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What did we learn from the presidential debate?
398903 June 28, 2024 10:56 Forexlive Latest News Market News
Well done we made it through the presidential debate.
There were plenty of takeaways you can derive on the political side, but this didn’t mean much for markets.
We saw some initial upside in the USD (downside in Antipodean currencies) but the moves pulled back the deeper we went into the debate.
The most noticeable comments for markets (but arguably not really impactful or meaningful) were:
- Trump says planned tariffs will decrease deficits and won’t increase problematic inflation
- Trump says China has been robbing us for years, and imposing tariffs on them is fair
- Trump says he would have the Russia/Ukraine war settled before he takes office
So, all in all, it was 90 minutes (which we’ll never get back) where we didn’t learn much, and had to listen to arguments about golf handicaps when the most important job in the world is at stake.
Have I mentioned how excited I am about the next few months of election shenanigans?
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JapanÂ’s Suzuki: Deeply concerned about excessive, one-sided moves on forex
398902 June 28, 2024 10:49 FXStreet Market News
Japanese Finance Minister Shunichi Suzuki said on Friday that he is “deeply concerned about excessive, one-sided moves on forex. “
Additional comments
Won’t comment on forex levels.
Important for currencies to move in stable manner reflecting fundamentals.
Rapid FX moves undesirable.
Deeply concerned about excessive, one-sided moves on forex.
Closely watching FX moves with a high sense of urgency.
No comment on whether current levels are excessive or not.
Believe trust in Japanese currency maintained.
Market reaction
At the time of writing, USD/JPY is extending a retreat from a new 38-year peak of 161.28, currently trading near 160.90. The pair is still up 0.10% on the day.
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US Dollar Index climbs to fresh two-month top ahead of the key US PCE data
398900 June 28, 2024 10:27 FXStreet Market News
- DXY regains positive traction amid some repositioning ahead of the US PCE Price Index.Â
- The recent hawkish comments by Fed officials back the case for one rate cut this year.
- Hence, the crucial inflation data will play a key role in driving the USD in the near term.
The US Dollar (USD) attracts fresh buyers following the previous day’s softer US macro data-inspired downfall and climbs to a fresh two-month peak during the Asian session on Friday. The USD Index (DXY), which tracks the Greenback against a basket of currencies, is currently placed just above the 106.00 mark, up 0.15% for the day, as traders look to the crucial US inflation data for some meaningful impetus.Â
The Federal Reserve’s (Fed) preferred inflation measure – the Personal Consumption Expenditure (PCE) Price Index – will be released later during the early North American session at 12:30 GMT. A lower-than-expected PCE deflator or a number that is in line with market expectations will back the case for two rate cuts by the Fed this year, which, in turn, could weaken the USD. Meanwhile, any upward surprise should push back the expected timing for the first Fed cut and trigger a fresh leg up for the buck.Â
Heading into the key data risk, the recent comments from a slew of influential FOMC members suggested that the US central bank is in no rush to start its rate-cutting cycle. In fact, Fed Governor Michelle Bowman said on Thursday that we are not at a point yet to consider a rate cut as the upside risks to inflation persist. Moreover, Atlanta Fed President Raphael Bostic noted that inflation remains a chief concern and that the central bank wants to be absolutely certain that inflation will return to 2% before an initial cut.
This overshadowed ThursdayÂ’s unimpressive US data, which indicated that growth momentum in the world’s largest economy is moderating. Hence, Friday’s release of the US PCE data will drive expectations about the Fed’s future policy decisions, which, in turn, should drive the Greenback in the near term. Meanwhile, the first US presidential debate between President Joe Biden and Republican Presidential Nominee Donald Trump failed to provide any impetus to the USD, which remains on track to end in the green for the fourth straight week.
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.
Asia-Pac equity futures not too bothered by the debate at the moment
398899 June 28, 2024 10:22 Forexlive Latest News Market News
Equity futures trades mostly green across the board.
The outperformers are the Hang Seng and the A50, at the same time we are starting to see some of the earlier USD strength soften a bit and some of the earlier weakness in the Antipodean currencies recover as the presidential debate carries on.
For those who traded through the trade war, you’ll be all too familiar with the chop. It’s going to be a very interesting next few months 🙂
Equity futures indexes
Gold price drifts lower ahead of US PCE Price Index, holds above $2,300 mark
398896 June 28, 2024 09:50 FXStreet Market News
- Gold price struggles to capitalize on the overnight strong bounce from a two-week low.
- Fed rate cut uncertainty helps limit the USD corrective slide and caps gains for the metal.
- Traders also seem reluctant to place aggressive bets ahead of the key US PCE Price Index.
Gold price (XAU/USD) registered strong gains of over 1% on Thursday and snapped a two-day losing streak to a two-week low touched the previous day. Softer US macro data released on Thursday suggested that growth momentum in the world’s largest economy is moderating. This comes on top of signs of easing inflationary pressures and reaffirms market expectations that the Federal Reserve (Fed) will start cutting interest rates. This led to the overnight downfall in the US Treasury bond yields this year, which triggered the US Dollar (USD) corrective slide from its highest level since early May and benefited the precious metal.Â
Apart from this, geopolitical tensions in the Middle East and the protracted Russia-Ukraine war provided an additional lift to the safe-haven Gold price. The upside for the XAU/USD, however, remains capped as bulls seem reluctant to place aggressive bets and prefer to wait for more cues about the Fed’s rate-cut path. Hence, the spotlight remains on the US Personal Consumption Expenditures (PCE) Price Index, due later during the North American session. The crucial US inflation data will influence expectations about the Fed’s future policy decision and determine the near-term trajectory for the non-yielding yellow metal.Â
Daily Digest Market Movers: Gold price awaits US PCE for more cues about the FedÂ’s rate-cut path
- 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 at 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.
- This, in turn, caps any further gains for the XAU/USD ahead of the release of the US Personal Consumption Expenditures (PCE) Price Index – the Fed’s preferred inflation gauge – later this Friday.
Technical Analysis: Gold price fails ahead of 50-day SMA support breakpoint turned hurdle
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.
Gold FAQs
Gold has played a key role in humanÂ’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesnÂ’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a countryÂ’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
US Election Debate: Trump says tariffs will decrease deficits and urges scrutiny of countries like China
398895 June 28, 2024 09:40 FXStreet Market News
The first US presidential debate between President Joe Biden and Republican Presidential Nominee Donald Trump began on CNN News. It is their first showdown of the 2024 election process.
The first question asked was on the state of the economy, including spiraling inflation, and whether it has been worse off after US President Biden took over.
Biden said that he aims to reduce housing prices, increase construction, and limit rent caps if he gets elected for the second term.
Trump condemned elevated inflation levels. He suggested that tariffs would decrease deficits and urged scrutiny of countries like China.
When asked about the Russia-Ukraine war, Trump said that If Russia respected President Biden, he wouldnÂ’t have invaded Ukraine. He added that Biden in fact encouraged Putin to get into the war.
“Shortly after I win the presidency, I will have the horrible war between Russia and Ukraine settled,” Trump said.
developing story, please refresh the page for updates.
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USD/JPY moves above 161.00, marks fresh 38-year highs
398894 June 28, 2024 09:36 FXStreet Market News
- USD/JPY marks fresh 38-year high at 161.27.
- Tokyo CPI rose to 2.3% year-over-year in June, up from the previous period’s 2.2%.
- The US Dollar (USD) gains ground due to higher yields on US Treasury bonds.
USD/JPY trades around 161.00, the highest level since 1986, during the Asian session on Friday. The Consumer Price Index (CPI) inflation in Tokyo rose to 2.3% year-over-year in June, up from the previous period’s 2.2%. Core Tokyo CPI inflation, which excludes volatile food prices, also increased during the same period, reaching 2.1% YoY compared to the previous 1.9%, surpassing the median market forecast of 2.0% YoY.
Japanese Finance Minister Shunichi Suzuki stated on Wednesday that he “will take appropriate steps on excessive FX moves.” Suzuki refrained from commenting on specific forex levels or potential interventions but emphasized the importance of currencies moving in a stable manner that reflects fundamentals. Chief Cabinet Secretary Yoshimasa Hayashi echoed similar sentiments as the Finance Minister.
The US Dollar (USD) gains ground due to higher yields on US Treasury bonds. 2-year and 10-year yields stand at 4.72% and 4.30%, respectively, by the press time. Federal Reserve (Fed) Board of Governors member Michelle Bowman noted on Thursday that while current Fed policies should be enough to drag inflation back to target, the Fed shouldn’t be unwilling to weigh further rate cuts in inflation data proves sticky.
FridayÂ’s Core PCE Price Index inflation is projected to decrease year-over-year to 2.6% from the previous 2.8%. This data is seen as the Federal Reserve’s (Fed) preferred inflation gauge. Market participants are hoping that signs of easing inflation will encourage the Federal Reserve (Fed) to consider rate cuts sooner rather than later.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the worldÂ’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of JapanÂ’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of JapanÂ’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation.
The BoJÂ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the YenÂ’s value against other currencies seen as more risky to invest in.
Australia Private Sector Credit (YoY) remains at 5.2% in May
398892 June 28, 2024 09:33 FXStreet Market News
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