Articles
Dow Jones Industrial Average churns on middling Wednesday markets
398486 June 27, 2024 06:09 FXStreet Market News
- Dow Jones hung up on the 39,000.00 handle amid quiet midweek markets.
- Fedspeak continues to press down on rate cut hopes.
- Investors buckle down for the wait to key data on Thursday and Friday.
The Dow Jones Industrial Average (DJIA) is churning just above 39,000.00 in tepid Wednesday trading as markets hunker down for the wait to key data in the back half of the trading week. Federal Reserve (Fed) officials have repeatedly noted the need for patience on policy rates. The US central bank continues to look for firmer signs that inflation will continue easing to the FedÂ’s 2% annual target. A notable lack of economic slowdown and a still-tight labor market leaves the Fed with little need to rush into rate cuts. Several Fed officials have cautioned that there might be no rate cuts in 2024, while the FedÂ’s median dot plot of rate expectations suggests only a single quarter-point cut for the year.
A notable lack of data on Wednesday leaves investors to fidget in place and wait for a raft of key US datapoints slated for release on Thursday and Friday. US Durable Goods Orders, a revision to first-quarter US Gross Domestic Product (GDP), and Initial Jobless Claims are all due Thursday. Friday will round out the trading week with a fresh print of US Personal Consumption Expenditure Price Index (PCE) inflation figures for May.
Investors with hopes pinned on at least a quarter-point rate cut from the Fed in September will look for soft-but-not-too-soft US economic figures. Too good a print means the Fed will be even less likely to deliver an early rate trim, while too bad of a data calendar will mean the US is headed for a recession, leaving rate-cut-hungry markets to dream of a happy middle ground.
Dow Jones news
The Dow Jones is up a scant 30 points rounding the corner into the final stretch of WednesdayÂ’s US market session. The major equity index is getting propped up by firm gains in market favorites, but most of the Dow JonesÂ’ constituent securities are in the red on Wednesday, with two-thirds of the listed stocks softly in the red.
Amazon.com Inc. (AMZN) surged nearly 4.5% on Wednesday, approaching $195.00 per share, with Apple Inc. (AAPL) struggling to keep pace, rising 2.3% to $214.00 per share. On the downside, Amgen Inc. (AMGN) and Travelers Companies Inc. (TRV) are each down around 1.7% apiece, with Amgen falling below $315.00 per share and Travelers Companies falling to $205.00 per share.
Dow Jones technical outlook
Dow Jones remains within touch range of the previous dayÂ’s closing bids near 39,100.00 on Wednesday. The DJIA remains down from last weekÂ’s peak near 39,600.00, but a near-term floor is priced in at WednesdayÂ’s early lows just above 38,900.00.
Daily candlesticks continue to hold just above the 50-day Exponential Moving Average (EMA) at 38,878.00 as bidders try to drag the large-cap index back towards all-time highs set in May just north of the 40,000.00 major handle.
Dow Jones five minute chart
Dow Jones daily chart
Economic Indicator
Personal Consumption Expenditures – Price Index (MoM)
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 MoM figure compares prices in the reference month to the previous month. 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 speaking, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
New Zealand ANZ – Roy Morgan Consumer Confidence fell from previous 84.9 to 83 in June
398485 June 27, 2024 06:05 FXStreet Market News
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GBP/JPY sets new 16-year high for a fourth straight day
398482 June 27, 2024 05:56 FXStreet Market News
- GBP/JPY continues to climb to fresh highs as Yen extends backslide.
- Floundering JPY draws out more direct warnings from Japanese officials.
- Market flows unlikely to change as rate differential remains wide.
GBP/JPY set a fresh 16-year high on Wednesday, marking the fourth consecutive day the Guppy has reached a new peak as the Japanese Yen continues to tumble. Increasingly stern alerts from Japanese policymakers regarding the pace of the YenÂ’s decline has produced very little results as investors await actual policy changes from the Bank of Japan (BoJ) and the Japanese Ministry of Finance (MoF).Â
Currency chief Masato Kanda, Japan’s Vice Finance Minister noted early Wednesday that he has “serious concern about the recent rapid weakening of the yen”, within Kanda continuing that he and the MoF are closely monitoring market trends with a high sense of urgency”. Kanda ended with saying that “we will take necessary actions against any excessive movements.”
GBP/JPY briefly softened to 202.40 before Guppy traders promptly responded by pushing the pair to a fresh 16-year high at 203.15.
The back half of the trading week kicks off a raft of impactful data for Japan and the UK, with Japanese Retail Trade figures due early Thursday. The Bank of England (BoE) will release its latest Financial Stability Report later in the day, leaving Yen pairs to pivot to face down the latest Japanese Tokyo Consum Price Index (CPI) inflation figures due early Friday. The UKÂ’s first-quarter Gross Domestic Product (GDP) will be revised to round out the trading week.
GBP/JPY technical outlook
A steady grind into the high side leaves GBP/JPY with little meaningful technical resistance levels. The pair has risen 2% from the last swing low into 198.90, trading steadily north of the 200-hour Exponential Moving Average (EMA) rising into 201.60.
Daily candlesticks have churned out an eighth consecutive gain as the Guppy continues its march towards 204.00. The pair is up 13% in 2024, and has closed in the green for six straight months.
GBP/JY hourly chart
GBP/JPY daily chart
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Mexican Peso slips as market shifts focus to Banxico
398480 June 27, 2024 05:51 FXStreet Market News
- Mexican Peso falls for second consecutive day against US Dollar.
- USD/MXN hits a daily high of 18.36 before trimming gains as Wall Street turns green.
- Banxico expected to keep interest rates unchanged at 11.00% amid sharp Peso depreciation and recent inflation spike.
- Fed Governor Michelle Bowman’s hawkish comments support USD.
The Mexican Peso extended its losses for the second consecutive day against the Greenback after the latter rose sharply. This was boosted by the jump in the USD/JPY pair, which exchanges hands at 38-year high as US Treasury bond yields advance as traders brace for the release of crucial inflation data in the United States (US). The USD/MXN trades at 18.33, up 1.30 %.
Sentiment shifted positively as Wall Street turned green during the last hour, trimming the USD/MXM pair gains after hitting a daily high of 18.33. MexicoÂ’s economic docket remains scarce as investors brace for Thursday’s Bank of Mexico (Banxico) monetary policy.
Banxico is expected to keep interest rates unchanged at 11.00% after the Mexican currency experienced a sharp depreciation following the June 2 election, alongside the sudden jump in JuneÂ’s mid-month inflation.
The Citibanamex survey showed that most economists expect rates to be unchanged at 11.00%, yet they expect the central bank to cut rates until August.
Besides that, investors are eyeing President-elect Claudia SheinbaumÂ’s cabinet members on Thursday.
Meanwhile, the USD/MXN experienced back-to-back positive gains sponsored by Federal Reserve (Fed) officials’ hawkish comments, particularly Governor Michelle Bowman. She said that rates will remain steady for “some time” and that if the disinflation process stalls, sheÂ’s open to another interest rate hike.
Daily digest market movers: Mexican Peso falls as traders await Banxico decision
- MexicoÂ’s economic docket will feature the Balance of Trade for May on Thursday, alongside the Unemployment Rate.
- Citibanamex survey showed economists priced out fewer rate cuts by the central bank, estimating rates will be lowered to 10.25% in 2024, up from 10.00%. Regarding the USD/MXN, the consensus estimates the exchange rate will end the year at 18.70, up from 18.00 in the previous report.
- Regarding economic growth, the consensus revised the Gross Domestic Product (GDP) for 2024 downward from 2.2% to 2.1% YoY.
- CME FedWatch Tool shows odds for a 25-basis-point Fed rate cut at 56.3%, lower than TuesdayÂ’s 59.5%.
Technical analysis: Mexican Peso falls as USD/MXN rallies back above 18.20
The USD/MXN uptrend remains in play, but the exotic pair will remain volatile during the rest of the session and Thursday as traders await BanxicoÂ’s decision. Momentum favors buyers, according to the Relative Strength Index (RSI), is bullish.
For a bullish continuation, buyers need to push the USD/MXN exchange rate past the psychological 18.50 level. Once cleared, the next stop would be the year-to-date (YTD) high of 18.99, followed by the March 20, 2023, high of 19.23, followed by an uptick to 19.50.
On the flip side, if USD/MXN tumbles below 18.00, the next key support level would be the 50-day Simple Moving Average (SMA) at 17.37 before testing the 200-day SMA at 17.23. Once those two levels are cleared, the next stop would be the 100-day SMA at 17.06.
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.
The USD and AUD the leaders while JPY and NZD the laggards
398479 June 27, 2024 05:50 Forexlive Latest News Market News
It’s been a good day for the AUD and the USD, less than optimal day for the JPY and NZD.
The AUD was supported after a hotter-than-expected CPI print and markets seeing about a 60% change of a hike at the September meeting and 74% odds of a hike by November.
The USD’s move was more interesting, and could have received some help from the upside in treasury yields. However, with the recent batch of data out of the US, I am putting the USD strength down to month-end and quarter-end related flows.
At the bottom of the pack was the JPY, which continued to lose ground throughout the session and forcing USDJPY into fresh 4 decade highs. Eyes will be focused on possible intervention from the Japan.
For the NZD, we did have some negative comments on the economy from the NZ treasury early during yesterday’s Asia-Pac session, but not sure whether those comments fully explain the amount of weakness though. The currency has struggled to keep it’s momentum following the more hawkish-than-expected policy decision we had in May.
Currency strength chart
Silver Price Analysis: XAG/USD tumbles and remains bearish below $29.00
398477 June 27, 2024 05:49 FXStreet Market News
- Silver drops influenced by Fed’s Core PCE Price Index anticipation.
- Last week’s bearish engulfing pattern and RSI hint at more declines.
- Support levels: $28.28 (June 10 high), $28.00, $27.01 (May 8 low), $26.82 (100-DMA).
- Resistance points: $29.17 (50-DMA), $31.54 (June 7 high), $32.00, $32.51 (YTD high).
Silver price fell on Wednesday as market participants awaited the release of the Fed’s  preferred inflation gauge, the core Personal Consumption Expenditure (PCE) Price Index, after releases from major countries hinted at a reacceleration of inflation. The XAG/USD spot price is at $28.76, down by 0.46%.
XAG/USD Price Analysis: Technical outlook
The grey metal formed a ‘bearish engulfing’ chart pattern last week, indicating potential for further downside. Momentum support sellers, as measured by the bearish Relative Strength Index (RSI), suggest that silver could extend its losses.
Therefore, XAG/USD’s first support is the June 10, 2021, high at $28.28. A breach of the latter will expose the psychological $28.00 mark, followed by the May 8 swing low of $27.01, ahead of the 100-DMA at $26.82.
Conversely, if XAG/USD resumes its uptrend, the next resistance level would be the 50-day moving average (DMA) at $29.17. Surpassing this level would target the June 7 high of $31.54. Clearing this would aim for $32.00 before challenging the year-to-date (YTD) high of $32.51.
XAG/USD Price Action – Daily Chart
NZD/USD Price Analysis: Kiwi plunges, outlook hinges on SMA convergence support
398475 June 27, 2024 05:49 FXStreet Market News
- On Wednesday, NZD/USD dives further, approaching 100 and 200-day Simple SMA convergence.
- The Kiwi’s outlook could skew bearish as the pair nears losing the significant 0.6070 threshold.
On Wednesday, the NZD/USD took a big hit, with the pair plunging towards the convergence of the 100 and 200-day Simple Moving Averages (SMAs) near the 0.6070 level. Pressure mounts on the pair and further losses could be on the horizon if the bears fail to defend this crucial area.
The Relative Strength Index (RSI) for the NZD/USD pair on the daily chart plummeted to 42, suggesting a deepening bearish momentum. Even though it hasn’t reached the oversold threshold yet, the declining trend is visible. The Moving Average Convergence Divergence (MACD) indicates bearish sentiment with rising red bars, affirming the stronger position of the sellers.
NZD/USD daily chart
The NZD/USD finds immediate support near the 0.6070 threshold coinciding with the converging 100 and 200-day SMAs. Additional support is lurking lower at 0.6050. A breakdown below these SMAs would validate a deeper sell-off scenario.
On the flip side, resistance is now at the former support level of 0.6100. The 20-day SMA at 0.6145Â offers additional resistance, followed by resistance points at 0.6170 and 0.6200. A decisive breakout above these levels could signal a termination of the current bearish trend and a shift in favor of the bulls.
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Tesla led the charge for the mag 7 with Google down but close to flat
398474 June 27, 2024 05:29 Forexlive Latest News Market News
The big 7 kept up pretty well when compared to the price action we saw in the USD and yields.
Big 7 performance NY close
Tesla was the best performer (still down more than 20% YTD though), while Google treaded water to finish close to flat.
Amazon finished up 3.9%, with some good notes from Adam regarding Amazon and the AI theme.
Nvidia was choppy with initially seeing weakness a while after the cash open (down more than 2% at some stage) before eventually regaining some composure heading into the opening bell.
Big 7 chart
NZD/JPY Price Analysis: Deeper correction in sight, bullish outlook holds
398471 June 27, 2024 04:51 FXStreet Market News
- NZD/JPY continues consolidating at 97.70.
- The 20-day SMA will offer strong support at 96.30 where the sellers will face a strong fortification.
- Despite the consolidation, the bullish outlook remains afloat, with targets set on the key resistance of 98.00.
On Wednesday, the NZD/JPY cross was seen neutral at 97.70 while extending its phase of consolidation. Nevertheless, the pair upholds robust support at the 20-day Simple Moving Average (SMA) of 96.30, maintaining its position near levels not seen since 2007. In that sense, a healthy correction was increasingly necessary to alleviate the overbought conditions.
The daily Relative Strength Index (RSI) currently sits at 64, slightly lower than Tuesday’sreading, indicating a mild downward momentum. Despite this subtle decline, the indicator remains in positive territory, moving away from extreme conditions. Conversely, the Moving Average Convergence Divergence (MACD) prints a fresh red bar, signaling a reduced buying pressure. This hints at a possible continuation of the consolidation phase.
NZD/JPY daily chart
The predominance of bulls above the 20-day SMA reflects the persistent upward pressure supporting the cross. With technical indicators falling back from overbought regions, the upper hand still belongs to the bulls, albeit with the increasing necessity of a correction or consolidation to sustain the upward trajectory.
Looking ahead, market participants are looking closely at the immediate support level of 97.00, and are eyeing the resistance target of 98.00. A decisive break above this consolidation range would confirm further upside potential, whereas a dip below the 20-day SMA could suggest a deeper correction.
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USDJPY flirting with 161 with intervention watch in overdrive
398470 June 27, 2024 04:49 Forexlive Latest News Market News
USDJPY getting close to 161 after taking out the previous intervention highs close to 161.20. Mostly likely quite a decent amount of stops triggered as we broke to new highs helping the pair higher.
With treading on fresh ground it means intervention watch is in overdrive in markets.
USDJPY trades to just below 161
It’s easy to blame the move in US yields for the gain, but to be fair the USDJPY did see a bit of recent divergence from US yields from the middle of the month.
A lot of this week’s moves are difficult to trust since we have month-end, quarter-end and half-year end flows to deal with.
Nonetheless, lots of eyes on Japanese officials and the USDJPY today.
USDJPY and US10Y