Articles
Gold price sticks to modest intraday losses as traders keenly await US PCE Price Index
398949 June 28, 2024 14:26 FXStreet Market News
- Gold price attracts some sellers and reverses a part of Thursday’s recovery from a two-week low.
- The USD advances to a fresh two-month high and exerts downward pressure on the commodity.
- Traders, however, seem reluctant to place directional bets ahead of the key US PCE Price Index.
Gold price (XAU/USD) comes under some renewed selling pressure on the last day of the week and erodes a part of Thursday’s recovery move of over 1% from a two-week low. The US Dollar (USD) regains positive traction following Thursday’s softer US data-led decline and climbs to a nearly two-month peak amid a goodish pickup in the US Treasury bond yields, bolstered by the Federal Reserve’s (Fed) hawkish outlook. Apart from this, some repositioning trade ahead of the US inflation data provides an additional boost to the Greenback, which, in turn, is seen as undermining the commodity.Â
Investors, meanwhile, are still pricing in a greater chance that the Fe will start its rate-cutting cycle in September amid signs of easing inflationary pressures and a slowdown in the economic momentum. This, along with geopolitical tensions in the Middle East and the protracted Russia-Ukraine, acts as a tailwind for the safe-haven Gold price. Traders also seem reluctant to place aggressive directional bets and prefer to wait for more cues about the Fed’s policy path. Hence, the focus will remain glued to the release of the US Personal Consumption Expenditures (PCE) Price Index, due later during the North American session.
Daily Digest Market Movers: Gold price is weighed down by higher US bond yields and resurgent USD demand
- The softer US macro data published on Thursday lifted bets for an imminent start of the Federal Reserve’s rate-cutting cycle this year and triggered a short-covering rally around the Gold price.
- The real US GDP growth for the first quarter was revised up to 1.4% annualized pace, though it marked the slowest rise since spring 2022 and confirmed a sharp slowdown from 3.4% in the previous quarter.
- The US Census Bureau reported that Durable Goods Orders increased by 0.1% in May as compared to a 0.1% fall anticipated and the 0.6% growth (revised from +0.7%) recorded in the previous month.
- Separately, the Labor Department said that Initial Jobless Claims fell to 233,000 in the week ended June 22, but the four-week moving average rose to 236,000, or the highest level since last September.Â
- Furthermore, US Pending Home Sales – a forward-looking indicator of home sales based on contract signings– unexpectedly decreased by 2.1% in May, to the lowest level on record going back to 2001.
- This comes on top of tepid US Retail Sales figures for May and signs that inflation is subsiding, which, in turn, should allow the Fed to lower borrowing costs as early as the September policy meeting.
- The US Dollar, however, found some support from comments by Fed Governor Michelle Bowman, saying that we are not at a point yet to consider a rate cut as the upside risks to inflation persist.
- Adding to this, rebounding US Treasury bond yields underpins the USD and weighs on the XAU/USD ahead of the US Personal Consumption Expenditures (PCE) Price Index – the Fed’s preferred inflation gauge.
Technical Analysis: Gold price remains below 50-day SMA pivotal resistance, bulls not out of the woods yet
From a technical perspective, the overnight positive move stalled ahead of the 50-day Simple Moving Average (SMA) support breakpoint, now turned resistance. The said barrier is currently pegged near the $2,337-2,338 region, which should now act as a key pivotal point. A sustained strength beyond has the potential to lift the Gold price back towards the $2,360-2,365 supply zone. Some follow-through buying will negate any near-term negative bias and allow bulls to reclaim the $2,400 round-figure mark. The momentum could extend further towards challenging the all-time peak, around the $2,450 area touched in May.
On the flip side, the $2,300 round-figure mark is likely to protect the immediate downside ahead of the $2,285 horizontal support. A convincing break below the latter will be seen as a fresh trigger for bearish traders and drag the Gold price to the 100-day SMA, currently near the $2,250 area. The XAU/USD could eventually drop to the $2,225-2,220 region en route to the $2,200 round-figure mark.
Economic Indicator
Personal Consumption Expenditures – Price Index (YoY)
The Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The YoY reading compares prices in the reference month to a year earlier. Price changes may cause consumers to switch from buying one good to another and the PCE Deflator can account for such substitutions. This makes it the preferred measure of inflation for the Federal Reserve. Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
US core PCE inflation set to slow as markets mull Federal Reserve rate cut bets for September
398948 June 28, 2024 14:22 FXStreet Market News
- The core Personal Consumption Expenditures Price Index is set to rise 0.1% MoM and 2.6% YoY in May.
- Markets see a nearly 40% probability that the Federal Reserve will leave the policy rate unchanged in September.
- A hot PCE inflation report could provide a boost to the US Dollar heading into the weekend.
The core Personal Consumption Expenditures (PCE) Price Index, the US Federal ReserveÂ’s (Fed) preferred inflation measure, will be published on Friday by the US Bureau of Economic Analysis (BEA) at 12:30 GMT.
PCE index: What to expect in the Federal ReserveÂ’s preferred inflation measure
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.1% on a monthly basis in May, at a softer pace than the 0.2% increase recorded in April. May core PCE is projected to grow at an annual pace of 2.6%, while the headline annual PCE inflation is also forecast to edge lower to 2.6%.
The US Bureau of Labor Statistics (BLS) reported earlier in the month that the Consumer Price Index (CPI) rose 3.3% on a yearly basis in May, while the core CPI increased 3.4% in the same period, down from 3.6% in April.
Previewing the PCE inflation report, “CPI and PPI data suggest core PCE inflation lost further momentum in May, with the series advancing 0.13% m/m — its lowest monthly gain of the year and following a 0.25% April expansion,” TD Securities analysts said. “We also look for the headline PCE and the supercore to print 0.0% each in May. Separately, personal spending likely advanced 0.3% m/m, with income rising 0.4%”, they added.
When will the PCE inflation report be released, and how could it affect EUR/USD?
The PCE inflation data is slated for release at 12:30 GMT. The monthly core PCE Price Index gauge is the most-preferred inflation reading by the Fed, as itÂ’s not distorted by base effects and provides a clear view of underlying inflation by excluding volatile items. Investors, therefore, pay close attention to the monthly core PCE figure.
The CME Group FedWatch Tool shows that markets currently price in a 37.7% probability of the Federal Reserve (Fed) leaving the policy rate unchanged in September. This market positioning suggests that the US Dollar (USD) faces a two-way risk heading into the event.
In case the monthly core PCE rises 0.2%, or more, in May, the immediate market reaction could cause investors to refrain from pricing in a rate reduction in September and help the USD outperform its rivals. On the other hand, a reading of 0.1%, or lower, could trigger a USD selloff ahead of the weekend and open the door for a leg higher in EUR/USD.Â
Investors, however, could remain reluctant to bet on a steady recovery in the Euro ahead of the first round of French elections on Sunday, even if the PCE inflation figures make it difficult for the USD to find demand. In addition, the data will be released on the last trading day of the second quarter. Hence, quarter-end flows and position adjustments could ramp up market volatility and cause the USD to move irregularly.
FXStreet Analyst Eren Sengezer offers a brief technical outlook for EUR/USD and explains:
“Despite several recovery attempts seen in the last couple of weeks, the Relative Strength Index (RSI) indicator on the daily chart stays below 50, reflecting buyer’s hesitancy. Furthermore, EUR/USD remains within the descending regression channel coming from early June.”
“1.0740 (upper limit of the descending channel) aligns as first resistance. Once EUR/USD rises above this level and stabilizes there, 1.0790-1.0800 (100-day Simple Moving Average (SMA), 200-day SMA, psychological level) could be seen as the next resistance before 1.0900. On the downside, 1.0660 (mid-point of the descending channel) aligns as first support before 1.0600 (lower limit of the descending channel).”
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the FedÂ’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the FedÂ’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Â
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Australian Dollar declines as RBA Deputy Governor Hauser opposes further rate hikes
398946 June 28, 2024 14:21 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
Australian Dollar PRICE Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the US Dollar.
| Â | USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF |
|---|---|---|---|---|---|---|---|---|
| USD | Â | 0.12% | 0.08% | 0.11% | 0.21% | 0.36% | 0.33% | 0.09% |
| EUR | -0.12% | Â | -0.04% | -0.02% | 0.09% | 0.23% | 0.20% | -0.02% |
| GBP | -0.08% | 0.04% | Â | 0.02% | 0.12% | 0.27% | 0.24% | -0.02% |
| JPY | -0.11% | 0.02% | -0.02% | Â | 0.08% | 0.25% | 0.20% | -0.02% |
| CAD | -0.21% | -0.09% | -0.12% | -0.08% | Â | 0.14% | 0.12% | -0.14% |
| AUD | -0.36% | -0.23% | -0.27% | -0.25% | -0.14% | Â | -0.03% | -0.28% |
| NZD | -0.33% | -0.20% | -0.24% | -0.20% | -0.12% | 0.03% | Â | -0.26% |
| CHF | -0.09% | 0.02% | 0.02% | 0.02% | 0.14% | 0.28% | 0.26% | Â |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Economic Indicator
CFTC AUD NC Net Positions
The weekly Commitments of Traders (COT) report provides information on the size and the direction of the positions taken, across all maturities, participants primarily based in Chicago and New York futures markets. Forex trades focus in “non-commercial” or speculative positions, to determinate whether a trend remains healthy or not, and also markets sentiment towards a certain asset.
Friday 28th June 2024: Asian Markets Rise as Investors Eye U.S. Inflation Reports
398945 June 28, 2024 14:18 ICMarkets Market News
Global Markets:
- Â Asian Stock Markets : Nikkei up 0.64%, Shanghai Composite up 0.54%, Hang Seng up 0.14% ASX up 0.10%
- Commodities : Gold at $2337.5 (0.03%), Silver at $29.48 (0.54%), Brent Oil at $85.73 (0.59%), WTI Oil at $82.31 (0.67%)
- Rates : US 10-year yield at 4.306, UK 10-year yield at 4.165, Germany 10-year yield at 2.451
News & Data:
- (USD) Final GDP q/q 1.4% vs 1.4% expected
- (USD) Unemployment Claims 233K vs 236K expected
- (USD) Pending Home Sales m/m -2.1% vs 0.6% expected
Markets Update:
Asia-Pacific markets rose on Friday as investors analyzed key economic data from Japan and awaited U.S. inflation reports due later in the day. The Japanese yen hit new 38-year lows against the U.S. dollar, falling to as low as 161.27. Japan appointed Atsushi Mimura to replace Masato Kanda as its top currency diplomat, according to Nikkei. Inflation in Tokyo accelerated to 2.3% in June from a year earlier, up from 2.2% in May. Core inflation, which excludes fresh food prices, rose to 2.1% from 1.9% in May. TokyoÂ’s inflation data is often seen as an indicator of national trends.
JapanÂ’s industrial production increased by 2.8% month-on-month in May, surpassing economistsÂ’ expectations of 2%, according to a Reuters poll. Year-on-year, industrial production rose by 0.3%. These figures may give Japan more leeway to tighten its monetary policy as the yen reaches multi-decade lows. In South Korea, retail sales fell by 0.2% year-on-year in May, a smaller decline compared to AprilÂ’s revised 0.8% drop. This marks the first time since July 2023 that South Korea has seen two consecutive months of declines.
JapanÂ’s Nikkei 225 rebounded 1.04% after the data release, while the broader Topix increased by 0.84%. South KoreaÂ’s Kospi edged up by 0.13%, and the small-cap Kosdaq rose by 0.1%. Hong KongÂ’s Hang Seng index saw a slight gain, while mainland ChinaÂ’s CSI 300 rebounded from a four-month low to rise by 0.11%. AustraliaÂ’s S&P/ASX 200 climbed by 0.13%.
In the U.S. overnight, the S&P 500 posted a modest gain as Wall Street anticipated new inflation data to gauge when the Federal Reserve might start lowering interest rates. The U.S. is expected to release its preferred inflation measure, the personal consumption expenditure index, on Friday. The broad market index closed slightly higher at 0.09%, the Nasdaq Composite added 0.30%, and the Dow Jones Industrial Average edged up by 0.09%.
Upcoming Events:Â
- 12:30 PM GMT – CAD GDP m/m
- 12:30 PM GMT – USD Core PCE Price Index m/m
- 12:30 PM GMT – USD Personal Income m/m
- 12:30 PM GMT – USD Personal Spending m/m
The post Friday 28th June 2024: Asian Markets Rise as Investors Eye U.S. Inflation Reports first appeared on IC Markets | Official Blog.
South Africa Private Sector Credit rose from previous 3.9%Â to 4.26% in May
398944 June 28, 2024 14:17 FXStreet Market News
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United Kingdom Current Account below forecasts (£-17.6B) in 1Q: Actual (£-21B)
398943 June 28, 2024 14:17 FXStreet Market News
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
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Sweden Trade Balance (MoM): 11.9B (May) vs 7.9B
398942 June 28, 2024 14:13 FXStreet Market News
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
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Germany Import Price Index (YoY) came in at -0.4% below forecasts (-0.3%) in May
398941 June 28, 2024 14:12 FXStreet Market News
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
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IC Markets Europe Fundamental Forecast | 28 June 2024
398940 June 28, 2024 14:10 ICMarkets Market News
IC Markets Europe Fundamental Forecast | 28 June 2024
What happened in the Asia session?
Core CPI in Tokyo unexpectedly accelerated for the second month in a row as it rose from 1.9% to 201% YoY in June, higher than the estimate of 2.0%. This acceleration follows the same path as the BOJ’s Core CPI reading that was released on Tuesday and potentially points to sustained price increases in Japan. Should inflationary pressures gain further traction, the BoJ may be forced to act at its next policy meeting and raise interest rates – a move that could strengthen the yen.
What does it mean for the Europe & US sessions?
The final result for first quarter GDP in the U.K. is expected to grow 0.6% QoQ following a technical recession in the second half of last year. Should GDP match or exceed its forecast, it would mark the strongest expansion in over two years with sectors such as services and land transport services pulling up overall economic output. A stronger GDP result could lift the Cable before European trading hours get underway.
Following the ‘soft’ CPI and PPI readings for the month of May two weeks ago, the PCE Price Index is also anticipated to register a slower pace of price increases. Should inflationary pressures continue to dissipate further, the greenback could face intense selling pressures later today.
PMI activity in the Chicago area has been contracting since the fourth quarter of 2022 and the estimate of 39.7 for the month of June points to another month contraction. Although PMI activity is expected to improve moderately from 35.4 to 39.7, business activity is still depressed – a result that will likely weigh on the dollar.
The Dollar Index (DXY)
Key news events today
PCE Price Index (12:30 pm GMT)
Chicago PMI (1:45 pm GMT)
What can we expect from DXY today?
Following the ‘soft’ CPI and PPI readings for the month of May two weeks ago, the PCE Price Index is also anticipated to register a slower pace of price increases. Should inflationary pressures continue to dissipate further, the greenback could face intense selling pressures later today.
PMI activity in the Chicago area has been contracting since the fourth quarter of 2022 and the estimate of 39.7 for the month of June points to another month contraction. Although PMI activity is expected to improve moderately from 35.4 to 39.7, business activity is still depressed – a result that will likely weigh on the dollar.
Central Bank Notes:
- The Federal Funds Rate target range remained unchanged at 5.25% to 5.50% for the seventh meeting in a row.
- The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run and judges that the risks to achieving its employment and inflation goals have moved toward better balance over the past year.
- The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks. Inflation has eased over the past year but remains elevated and in recent months, there has been modest further progress toward the CommitteeÂ’s 2% inflation objective.
- Recent indicators suggest that economic activity has continued to expand at a solid pace while job gains have remained strong, and the unemployment rate has remained low.
- In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks and does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.
- In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the CommitteeÂ’s goals.
- In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. Beginning in June, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion.
- The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities.
- Next meeting runs from 30 to 31 July 2024.
Next 24 Hours Bias
Medium Bearish
Gold (XAU)
Key news events today
PCE Price Index (12:30 pm GMT)
Chicago PMI (1:45 pm GMT)
What can we expect from Gold today?
Following the ‘soft’ CPI and PPI readings for the month of May two weeks ago, the PCE Price Index is also anticipated to register a slower pace of price increases. Should inflationary pressures continue to dissipate further, the greenback could face intense selling pressures later today.
PMI activity in the Chicago area has been contracting since the fourth quarter of 2022 and the estimate of 39.7 for the month of June points to another month contraction. Although PMI activity is expected to improve moderately from 35.4 to 39.7, business activity is still depressed – a result that will likely weigh on the dollar and potentially lift gold prices.
Next 24 Hours Bias
Weak Bullish
The Australian Dollar (AUD)
Key news events today
No major news events.
What can we expect from AUD today?
The Aussie fell to an overnight low of 0.6643 before stabilizing around this level. This currency pair was trading around 0.6650 as Asian markets came online – these are the support and resistance levels for today.
Support: 0.6630
Resistance: 0.6685
Central Bank Notes:
- The RBA kept the cash rate target unchanged at 4.35%, marking the ninth pause out of the last ten board meetings.
- Over the year to April, the monthly CPI indicator rose by 3.6% in headline terms, and by 4.1% excluding volatile items and holiday travel, which was similar to its pace in December 2023.
- The central forecasts published in May were for inflation to return to the target range of 2–3% in the second half of 2025 and to the midpoint in 2026 while there have been indications that momentum in economic activity is weak, including slow growth in GDP, a rise in the unemployment rate and slower-than-expected wages growth.
- Inflation is easing but has been doing so more slowly than previously expected and it remains high and the Board expects that it will be some time yet before inflation is sustainably in the target range.
- The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out.
- Next meeting is on 6 August 2024.
Next 24 Hours Bias
Medium Bullish
The Kiwi Dollar (NZD)
Key news events today
Matariki (Bank Holiday)
What can we expect from NZD today?
As it is a bank holiday in New Zealand, lower trading activity for the Kiwi can be expected during the Asia session but trading activity could pick up in the latter part of the day. This currency pair was trading around 0.6085 at the beginning of the Asia session – these are the support and resistance levels for today.
Support: 0.6040
Resistance: 0.6110
Central Bank Notes:
- The Monetary Policy Committee kept the OCR unchanged at 5.50% for the seventh meeting in a row and agreed that interest rates need to remain at a restrictive level for a sustained period to ensure annual headline CPI inflation returns to the 1 to 3% target range.
- Restrictive monetary policy is contributing to an easing in capacity pressures while headline inflation, core inflation, and most measures of inflation expectations are continuing to decline. However, domestic inflation has fallen more slowly than expected and headline CPI inflation remains above the CommitteeÂ’s target band.
- Higher dwelling rents, insurance costs, council rates, and other domestic services price inflation have resulted in a slow decline in domestic inflation, posing a risk to inflation expectations.
- GDP declined by 0.1% in the December 2023 quarter with economic growth having now been negative for four of the past five quarters. High interest rates have reduced household spending, as well as residential and business investment, despite very strong population growth. Recent indicators of economic activity have been weak, as expected.
- Next meeting is on 10 July 2024.
Next 24 Hours Bias
Medium Bullish
The Japanese Yen (JPY)
Key news events today
Tokyo Core CPI (11:30 pm GMT 27th June)
What can we expect from JPY today?
Core CPI in Tokyo unexpectedly accelerated for the second month in a row as it rose from 1.9% to 201% YoY in June, higher than the estimate of 2.0%. This acceleration follows the same path as the BOJ’s Core CPI reading that was released on Tuesday and potentially points to sustained price increases in Japan. Should inflationary pressures gain further traction, the BoJ may be forced to act at its next policy meeting and raise interest rates – a move that could strengthen the yen.
Central Bank Notes:
- The Bank considers that the policy framework of Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control and the negative interest rate policy to date have fulfilled their roles. With the price stability target of 2%, it will conduct monetary policy as appropriate, guiding the short-term interest rate as a primary policy tool.
- The Bank of Japan decided on the following measures:
- The Bank will encourage the uncollateralized overnight call rate to remain at around 0 to 0.1% while continuing its Japanese government bonds (JGB) purchases in accordance with the decisions made at the March 2024 MPM.
- The Bank decided, by an 8-1 majority vote, that it would reduce its purchase amount of JGBs thereafter to ensure that long-term interest rates would be formed more freely in financial markets.
- Underlying CPI inflation is expected to increase gradually, since it is projected that the output gap will improve and that medium- to long-term inflation expectations will rise with a virtuous cycle between wages and prices continuing to intensify.
- In the second half of the projection period of the April 2024 Outlook for Economic Activity and Prices (Outlook Report), it is likely to be at a level that is generally consistent with the price stability target of 2%.
- The year-on-year rate of increase in the CPI (all items less fresh food), has been in the range of 2.0-2.5% recently, as services prices have continued to rise moderately, reflecting factors such as wage increases, although the effects of a pass-through to consumer prices of cost increases led by the past rise in import prices have waned. Inflation expectations have risen moderately.
- JapanÂ’s economy has recovered moderately, although some weakness has been seen in part while is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions.
- Next meeting is on 31 July 2024.
Next 24 Hours Bias
Weak Bearish
The Euro (EUR)
Key news events today
No major news events.
What can we expect from EUR today?
The Euro hit an overnight high of 1.0726 before pulling back towards 1.0700. This currency pair was trading around 1.0710 as Asian markets came online – these are the support and resistance levels for today.
Support: 1.0680
Resistance: 1.0750
Central Bank Notes:
- The Governing Council today decided to lower the three key ECB interest rates by 25 basis points after nine months of holding rates steady.
- Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 4.25%, 4.50% and 3.75% respectively, with effect from 12 June 2024.
- Since September 2023, inflation has fallen by more than 2.5% and the inflation outlook has improved markedly while underlying inflation has also eased, reinforcing the signs that price pressures have weakened, and inflation expectations have declined at all horizons.
- At the same time, despite the progress over recent quarters, domestic price pressures remain strong as wage growth is elevated, and inflation is likely to stay above target well into next year – the latest Eurosystem staff projections for both headline and core inflation have been revised up for 2024 and 2025 compared with the March projections.
- Projections now show headline inflation averaging 2.5% in 2024, 2.2% in 2025 and 1.9% in 2026 while economic growth is expected to pick up to 0.9% in 2024, 1.4% in 2025 and 1.6% in 2026.
- The Council also confirmed that it will reduce the Eurosystem’s holdings of securities under the pandemic emergency purchase programme (PEPP) by €7.5 billion per month on average over the second half of the year.
- The Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner and will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim and is not pre-committing to a particular rate path.
- Next meeting is on 18 July 2024.
Next 24 Hours Bias
Medium Bullish
The Swiss Franc (CHF)
Key news events today
No major news events.
What can we expect from CHF today?
Weakness in the franc has kept USD/CHF elevated in the final trading week of June. This currency pair hovered above 0.8980 at the beginning of the Asia session – these are the support and resistance levels for today.
Support: 0.8900
Resistance: 0.9000
Central Bank Notes:
- The SNB eased monetary policy by lowering its key policy rate by 25 basis points for the second consecutive meeting, going from 1.50% to 1.25% in June.
- The underlying inflationary pressure has decreased again compared to the previous quarter but inflation had risen slightly since the last monetary policy assessment, and stood at 1.4% in May.
- The inflation forecast puts average annual inflation at 1.3% for 2024, 1.1% for 2025 and 1.0% for 2026, based on the assumption that the SNB policy rate is 1.25% over the entire forecast horizon.
- Swiss GDP growth was moderate in the first quarter of 2024 with the services sector continuing to expand, while manufacturing stagnated.
- Growth is likely to remain moderate in Switzerland in the coming quarters as the SNB anticipates GDP growth of around 1% this year while currently expecting growth of around 1.5% for 2025.
- Next meeting is on 26 September 2024.
Next 24 Hours Bias
Weak Bearish
The Pound (GBP)
Key news events today
GDP (6:00 am GMT)
What can we expect from GBP today?
The final result for first quarter GDP in the U.K. is expected to grow 0.6% QoQ following a technical recession in the second half of last year. Should GDP match or exceed its forecast, it would mark the strongest expansion in over two years with sectors such as services and land transport services pulling up overall economic output. A stronger GDP result could lift the Cable before European trading hours get underway.
Central Bank Notes:
- The Bank of EnglandÂ’s Monetary Policy Committee (MPC) voted by a majority of 7-to-2 to maintain its Official Bank Rate at 5.25% for the seventh consecutive meeting.
- Two members preferred to reduce the Bank Rate by 25 basis points to 5%, an increase of one from the previous meeting.
- Twelve-month CPI inflation fell to 2.0% in May from 3.2% in March, close to the May Monetary Policy Report projection. CPI inflation is expected to rise slightly in the second half of this year, as declines in energy prices last year fall out of the annual comparison.
- Reflecting a margin of slack in the economy, CPI inflation had been projected to be 1.9% in two yearsÂ’ time and 1.6% in three years.
- UK GDP appears to have grown more strongly than expected during the first half of this year. Business surveys, however, remain consistent with a slower pace of underlying growth, of around 0.25% per quarter.
- UK real GDP had increased by 0.6% in 2024 Q1, 0.2% stronger than had been expected in the May Monetary Policy Report and Bank staff now expect GDP growth of 0.5% in 2024 Q2 as a whole, stronger than the 0.2% rate that had been incorporated in the May Report.
- The MPC remains prepared to adjust monetary policy as warranted by economic data to return inflation to the 2% target sustainably. It will therefore continue to monitor closely indications of persistent inflationary pressures and resilience in the economy as a whole, including a range of measures of the underlying tightness of labour market conditions, wage growth and services price inflation.
- Next meeting is on 1 August 2024.
Next 24 Hours Bias
Medium Bullish
The Canadian Dollar (CAD)
Key news events today
GDP (12:30 pm GMT)
What can we expect from CAD today?
The monthly GDP indicator is anticipated to grow 0.3% in April following a stall in economic output in March. Industries such as manufacturing, mining, quarrying, oil & gas extraction and wholesale trade are expected to lead the rise in GDP activity. Should the reading surprise market estimates, it could function as a potential bullish catalyst for the Loonie to drive USD/CAD lower.
Central Bank Notes:
- The Bank of Canada reduced its target for the overnight rate by 25 basis points to 4.75% while continuing its policy of balance sheet normalization.
- CanadaÂ’s economic growth resumed in the first quarter of 2024 after stalling in the second half of last year. At 1.7%, first-quarter GDP growth was slower than forecast in the MPR but consumption growth was solid at about 3%, and business investment and housing activity also increased.
- Inflation remains above the 2% target and shelter price inflation is high but total CPI inflation has declined consistently over the course of this year, and indicators of underlying inflation increasingly point to a sustained easing.
- CPI inflation has eased from 3.4% in December to 2.7% in April while the preferred measures of core inflation have come down from about 3.5% last December to about 2.75% in April and the 3-month rate of core inflation slowed from about 3.5% in December to under 2% in March and April.
- In the labour market, businesses are continuing to hire workers as employment has been growing, but at a slower pace than the working-age population while elevated wage pressures look to be moderating gradually.
- The Governing Council is closely watching the evolution of core inflation and remains particularly focused on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour.
- Recent data has increased the councilÂ’s confidence that inflation will continue to move towards the 2% target. Nonetheless, risks to the inflation outlook remain.
- Next meeting is on 24 July 2024.
Next 24 Hours Bias
Weak Bullish
Oil
Key news events today
No major news events.
What can we expect from Oil today?
Oil prices remain elevated as concerns about global supply disruption grow due to the ongoing geo-political tensions in the Middle East and Europe (Russia and Ukraine). WTI oil has been ranging approximately between $81 and $82.50 per barrel over the past nine trading days but it looks like it could break above this near-term resistance today.
Next 24 Hours Bias
Weak Bullish
The post IC Markets Europe Fundamental Forecast | 28 June 2024 first appeared on IC Markets | Official Blog.
United Kingdom Total Business Investment (QoQ) came in at 0.5% below forecasts (0.9%) in 1Q
398939 June 28, 2024 14:09 FXStreet Market News
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United Kingdom Total Business Investment (YoY) came in at -1%, below expectations (-0.6%) in 1Q
398938 June 28, 2024 14:09 FXStreet Market News
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
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