBA) Deputy Governor Andrew Hauser. Hauser said it would be a “bad mistake” to formulate policy in response to a single inflation report. He emphasized that there is still a suite of economic data to come that will require detailed analysis, per Bloomberg.

The AUD gained ground after releasing May’s higher-than-expected Monthly Consumer Price Index (CPI). The persistently high inflation has fueled speculation that the RBA might raise interest rates again in August.

The US Dollar (USD) gains ground due to higher yields on US Treasury bonds. FridayÂ’s Core PCE Price Index inflation is projected to decrease YoY to 2.6% from the previous 2.8%. This data is seen as the Federal Reserve’s (Fed) preferred inflation gauge.

Daily Digest Market Movers: Australian Dollar declines due to hawkish Fedspeak

• AustraliaÂ’s 10-year government bond yield surged above 4.4%, reaching a three-week high, as a hot inflation reading fueled fears that the Reserve Bank of Australia might raise interest rates again in the next meeting in August.
• Federal Reserve (Fed) Board of Governors member Michelle Bowman noted on Thursday that she is still not ready to support a central bank rate cut with inflation pressures still elevated. Bowman said, adding “We are still not yet at the point where it is appropriate to lower the policy rate, and I continue to see a number of upside risks to inflation,” per Reuters.
• US Gross Domestic Product Annualized expanded by 1.4% in Q1, slightly higher than the previous reading of 1.3%, but continuing to point to the lowest growth since the contractions in the first half of 2022.
• US Initial Jobless Claims showed on Thursday that the number of people claiming unemployment benefits fell to 233,000 in the week ending June 21, below market expectations of 236,000. The claim count fell for a second consecutive week since hitting the 10-month high of 243,000 earlier in June.
• The first US presidential debate between President Joe Biden and Republican Presidential Nominee Donald Trump began on CNN News. Biden acknowledged that “inflation had driven prices substantially higher than at the start of his term but said he deserves credit for putting ‘things back together again’ following the coronavirus pandemic.” In response, Trump condemned elevated inflation levels. He suggested that tariffs would decrease deficits and urged scrutiny of countries like China, per Reuters.
• Reserve Bank of Australia (RBA) Assistant Governor Christopher Kent stated on Wednesday that recent data emphasize the necessity of remaining vigilant about potential inflation increases. Kent noted that current policies are contributing to slower demand growth and lower inflation. He also mentioned that no options regarding future interest rate adjustments are being excluded, per Bloomberg.
• AustraliaÂ’s monthly Consumer Price Index (CPI) jumped by 4.0% in the year to May, up from the 3.6% increase recorded in April, according to data published by the Australian Bureau of Statistics (ABS) on Wednesday. This increase exceeded the market forecast, which predicted a 3.8% growth for the reported period.

Technical Analysis: Australian Dollar falls below 0.6650

The Australian Dollar trades around 0.6630 on Friday. The daily chart analysis indicates a neutral bias for the AUD/USD pair as it consolidates within a rectangle formation. The 14-day Relative Strength Index (RSI) is at the 50 level, also suggesting neutral momentum. Further movement may signal a clear directional trend.

The AUD/USD pair finds support around the 50-day Exponential Moving Average (EMA) at 0.6618. A break below this level could lead the pair to test the lower boundary of the rectangle formation near 0.6585.

On the upside, the AUD/USD pair may face resistance near the upper boundary of the rectangle formation around 0.6695, close to the psychological level of 0.6700. Further resistance appears at 0.6714, the highest level since January.

AUD/USD: Daily Chart

EUR/USD Forecast: Euro could have a hard time staging a rebound

399003   June 28, 2024 16:51   FXStreet   Market News  

• EUR/USD struggles to build on Thursday’s rebound, stays near 1.0700.
• US data and quarter-end flows could camp up the pair’s volatility on Friday.
• The first round of French presidential election will take place on Sunday.

EUR/USD stays in a consolidation phase at around 1.0700 on Friday after posting small gains on Thursday.

The US Bureau of Economic Analysis will release the Personal Consumption Expenditures (PCE) Price Index data for May, the Federal Reserve’s preferred gauge of inflation, later in the day. Investors are likely to react to the monthly core PCE Price Index print, which is not distorted by base effects and excludes volatile food and energy prices.

Investors expect the monthly core PCE Price Index to rise 0.1% in May following the 0.2% increase recorded in April. A reading at or below the market expectation could make it difficult for the US Dollar (USD) to find demand in the American session. On the other hand, a print of 0.2% or higher could provide a boost to the USD and weigh on EUR/USD.

Even if the PCE inflation report hurts the USD, EUR/USD could struggle to stage a decisive rebound, with investors refraining from positioning themselves for an extended Euro strength ahead of the first round of election in France this weekend.

It’s also worth noting that this Friday is the last trading day of the second quarter. Quarter-end flows and position adjustments later in the day could ramp up market volatility and trigger irregular movements in major currency pairs.

EUR/USD Technical Analysis

1.0670, the Fibonacci 78.6% retracement of the latest uptrend, stays intact as strong support. In case EUR/USD drops below this level and confirms it as resistance, 1.0600 (psychological level, static level) could be set as the next bearish target.

On the upside, 1.0700 (psychological level, static level) aligns as interim resistance before 1.0730-1.0745 (Fibonacci 61.8% retracement, 100-period Simple Moving Average) and 1.0760 (Fibonacci 50% retracement).

USD/INR struggles due to expected foreign inflows amid bonds inclusion

399001   June 28, 2024 16:46   FXStreet   Market News  

• The Indian Rupee may limit its downside due to foreign inflows on bonds joining J.P. MorganÂ’s Emerging Market Bond Index.
• Indian equity markets appreciate due to the return of foreign institutional investors and growing purchases in index heavyweights.
• US Core PCE to be released on Friday; expected to decrease YoY to 2.6% from the previous 2.8%.

The Indian Rupee (INR) offers its daily gains on Friday as the upside in the US Dollar (USD) underpins the USD/INR pair. However, the INR may limit its downside on expectations of foreign inflows as Indian bonds join the JP Morgan Emerging Market (EM) Bond Index on Friday.

Foreign investors have already invested approximately $10 billion into the securities eligible to join JPMorganÂ’s index, according to Business Standard. Meanwhile, Goldman Sachs anticipates at least $30 billion more in inflows in the coming months as IndiaÂ’s weighting on the index steadily rises to 10%.

Indian Rupee traders would likely observe key economic data on Friday, including the Federal Fiscal Deficit for May and FX Reserves for the week ending June 17.

On the US DollarÂ’s (USD) front, Core PCE Price Index inflation is projected to decrease YoY to 2.6% from the previous 2.8%. This data is seen as the Federal Reserve’s (Fed) preferred inflation gauge.

Daily Digest Market Movers: Indian Rupee offers gains due to risk aversion

• Indian equity markets extend gains due to the return of foreign institutional investors and growing purchases in index heavyweights. Traders maintain an upside momentum for the Indian equity markets, buoyed by optimism about the upcoming union budget for 2024-2025 and solid domestic economic data. The Reserve Bank of India (RBI) expects the economy to grow by 7.2% in FY 2025, further lifting market sentiment.
• Federal Reserve (Fed) Board of Governors member Michelle Bowman noted on Thursday that she is still not ready to support a central bank rate cut with inflation pressures still elevated. Bowman said, adding “We are still not yet at the point where it is appropriate to lower the policy rate, and I continue to see a number of upside risks to inflation,” per Reuters.
• US Gross Domestic Product Annualized expanded by 1.4% in Q1, slightly higher than the previous reading of 1.3%, but continuing to point to the lowest growth since the contractions in the first half of 2022.
• US Initial Jobless Claims showed on Thursday that the number of people claiming unemployment benefits fell to 233,000 in the week ending June 21, below market expectations of 236,000. The claim count fell for a second consecutive week since hitting the 10-month high of 243,000 earlier in June.
• The first US presidential debate between President Joe Biden and Republican Presidential Nominee Donald Trump began on CNN News. Biden acknowledged that “inflation had driven prices substantially higher than at the start of his term but said he deserves credit for putting ‘things back together again’ following the coronavirus pandemic.” In response, Trump condemned elevated inflation levels. He suggested that tariffs would decrease deficits and urged scrutiny of countries like China, per Reuters.
• The S&P Global Ratings retained its growth forecast for India at 6.8% for FY25, citing high interest rates and government spending boosting demand in the non-agricultural sectors.
• On Tuesday, RBI Governor Shaktikanta Das said that India is on the verge of a major structural shift in its growth trajectory, moving towards sustained 8% GDP growth. Das attributes this growth to several key drivers, including structural reforms such as the Goods and Services Tax (GST), reported by The Economic Times.

Technical analysis: USD/INR falls below 83.50

The USD/INR trades around 83.40 on Friday. The analysis of the daily chart shows a broadening pattern, suggesting a potential correction before a downward movement. The 14-day Relative Strength Index (RSI) is below the 50 level, indicating a bearish bias.

The USD/INR pair tests the immediate support at the 50-day Exponential Moving Average (EMA) of 83.40. A break below this level could potentially strengthen the bearish bias, which could lead the pair toward the lower boundary of the broadening pattern, around the 83.30 level.

Resistance on the upside is anticipated near the upper boundary of the broadening formation, around 83.70, followed by the psychological level of 84.00.

USD/INR: Daily Chart