Articles
Japanese Yen gamble on soft US data is partially working out
398778 June 27, 2024 23:12 FXStreet Market News
- The Japanese Yen slightly recovers from its multi-decade low of 160.87 against the US Dollar seen on Wednesday.
- The Yen finds some support after comments from Japanese Finance Minister ShunÂ’ichi Suzuki.Â
- The US Dollar Index falls back below 106.00 ahead of US Q1 GDP, Durable Goods Orders and weekly Jobless Claims.Â
The Japanese Yen (JPY) is attempting to starts its recovery after its steep decline Wednesday when markets started playing a chicken game with the Japanese government. The Japanese Yen sank to 160.87 against the US Dollar (USD), even lower than the level of 160.20 seen at the end of April right before the Japanese Ministry of Finance intervened and pushed the USD/JPY back to 151.95. Early comments during the Asian session on Thursday from Japanese Finance Minister ShunÂ’ichi Suzuki seemingly had more impact than the comments from Masato Kanda, Vice Minister for International Affairs, on Wednesday when the actual move occurred.Â
Meanwhile, the US Dollar Index (DXY) – which gauges the value of the US Dollar against a basket of six foreign currencies – is easing after the chunky US data release on Thursday made markets choke. Certainly the nearly flatlining US Durable Goods orders and the uptick in Wholesale Inventories is another sign on the wall the US consumer is not having it anymore. That could have ripple effect over the summer in employment data and economic performances, no longer support a US Dollar at current levels, but lower.Â
Daily digest market movers: US data helps out
- At 01:30 GMT, Japanese Finance Minister ShunÂ’ichi Suzuki commented on the recent moves in the Japanese Yen. Suzuki said they are watching currencies closely and will act when needed, though Suzuki declined to comment on specific FX levels.
- Reuters cites severals banks which got consulted by the Bank of Japan during European hours, asked for their expectations over the range and pace of tapering. The survey will certainly be used in the upcoming meeting with the BoJ and bond market participants on July 9th and 10th. Â
- At 12:30 GMT, nearly all important data points were released for this Thursday:
- US Gross Domestic Product for the third quarter:
- Headline GDP grew at an annualized rate of 1.4%, more than the 1.3% previously estimated.
- GDP Price Index remained stable at 3.1%.
- The Headline Personal Consumption Expenditure Price index went from 3.3% to 3.4%, while the core reading also ticked higher from 3.6% to 3.7%.
- US Durable Goods for May:
- Headline Durable Goods orders fell flat to 0.1%, from a revised 0.6% to only 0.2%.
- Durable Goods without Cars and Transportation missed estimates and fell lower from 0.4% to -0.1%.
- Weekly Jobless Claims for the week ending June 14th:
- Initial Jobless Claims came in stronger, from 238,000 to 233,000..
- Continuing Claims were an issue, as they jumped from 1,821,000 to 1,839,000.
- US Gross Domestic Product for the third quarter:
- Equities are trying to digest the US data release with US equities trying to salvage the situation and erasing earlier losses partially.Â
- The CME Fedwatch Tool is broadly backing a rate cut in September despite recent comments from Federal Reserve (Fed) officials. The odds now stand at 56.3% for a 25-basis-point cut. A rate pause stands at a 37.7% chance, while a 50-basis-point rate cut has a slim 6.0% possibility.Â
- The Overnight indexed Swap curve for Japan shows a 64.0% chance of a rate hike on July 31, and a smaller 52.8% chance for a hike on September 20.Â
- The US 10-year benchmark rate tradesat 4.29%, easing a touch.Â
- The benchmark 10-year Japan Treasury Note (JGB) trades around 1.07%, nearing highs not seen since 2011.
USD/JPY Technical Analysis: Interventions from both sides?Â
The USD/JPY is trading off its multi-decade high, freshly printed on Wednesday at 160.81. For now, the words from Japanese Finance Minister ShunÂ’ichi Suzuki are having a bit of an impact, though the question is how long the impact will last as the attention will start to die down. The Japanese government is playing a dangerous game, though, seeming to bet on weak US data on Thursday and Friday, which would trigger a pullback in the DXY and might see Yen strengthen without aid from the Japanese government.Â
Although the Relative Strength Index (RSI) is overbought in the daily chart, a correction could soon occur. If weaker US data, when that plays out and is undoubtedly not a certainty, will be enough to drive USD/JPY down to 151.91 remains to be seen. Instead, look at the 55-day Simple Moving Average (SMA) at 156.39 and the 100-day SMA at 153.69 for traders to quickly build a pivot on and try to test highs again, testing the Japanese deep pockets again.Â
USD/JPY: Daily Chart
Central banks FAQs
Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%.
A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing.
A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%.
Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.
June US KC Fed manufacturing index -11 vs -1 prior
398777 June 27, 2024 23:11 Forexlive Latest News Market News
- Prior was -1
- Composite index -8 vs -2 prior
“It is clear inflation has forced the customer
to make ‘either/or’ decisions on how they spend their money. We see
value added items in the food sector being affected strongly. Our
business is not bad per se, but not as robust as we would like to see.
This is both on the restaurant side as well as retail grocery.”
“Hiring qualified hourly employees continues to be a challenge.”
“Access
to unskilled labor is better than it has been since the start of the
pandemic. Still not great quality wise, but the number of people looking
for work is robust. Still challenges on hiring and retaining
office/administrative staff. Salary/wage expectations from candidates is
extremely high.”
“We believe that our customers are delaying orders to us due to the high cost of capital.”
“Saw a quick slowdown in activity in the last few weeks. Projects put on hold, delays in permitting, etc.”
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Mexican Peso continues falling ahead of Banxico policy meeting
398775 June 27, 2024 23:10 FXStreet Market News
- The Mexican Peso is weakening ahead of the Bank of Mexico policy meeting.Â
- Mexican labor and trade data beat estimates but only partially recoup MXN’s losses.Â
- USD/MXN completes an ABC correction higher and reaches a critical turning point.
The Mexican Peso (MXN) trades lower on Thursday continuing a run of two straight days of depreciation. The Bank of Mexico (Banxico) monetary policy meeting is scheduled to end at 19:00 GMT with an announcement of the Banxico’s policy decision, a potentially market-moving event for the Peso.Â
Mexican economic data comes out better than expected on Thursday. The Unemployment Rate remains at 2.6% in May when analysts had expected a rise to 2.7%. The Balance of Trade, meanwhile, edges into surplus territory, with $1.99 billion reading when analysts had expected it to show a deficit, according to data from INEGI. The Peso only appreciates marginally after the good news however before renewing its slide.
At the time of writing, one US Dollar (USD) buys 18.42Â Mexican Pesos, EUR/MXN is trading at 19.76, and GBP/MXN at 23.33.
Mexican Peso trades flat after two-day drop
The Mexican Peso trades down in the run-up to the Banxico policy meeting on Thursday. An overwhelming majority of economists expect the central bank to maintain its policy interest rate at its current 11.00% level. Of the 25 economists surveyed by Bloomberg, 23 expect the central bank to keep interest rates unchanged. A recent survey by Mexican lender Citibanamex showed that the majority of respondents expect Banxico to keep its policy rate unchanged – although most expect a cut in August.
The high interest-rate differential between Mexico and most major economies has kept the Mexican Peso strong. Relatively higher interest rates attract greater inflows of foreign capital. Therefore, deciding not to cut interest rates might be bullish for the Peso, although given that this outcome has been widely predicted, the market may already have priced it in.
Many analysts have changed their minds about Banxico cutting interest rates due to the sharp depreciation in the Peso after the June 2 election. They now see imported inflation as a factor further weighing against immediate interest-rate cuts.Â
RabobankÂ’s Senior Strategist Christian Lawrence was one analyst who expected Banxico to cut interest rates in June. However, he changed his opinion in light of the sharp devaluation of the Mexican Peso since the election, which “has acted as a de facto cut.”Â
The same goes for economists at Standard Chartered: “We now expect Banco de México (Banxico) to stay on hold instead of cutting by 25bps at its 27 June meeting, amid sharp currency depreciation driven by elevated political noise and fiscal uncertainty,” said the bank in a recent note.Â
Technical Analysis: USD/MXN completes ABC correction and reaches crossroads
USD/MXN has completed an ABC corrective pattern higher on the 4-hour chart.Â
The pair is now at a critical juncture. If it continues to make higher highs, it could mean the short-term downtrend has reversed. Alternatively, a recapitulation would suggest the downtrend is resuming, and the pair could move to lower lows.Â
USD/MXN 4-hour ChartÂ
A move below 18.06 (June 26 low) would suggest the downtrend was resuming and probably see a continuation down to 17.87 (June 24 low).Â
At the same time, the short-term trend remains bearish, leaving the pair at risk of a recapitulation lower. Further weakness could see it reach the 17.72 swing low made on June 4.
Alternatively, if USD/MXN rallies and breaks above 18.39 (June 26 high), it would form a higher high and suggest a new short-term uptrend was evolving. Resistance at 18.48 (2023 October 6 high) and 18.68 (June 14 high) might supply upside targets afterward.
The direction of the long and intermediate-term trends remains in doubt.Â
Mexican Peso FAQs
The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.
The main objective of MexicoÂ’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.
Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.
As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.
XRP fails to recover, Ripple holders realize losses for ninth consecutive day
398771 June 27, 2024 23:09 FXStreet Market News
- Ripple holders realized losses on their XRP tokens for the ninth consecutive day on Thursday.Â
- Traders have taken over $41 million in losses since June 18, according to Santiment data.
- XRP hovers around $0.47, wiping out over 5% in value in the past seven days.Â
Ripple (XRP) holds the recent decline at around $0.47 on Thursday. On-chain data shows that different cohorts of XRP investors reacted differently to the price decline, with whales holding between 1 million and 10 million XRP distributing their token holdings at a loss.Â
Typically, an asset is expected to recover after a capitulation.Â
Daily digest market movers: Ripple on-chain data shows traders are realizing losses
- Ripple on-chain data from tracker Santiment shows that XRP investors took over $41 million in unrealized losses between June 18 and June 27, as shown in the chart below.Â
- The negative spikes in the Network Realized Profit/oLss metric show the losses taken by XRP traders in the past nine days. Consistent realization of losses by traders is considered typical of a capitulation.Â
Network realized profit/ loss vs. price
- Different segments of XRP investors reacted differently to the price decline. Wallet addresses holding between 10,000 and 100,000 XRP tokens and 100,000 and 1 million coins accumulated the asset, buying the dip.Â
- The group of investors holding between 1 million and 10 million XRP distributed their holdings at a loss. Typically, this segment is associated with capitulation prior to recovery in the assetÂ’s price, as seen in the chart below.
XRP supply distributionÂ
- In the absence of an update in the SEC vs. Ripple lawsuit, traders are watching Bitcoin price trends for cues to determine where XRP is headed.Â
- XRP is hovering around $0.47, down nearly 5% in the past seven days.
Technical analysis: Ripple likely to extend losses by 3.5%
Ripple is in a downward trend, hovering around the $0.47 level on Thursday. If the decline resumes, XRP is likely to touch support at $0.4508, the June 7 low. In the event of a recovery in the altcoinÂ’s price, XRP could fill the Fair Value Gap between $0.4731 and $0.4710 before resuming its downward trend.Â
The Moving Average Convergence Divergence (MACD) indicator supports the bearish thesis, with the signal line crossing above the MACD line and the red histogram bars under the neutral line. There is underlying negative momentum in RippleÂ’s price trend.Â
XRP/USDT daily chartÂ
RippleÂ’s close above the Fair Value Gap between $0.4825 and $0.4841 could invalidate the bearish thesis and push XRP higher toward the resistance at $0.4955.Â
Cryptocurrency metrics FAQs
The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. Since its inception, a total of 19,445,656 BTCs have been mined, which is the circulating supply of Bitcoin. On the other hand, circulating supply can also be decreased via actions such as burning tokens, or mistakenly sending assets to addresses of other incompatible blockchains.
Market capitalization is the result of multiplying the circulating supply of a certain asset by the assetÂ’s current market value. For Bitcoin, the market capitalization at the beginning of August 2023 is above $570 billion, which is the result of the more than 19 million BTC in circulation multiplied by the Bitcoin price around $29,600.
Trading volume refers to the total number of tokens for a specific asset that has been transacted or exchanged between buyers and sellers within set trading hours, for example, 24 hours. It is used to gauge market sentiment, this metric combines all volumes on centralized exchanges and decentralized exchanges. Increasing trading volume often denotes the demand for a certain asset as more people are buying and selling the cryptocurrency.
Funding rates are a concept designed to encourage traders to take positions and ensure perpetual contract prices match spot markets. It defines a mechanism by exchanges to ensure that future prices and index prices periodic payments regularly converge. When the funding rate is positive, the price of the perpetual contract is higher than the mark price. This means traders who are bullish and have opened long positions pay traders who are in short positions. On the other hand, a negative funding rate means perpetual prices are below the mark price, and hence traders with short positions pay traders who have opened long positions.
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United States Kansas Fed Manufacturing Activity declined to -11 in June from previous -1
398769 June 27, 2024 23:06 FXStreet Market News
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Gold bounces ahead of potentially market-moving inflation data
398767 June 27, 2024 23:05 FXStreet Market News
- Gold bounces off the psychologically important $2,300 level after another leg of selling.Â
- The pair continues to be pressured by a higher-for-longer outlook on interest rates – data on Friday could be key.
- XAU/USD approaches the neckline for a potential topping pattern – if broken, a cascade down could result. Â
Gold (XAU/USD) rallies, trading in the $2.320s on Thursday. Long-term global factors support the yellow metal in its recovery. This comes after a period of pressure following comments from Federal Reserve (Fed) officials – those tasked with setting interest rates in the US – who have consistently stated that more progress has to be made on bringing down inflation before they can consider cutting interest rates.Â
Their reluctance to cut rates weighs on Gold because it makes the non-interest paying asset comparatively less attractive to investors. Â
Gold pressured by reluctant Fed
Gold recovers on Thursday after another big down-day on Wednesday due to markets responding to a mixture of Fed speakers maintaining a reluctant stance regarding cutting interest rates. Â
Of key importance going forward will be the release of the US Personal Consumption Expenditures (PCE) Price Index for May on Friday, which is the Federal ReserveÂ’s (Fed) preferred gauge of inflation. A lower-than-expected result could make the Fed more likely to cut interest rates. The opposite would be the case if the PCE beats expectations.Â
Whilst the Fed sits on its hands, the market is more optimistic seeing a relatively high probability (62%) of the Fed cutting interest rates at (or before) the FedÂ’s September meeting, although this is below the 66% seen on Wednesday. The estimates are according to the CME FedWatch tool, which calculates chances using Fed Funds futures prices.Â
GoldÂ’s downside capped by longer-term factors
Gold gains support from various long-term positive factors. Firstly, there is its role as a safe-haven in an increasingly fractured, uncertain world. Geopolitical uncertainty in the Middle East, Ukraine and now France ahead of its contentious elections, is making some investors nervous, as is the impact of AI-driven revolutionary economic change as well as the threat of climate change. Â
The US Dollar (USD) is a further double-edged factor. A strong US Dollar has led to such a steep depreciation in mainly Asian currencies recently, prompting regional central banks to hoard Gold as a hedge against the effects. That said, a stronger Dollar also tends to lower Gold price precisely because it is priced in Dollars.Â
Recently USD reached a 38-year high against the Japanese Yen (JPY) and the higher it goes the more demand Gold will see as a currency hedge.Â
Another longer-term positive factor for Gold is the BRICS trade confederationÂ’s strategy to use Gold as a replacement for the US Dollar in 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 currencies.Â
Technical Analysis: Gold continues approaching key supportÂ
Gold has steadily pushed lower towards key support and the neckline of a possible topping pattern at $2,279. A break below the neckline would signal a strong down move.Â
XAU/USD Daily Chart
Â
The XAU/USD pair had been forming a bearish Head-and-Shoulders (H&S) pattern over the last three months. However, the upside break on June 20 has brought the validity of the pattern into doubt. That said, a more complex topping pattern that might still prove bearish is still possibly forming.Â
If so, then a break below the patternÂ’s neckline – even if it is not an orthodox H&S – at $2,279 would provide confirmation of a reversal lower, with a conservative target at $2,171, and a second target at $2,105.Â
At the same time, it is also still possible that Gold could find its feet and continue higher. GoldÂ’s original break above the trendline and the 50-day SMA on June 20 was supposed to reach an initial, conservative target in the mid $2,380s (June 7 high), and it is still possible it could reach that target despite the fallback.
However, it would require a break above $2,350 to confirm a move up to the June 7 high. A further break above that might indicate a continuation up to the May – and all-time – high at $2,450.Â
A break above that would confirm a resumption of the broader uptrend.Â
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.Â
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.
GBP/USD Price Analysis: Remain bearish despite bouncing off weekly lows
398765 June 27, 2024 23:03 FXStreet Market News
- GBP/USD climbs to 1.2652, up 0.25%, remaining under the 1.2703 weekly high.
- Technical stance neutral; daily MAs range between 1.2641 and 1.2557.
- ‘Evening star’ pattern and bearish RSI suggest potential drop; support at 1.2641/39 (100 & 50-DMAs), 1.2600, 1.2555 (200-DMA).
- For bullish move, GBP/USD must surpass 1.2700 and tackle resistance at 1.2730/40.
The Pound Sterling gathers some steam versus the Greenback, yet it remains trading below the weekly highs of 1.2703 as investors await the US Personal Consumption Expenditure (PCE) Price Index release, along with fears of the upcoming general election in the UK. The GBP/USD trades at 1.2652, up 0.25%.
GBP/USD Price Analysis: Technical outlook
The GBP/USD is neutral biased further confirmed by almost fla daily moving averages (DMAs) trapped within the 1.2641-1.2557 range. The formation of an ‘evening star’ kept traders from reclaiming 1.2700, exacerbated Cable’s fall to a six-week low of 1.2612.
Momentum favors sellers as depicted by the Relative Strength Index (RSI) standing at bearish territory; therefore, the GBP/USD path of least resistance is tilted to the downside.
First support would be the confluence of the 100 and 50-DMAs at around 1.2641/39, followed by the 1.2600 psychological figure. Once surpassed, the next demand zone to challenge would be the 200-DMA at 1.2555.
For a bullish continuation, traders must claim 1.2700 and clear a previous support trendline turned resistance at around 1.2730/40.
GBP/USD Price Action – Daily Chart
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, aka ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
US equities make moderate gains. Eyes on AI as OpenAI pushes out timelines
398763 June 27, 2024 22:45 Forexlive Latest News Market News
It’s been a lively week for tech stocks but the market appears to be in something of a holding pattern ahead of tomorrow’s PCE report. The Nasdaq sold off early in the week and late last week but it’s slowly climbed back.
Shares of Nvidia haven’t climbed back in the same way and remain 10% from the record set last week. Some disappointing data on the AI front came late yesterday with OpenAI saying it wouldn’t release GPT-4o in ‘weeks’ as it initially promised but instead will begin to roll it out in a month with all users getting access in the autumn to the voice features but with video and screen-sharing capabilities coming at some undetermined time later.
“WeÂ’re improving the modelÂ’s ability to detect and refuse certain content. WeÂ’re also working on improving the user experience and preparing our infrastructure to scale to millions while maintaining real-time responses,” the company said.
Shares of NVDA are down 1.3% but Micron shares are off 6% after reporting earnings late yesterday.
Micron shares daily
Shares of Walgreen’s and Levi’s are also down sharply on earnings.
On the flipside, shares of Adobe are up 3.3% with Google, Meta and Amazon also making moderate gains.
The Nasdaq is up 0.3% while the S&P 500 is up 0.15%.
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NZD/USD Price Analysis: Undergoing a throwback after piercing neckline
398761 June 27, 2024 22:40 FXStreet Market News
- NZD/USD is recovering in a throwback move to the neckline of a topping pattern it recently pierced.Â
- The pair is at a critical point – whilst the odds favor a resumption of the downside bias, a continuation higher is possible.Â
- A break below the June 26 low would confirm a continuation down to a target for the topping pattern.Â
NZD/USD has formed a complex multi-peak topping pattern which is at risk of breaking down now that the pairÂ’s “neckline” – the level underpinning its trough lows – at around 0.6100, has been decisively pierced.Â
NZD/USD 4-hour ChartÂ
NZD/USD pierced cleanly through the neckline on June 26 and fell to a low of 0.6068. However, it quickly mounted a recovery and returned back to the neckline.Â
The recovery back up to the neckline could be what is called a “throwback” in technical parlance. This is a move that comes immediately after a breakout from a chart pattern in which the price recovers back to the original boundary line, or in this case neckline.Â
The throwback is usually only a temporary recovery before price surrenders to the overwhelming downwards pressure and falls back down to the patternÂ’s breakout target. However, this is not always the case and sometimes price will recover.Â
A break below the June 26 low at 0.6068 would provide confirmation of a resumption of the downmove, to a target in a zone (shaded red) between 0.6028 (bottom of April 10 price gap) and 0.6015, the Fibonacci 0.618 extension of the height of the pattern.Â
This is a conservative estimate and it is possible the pair could go even lower to 0.5965, the 100% extrapolation of the height of the pattern from the neckline lower.  Â
A break above the 0.6149 (June 13 and 14 high) would invalidate the break and the pattern and possibly indicate a continuation higher instead.Â
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Crypto Today: Bitcoin, Ethereum hover around key supports, Spot ETH ETF approval likely by July 4
398757 June 27, 2024 22:35 FXStreet Market News
- Bitcoin trades around $61,000 on Thursday as profit-taking by investors persists.
- Spot Ethereum ETF optimism helps Ether sustain above $3,400, Reuters reports ETF approval is likely by July 4.Â
- A Satoshi era Bitcoin wallet moved $3 million in BTC late Wednesday, likely to realize gains.Â
Crypto update:
- BTC/USDT trades at $61,436 at the time of writing, hovering above crucial support at $61,000 on Thursday. The largest asset by market capitalization has sustained above support even as selling pressure persists and investors take profits.Â
Bitcoin price struggles around $61,000 as German, US government transfers weigh
- ETH/USDT trades at $3,435 on Thursday, wiping out nearly 4% value in the past seven days. Still, the optimism surrounding Spot Ethereum Exchange Traded Fund (ETF) approval persists. A Reuters report says that the US Securities and Exchange Commission (SEC) could approve the ETF as early as July 4.Â
 Ethereum ETFs may launch on July 4, could see 40% rally afterwards
- XRP/USDT trades at $0.4721, around support at $0.47 on Thursday. For the ninth consecutive day, Ripple investors have realized losses, per Santiment data. Typically, this points to a capitulation and an upcoming recovery in XRP.Â
XRP stuck under $0.48 while Ripple CEO claps back at SEC Chair for recent remarks on crypto
- Meme coins, Artificial Intelligence (AI), Real World Asset (RWA) tokens offered traders buy-the-dip opportunities on Thursday after emerging as the top-performing categories in crypto.Â
Meme coins, AI and RWA crypto tokens could drive profitability in 2024
Chart of the day:
KAS/USDT daily chartÂ
Kaspa (KAS) extended gains by over 22% in the past seven days on MEXC exchange. Unlike traditional blockchains, the Proof-of-Work (PoW) asset implements the GHOSTDAG protocol. This means transaction processing is faster, and the chain is highly scalable.Â
KAS/USDT daily chart shows that the asset could extend gains by over 9% and revisit its monthly high from June 5, at $0.1930. The asset finds support at $0.1713, the 23.6% Fibonacci retracement of the rally from the May 1 low of $0.1012 to the June 5 high of $0.1930.
In the event of a correction, KAS could dip to support at $0.1622, the June 25 high and the lower boundary of the Fair Value Gap, as seen on the daily chart.Â
Market updates:
- A Bitcoin wallet from the “Satoshi era,” the time when BTC founder Satoshi Nakamoto was active on public forums between 2009 and 2011, has been reactivated. On-chain data shows that the wallet had acquired BTC at $0.10 and moved it when the price was above $60,000, late Wednesday.Â
Bitcoin transaction by Satoshi Era walletÂ
- CEO of Helius Labs commented on the Cardano blockchain, alleging that the Ethereum-alternative chain was likely attacked. The executive shared details of what he refers to as a “DDoS” attack, in a tweet on X.Â
It seems Cardano was DDoSd attacked from
*checks notes*
Someone sending it several transactions (less than 200)
The attack cost 250$/hour for 12 hours and was stopped by *checks notes* deregistering the attacker
— mert | helius | hSOL (@0xMert_) June 27, 2024
- Axie NFT collection has noted an 690% increase in its active addresses since April, per data from DeFiLlama. The Axie Infinity (AXS) tokens lags behind with a 45% decline in its price in the same timeframe.Â
Since April, Axie monthly active addresses are up 690% from 26.5 k -> 209.6 k.
Axie is also generating more monthly onchain revenue than the top NFT collections.
Step by step. pic.twitter.com/WlypXJBA6y
— Jihoz.ron (@Jihoz_Axie) June 27, 2024
Industry updates:
- Coinbase sued the US SEC and the Federal Deposit Insurance Corporation for not complying with the Freedom of Information Act requests and asked the court to force the agencies to comply.Â
Coinbase lawsuit against FDIC
- Solana MobileÂ’s Chapter 2, or the newest versionÂ’s pre-order token holders, have surpassed 140,000.Â
- Kaspa (KAS), Ethereum Name Service (ENS) and Toncoin (TON) rank among trending coins. The assets have added 10%, 7.3% and 2.6% to their values in the past 24 hours.Â
Crypto market capitalization is nearly unchanged in the past 24 hours.Â
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EUR/USD recovers further above 1.0700 as US Dollar corrects ahead of US Inflation
398755 June 27, 2024 22:33 FXStreet Market News
- EUR/USD finds interim support near 1.0660 while uncertainty ahead of US core PCE inflation keeps the outlook vulnerable.
- Investors see the Fed reducing interest rates twice this year.
- The Euro will dance to the tunes of the preliminary June HICP data for France, Italy, and Spain on Friday.
EUR/USD rebounds sharply on Thursday’s New York session after declining to a seven-week low near 1.0665 the day before. The major currency pair finds support as the US Dollar (USD) corrects amid uncertainty ahead of the United States (US) core Personal Consumption Expenditures (PCE) Price Index data for May, which will be published on Friday. However, the near-term demand remains vulnerable amid fears of widening policy divergence between the US Federal Reserve (Fed) and the European Central Bank (ECB).
The US Dollar Index (DXY), which tracks the GreenbackÂ’s value against six major peers, faces pressure in an attempt to move above the crucial resistance of 106.00.Â
Investors will pay close attention to the US core PCE inflation data, which will provide cues about when and how much the Fed will reduce interest rates this year. The US PCE report is expected to show that core price pressures grew at a slower pace of 0.1% month-on-month in May against 0.2% in April. Annually, the underlying inflation is projected to decelerate to 2.6% from 2.8% in April.Â
Softer-than-expected inflation figures would boost expectations of early Fed rate cuts, which would be unfavorable for the US Dollar. On the contrary, hot numbers will diminish Fed rate-cut prospects.
Currently, financial markets expect that the Fed will start reducing interest rates at the September meeting and deliver subsequent rate cuts in November or December.
On the economic front, US Durable Goods Orders for May unexpectedly rose by 0.1%. Economists forecasted them to have declined by 0.1% after an expansion of 0.6%, downwardly revised from 0.7%. Fresh orders for Durable Goods are a leading indicator of core Consumer Price Index (CPI) data. Meager growth in New Orders for Durable Goods doesn’t pose significant upside risks to price pressures.
Daily digest market movers: EUR/USD awaits Eurozone HICP data
- EUR/USD continues to face selling pressure near the round-level resistance of 1.0700. The EuroÂ’s near-term outlook is uncertain ahead of the EurozoneÂ’s election outcome and growing speculation that the ECB will deliver back-to-back rate cuts.
- Investors remain cautious over the outcome of the French election amid speculation that the new government would make significant fiscal policy shifts, which would widen the financial crisis. The uncertainty over the French elections was triggered after French President Emmanuel Macron called for a snap election after his party suffered defeat in preliminary results from Marine Le PenÂ’s far-right National Rally (RN).
- On the monetary policy front, ECB policymakers refrained from committing to any pre-defined interest rate path after the central bank commenced the rate-cutting cycle in its policy meeting in early June amid concerns over wage inflation. However, higher interest rates weigh heavily on overall demand, which impacts activities in manufacturing as well as the service sector.
- Going forward, preliminary Eurozone Harmonized Index of Consumer Prices (HICP) data for June will be under the spotlight next week, as it will provide major cues about the interest rate outlook. Currently, investors expect that the ECB will deliver one more rate cut this year.
Technical Analysis: EUR/USDÂ recaptures 1.0700
EUR/USD trades inside WednesdayÂ’s range as investors sidelined ahead of the US core PCE inflation reading. The downward-sloping border of the Symmetrical Triangle pattern formation on a daily timeframe remains a major barrier for the Euro bulls. A fresh downside would appear if the pair delivers a decisive breakdown of the above-mentioned chart pattern.
The shared currency pair establishes below the 200-day Exponential Moving Average (EMA) near 1.0780, suggesting that the overall trend is bearish.
The 14-period Relative Strength Index (RSI) hovers near 40.00. A bearish momentum would trigger if the oscillator slips below this level.
Economic Indicator
Harmonized Index of Consumer Prices (YoY)
The Harmonized Index of Consumer Prices (HICP) measures changes in the prices of a representative basket of goods and services in the European Monetary Union. The HICP, released by Eurostat on a monthly basis, is harmonized because the same methodology is used across all member states and their contribution is weighted. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.
Next release: Tue Jul 02, 2024 09:00 (Prel)
Frequency: Monthly
Consensus: –
Previous: 2.6%
Source: Eurostat
United States EIA Natural Gas Storage Change came in at 52B, below expectations (53B) in June 21
398754 June 27, 2024 22:33 FXStreet Market News
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