Articles

Shelter inflation is the key to North American inflation outlook

401842   July 12, 2024 03:15   Forexlive Latest News   Market News  

It’s
all
housing
at
this
point.

CIBC
today
highlights
that
shelter
is
the
key
to
getting
inflation
back
to
the
Fed
and
Bank
of
Canada
targets.
For
the
Fed,
they
note
that
core
inflation
excluding
housing
is
already
at
2%
y/y.

They
highlight
analysis
suggesting
that
rent
inflation
takes
about
a
year
to
enter
the
official
measures,
so
at
this
point
the
Fed
is
fighting
ghosts.

“Happily,
research
out
of
the
Richmond1
and
Boston
Fed,
using
two
very
different
methodologies,
arrive
at
broadly
similar
conclusions:
by
the
middle
of
next
year,
shelter
inflation
should
come
down
to
close
to
its
pre-pandemic
average
of
3%.
The
Richmond
Fed
estimate
is
more
aggressive,
suggesting
shelter
should
fall
by
3%-points
to
around
2%
while
the
Boston
Fed
paper
has
a
more
steady
pace
of
disinflation
resulting
in
a
2%-point
decline.
But
both
suggest
major
progress
is
right
around
the
corner.

CIBC
sees
shelter
inflation
falling
to
3%
by
mid-2025,
which
would
bring
it
back
to
pre-pandemic
levels.

In
Canada,
the
calculation
is
different
but
the
result
is
the
same.
The
major
cost
weighing
on
Canadians
is
mortgage
interest,
due
to
variable
rate
mortgages
and
5-year
resets.
However
with
BOC
rates
staying
flat,
those
on
variable
rates
will
soon
see
flat
y/y
price
changes.

For
these
changes,
CIBC
built
its
own
model
and
see
mortgage
interest
costs
‘cooling
dramatically’
over
the
coming
year-and-a-half,
leading
the
BOC
to
cut
the
overnight
rate
to
2.75%
by
the
end
of
2025.

There’s
more
to
the
inflation
story
than
shelter
in
both
the
US
and
Canada.
But
gaining
some
shelter
from
rising
costs
for
accommodation
is
no
small
part
of
the
last
mile.
It’s
also
an
important
part
of
keeping
inflation
expectations
anchored
and
therefore
material
to
supporting
interest
rate
reductions
in
both
countries
through
2025

I
think
the
market
has
largely
moved
beyond
inflation
but
these
are
the
same
numbers
the
Fed
and
BOC
are
looking
at.
Next
up
is
the
BOC
on
July
24
and
the
implied
probability
of
a
cut
is
66%.

Gold price surges on weak US inflation data, Fed rate cut expectations grow

401840   July 12, 2024 03:14   FXStreet   Market News  

• 
  Gold
  skyrockets
  above
  $2,400
  after
  softer
  US
  CPI
  sparks
  hopes
  for
  Fed
  rate
  cuts
  in
  2024.
• 
  US
  10-year
  Treasury
  yield
  drops
  10
  basis
  points
  to
  4.187%,
  boosting
  Gold’s
  appeal.
• 
  CME
  FedWatch
  Tool
  shows
  85%
  odds
  for
  September
  rate
  cut;
  US
  Dollar
  Index
  falls
  to
  104.48.

Gold
prices
skyrocketed
sharply
during
Thursday’s
North
American
session
after
the
release
of
the
Consumer
Price
Index
(CPI)
in
the

United
States
opened
the
door
for
the

Federal
Reserve
(Fed)
to
lower
borrowing
costs.
Hence,
US
Treasury
yields
tanked,
a
tailwind
for
the
precious
metal.
The

XAU/USD
trades
at
$2,414,
up
more
than
1.80%
after
bouncing
off
daily
lows
of
$2,371.

Market
sentiment
shifted
sour
as
the
S&P
500
and
the
Nasdaq
100
sank
sharply,
while
the
Dow
Jones
Industrial
advanced.
US
yields
are
collapsing
with
the
10-year
Treasury
note
yield
down
10
basis
points
to
4.187%.

Data
from
the
US
Bureau
of
Labor
Statistics
(BLS)
revealed
that
consumer
prices
deflated
in
June.
Excluding
volatile
items
like
food
and
energy,
the
so-called
core
dipped
as
well,
reigniting
hopes
that
the
Fed
could
cut
rates
in
2024.

The
CME
FedWatch
Tool
shows
85%
odds
for
a
quarter-point
percentage
rate
cut
in
September,
up
from
Wednesday’s
70%
chances.

The
December
2024
fed
funds
rate
futures
contract
implies
that
the
Fed
will
ease
policy
by
49
basis
points
(bps)
toward
the
end
of
the
year,
up
from
39
a
day
ago.

Other
data
showed
the
labor
market
remains
robust
as
the
number
of
Americans
filing
for
unemployment
benefits
missed
the
consensus
and
came
in
lower
than
the
previous
reading.

Today’s
US
data
presents
a
balanced
Goldilocks
scenario:
inflation
is
decreasing
while
employment
remains
strong,
with
no
signs
of
an
impending
recession.

Meanwhile,
the
US
Dollar
Index
(DXY),
which
tracks
the
value
of
a
basket
of
six
currencies
against
the
US
Dollar,
plummeted
more
than
0.40%
and
is
down
at
104.48.

Ahead
of
the
week,
the
US
economic
schedule
will
feature
the
Producer
Price
Index
(PPI)
for
June
and
the
University
of
Michigan
Consumer
Sentiment
survey
for
the
same
period.

Daily
digest
market
movers:
Gold
soars
due
to
Fed
rate
cut
hopes

• June
  US
  Consumer
  Price
  Index
  (CPI)
  contracted
  by
  -0.1%
  MoM,
  missing
  the
  forecast
  of
  a
  0.1%
  increase.
  Core
  CPI
  also
  ticked
  lower
  from
  0.2%
  in
  May
  to
  0.1%
  in
  June,
  aligned
  with
  estimates.
• Over
  the
  12
  months
  to
  June,
  headline
  US
  inflation
  dropped
  to
  3%,
  down
  from
  3.3%,
  while
  core
  inflation
  slumped
  to
  3.3%,
  below
  estimates
  and
  down
  from
  the
  previous
  month’s
  3.4%.
• Initial
  Jobless
  Claims
  for
  the
  week
  ending
  July
  6
  came
  in
  better
  than
  expected
  at
  222K,
  below
  the
  consensus
  of
  236K
  and
  the
  previous
  reading
  of
  239K.
• According
  to
  the
  CME
  FedWatch
  Tool,
  odds
  of
  a
  September
  rate
  cut
  have
  increased
  to
  84%,
  up
  from
  72%
  on
  Wednesday.
• Bullion
  prices
  retreated
  somewhat
  due
  to
  the
  People’s
  Bank
  of
  China’s
  (PBoC)
  decision
  to
  halt
  Gold
  purchases
  in
  June
  as
  it
  did
  in
  May.
  China
  held
  72.80
  million
  troy
  ounces
  of
  the
  precious
  metal
  at
  the
  end
  of
  June.

Technical
analysis:
Gold
price
climbs
above
$2,400,
invalidates
Head-and-Shoulders

Gold
price
resumed
its
aggressive
uptrend
and
decisively
broke
the
Head-and-Shoulders
neckline,
invalidating
the
chart
pattern
and
opening
the
door
for
higher
prices.
Momentum
remains
on
the
buyers’
side,
with
the
Relative
Strength
Index
(RSI)
finally
showing
signs
of
direction,
trending
up.

That
said,
the
path
of
least
resistance
is
to
the
upside.
The
XAU/USD
first
resistance
would
be
the
year-to-date
high
of
$2,450,
ahead
of
the
$2,500
mark.
Conversely,
if
Gold
slides
below
the
$2,400
figure,
the
next
demand
zone
will
be
the
July
5
high
at
$2,392.
If
cleared,
XAU/USD
would
continue
to
$2,350

EUR/USD Forecast: The hunt for 1.1000 has begun

401838   July 12, 2024 03:14   FXStreet   Market News  

• 
  EUR/USD
  consolidates
  its
  bullish
  appetite
  around
  1.0900.
• 
  The
  US
  Dollar
  melted
  on
  poor
  US
  CPI
  prints.
• 
  US
  Producer
  Prices
  should
  keep
  the
  focus
  on
  the
  inflation
  issue.

The
US
Dollar
(USD)
accelerated
its
downward
trend
big
time
on
Thursday,
dragging
the
USD
Index
(DXY)
to
multi-week
lows
near
the
104.00
neighbourhood
in
the
wake
of
the
publication
of
lower-than-estimated
US
inflation
figures
gauged
by
the
CPI.

The
steep
decline
in
the
Greenback
motivated
EUR/USD
to
revisit
the
1.0900
hurdle
for
the
first
time
since
early
June,
always
against
the
backdrop
of
further
repricing
of
the
start
of
the
easing
cycle
by
the
Federal
Reserve
(Fed)
in
September.

Following
the
US
CPI
data,
the
CME
Group’s
FedWatch
Tool
suggests
a
nearly
93%
chance
of
interest
rate
cuts
in
September,
increasing
to
around
99%
by
December.

But
then
again,
that’s
the
market
speaking.

Against
that
backdrop,
it
is
worth
remembering
that
Chief
Jerome
Powell
indicated
he
was
not
yet
convinced
that
inflation
was
sustainably
decreasing
to
2%,
though
he
showed
“some
confidence”
it
was
trending
in
that
direction.
On
Thursday,

Federal
Reserve
Bank
of
St.
Louis
President
Alberto
Musalem
argued
that
the
consumer
price
data
released
earlier
in
the
day
is
moving
in
the
right
direction.
Musalem
remarked
that
recent
inflation
data
“has
slowed
and
is
consistent”
with
more
price-sensitive
consumers.
He
also
expressed
his
belief
that
monetary
policy
is
currently
in
the
right
place
and
mentioned
that
he
is
monitoring
the
data
to
see
if
inflation
continues
to
moderate
back
to
the
2%
target.

Her
colleague
Mary
Daly,
President
of
the
San
Francisco
Federal
Reserve
Bank,
remarked
that
recent
cooler
inflation
readings
are
a
“relief,”
and
she
anticipates
further
easing
in
both
price
pressures
and
the
labour
market,
which
would
justify
interest
rate
cuts.
She
noted
that
while
inflation
is
likely
to
cool
further,
the
progress
may
be
“bumpy.”
Daly
indicated
that
the
economy
appears
to
be
moving
towards
a
scenario
where
one
or
two
interest
rate
cuts
this
year,
as
projected
in
the
June
Fed
policymaker
forecasts,
“would
be
the
appropriate
path.”

In
the
meantime,
the
macroeconomic
landscape
remained
stable
on
both
sides
of
the
Atlantic.
The
European
Central
Bank
(ECB)
is
considering
further
rate
cuts
beyond
the
summer,
with
markets
anticipating
two
additional
cuts
by
year-end,
while
debate
continues
among
investors
about
whether
the
Fed
will
implement
one
or
two
(or
three?)
rate
cuts
this
year,
despite
the
Fed’s
current
projection
of
a
single
cut,
likely
in
December.

The
ECB’s
rate
cut
in
June,
along
with
the
Fed’s
decision
to
maintain
rates,
has
widened
the
policy
divergence
between
the
two
central
banks,
potentially
leading
to
further
weakening
of
EUR/USD
in
the
short
term.

However,
economic
recovery
prospects
in
the

Eurozone,
combined
with
signs
of
cooling
in
key
US
economic

indicators,
may
mitigate
this
disparity
and
occasionally
support
the
pair
in
the
near
future.

Looking
ahead,
market
participants
should
closely
monitor
the
release
of
further
US
inflation
data
gauged
by
Producer
Prices
on
Friday
as
well
as
the
advanced
Michigan
Consumer
Sentiment
print.

EUR/USD
daily
chart

EUR/USD
short-term
technical
outlook

EUR/USD
is
expected
to
meet
the
next
up-barrier
at
the
July
peak
of
1.0900
(July
11),
followed
by
the
June
peak
of
1.0916
(June
4).
If
the
pair
rises
over
this
level,
it
may
bring
the
March
peak
of
1.0981
(March
8)
back
into
focus,
followed
by
the
psychological
1.1000
barrier.

If
bears
get
the
upper
hand,
spot
might
touch
the
200-day
SMA
at
1.0802
before
sliding
to
a
low
of
1.0666
on
June
26.
From
here,
the
May
low
of
1.0649
(May
1)
leads
to
the
2024
bottom
of
1.0601
(April
16).

Looking
at
the
larger
picture,
it
looks
that
further
gains
are
on
the
way
if
the
key
200-day
SMA
is
routinely
surpassed.

So
far,
the
4-hour
chart
indicates
a
modest
improvement
in
the
upside
momentum.
Initial
resistance
comes
at
1.0900
ahead
of
1.0916.
On
the
flip
side,
the
55-SMA
at
1.0798
comes
first
ahead
of
the
200-SMA
at
1.0784
and
ultimately
1.0709.
The
Relative
Strength
Index
(RSI)
has
dropped
below
65.

BofA: Chart: G10 FX HeatMap and USD outlook

401837   July 12, 2024 02:41   Forexlive Latest News   Market News  

Bank
of
America
highlights
that
recent
US
growth
indicators
have
started
to
turn
lower,
and
inflation
appears
to
be
easing.
This
trend
has
tempered
the
USD’s
strength,
as
markets
anticipate
a
potential
Fed
easing
cycle
this
year.
BofA’s
G10
FX
HeatMap
provides
a
broader
context
for
the
USD
outlook
by
evaluating
multiple
metrics
across
G10
currencies.

Key
Points:

• 
  US
  Growth
  and
  Inflation:
  Indicators
  show
  US
  growth
  slowing
  and
  inflation
  easing,
  contributing
  to
  the
  USD
  pulling
  back
  from
  near-year-to-date
  highs.
• 
  Fed
  Easing
  Expectations:
  The
  recent
  data
  supports
  the
  plausibility
  of
  a
  Fed
  easing
  cycle
  starting
  this
  year,
  influencing
  the
  USD
  outlook.
• 
  G10
  FX
  HeatMap:
  BofA’s
  heatmap
  evaluates
  G10
  currencies
  on
  metrics
  such
  as
  growth
  and
  inflation
  outlooks,
  interest
  rates,
  valuation,
  financial
  conditions,
  positioning,
  and
  economic
  data
  trends.
• 
  Key
  Observations:
  • 
    Scandinavian
    Currencies:
    Favorable
    outlooks
    based
    on
    the
    evaluated
    metrics.
  • 
    USD
    and
    JPY:
    A
    wide
    distribution
    of
    favorable
    and
    unfavorable
    scores,
    indicating
    mixed
    outlooks.
  • 
    EUR:
    Across-the-board
    sub-average
    scores,
    suggesting
    a
    less
    favorable
    outlook.

Conclusion:

BofA’s
analysis
indicates
a
mixed
outlook
for
the
USD,
influenced
by
slowing
US
growth
and
easing
inflation,
which
support
expectations
of
a
Fed
easing
cycle.
The
G10
FX
HeatMap
reveals
favorable
prospects
for
Scandinavian
currencies
and
mixed
signals
for
the
USD
and
JPY,
while
the
EUR
shows
generally
unfavorable
metrics.
This
comprehensive
evaluation
helps
contextualize
the
potential
movements
in
G10
currencies
going
forward.

For
bank
trade
ideas,

check
out
eFX
Plus.
For
a
limited
time,
get
a
7
day
free
trial,
basic
for
$79
per
month
and
premium
at
$109
per
month.

Get
it
here.

Australian Dollar continues gaining, investors adjust to US Inflation figures

401836   July 12, 2024 02:39   FXStreet   Market News  

• 
  AUD
  continued
  its
  upswing
  on
  Thursday
  against
  USD.
• 
  Markets
  adjust
  their
  stance
  on
  the
  Federal
  Reserve
  following
  US
  inflation
  figures.
• 
  RBA’s
  reluctance
  to
  initiate
  rate
  cuts
  due
  to
  stubbornly
  high
  inflation
  provides
  stable
  support
  for
  Aussie.

The
Australian
Dollar
(AUD)
carried
on
with
its
positive
trend
against
the
USD
on
Thursday,
rising
to
0.6780
after
hitting
a
high
of
0.6798.
Despite
an
empty
Australian

financial
calendar
this
week
with
no
significant
events,
the
pair
still
holds
its
ground
with
the
AUD
resuming
its
recent
gains.
Market
participants
are
adjusting
their
bets
on
the
next
moves
from
the

Federal
Reserve
(Fed)
following
the
release
of
US
inflation
data.

The
Reserve
Bank
of
Australia
(RBA)
is
gearing
to
be
among
the
last
G10
nations’
central
banks
to
initiate
rate
cuts,
a
factor
that
may
extend
the
AUD’s
gains.
High
inflation
within
Australia
is
prompting
the
RBA
to
postpone
rate
cuts,
which
may
limit
the
downside
for
the
AUD.

Daily
market
movers:
AUD
holds
as
markets
adjust
to
US
inflation
figures

• US
  inflation,
  measured
  by
  the
  annual
  change
  in
  the
  Consumer
  Price
  Index
  (CPI),
  fell
  to
  3%
  in
  June
  from
  3.3%
  in
  May,
  as
  reported
  by
  the
  US
  Bureau
  of
  Labor
  Statistics
  (BLS)
  on
  Wednesday,
  lower
  than
  expected.
• Core
  measure
  also
  came
  in
  below
  the
  market’s
  forecast
  at
  3.3%
  YoY.
• This
  validates
  the
  market’s
  prediction
  of
  an
  earlier
  cut
  in
  September,
  and
  as
  RBA
  and
  Fed
  policies
  diverge,
  the
  upside
  for
  the
  pair
  is
  open-ended.
• Fed
  Chair
  Jerome
  Powell
  on
  Thursday
  kept
  a
  cautious
  tone
  on
  inflation
  during
  his
  testimony
  before
  the
  House
  Financial
  Services
  Committee.
  He
  reaffirmed
  that
  while
  inflation
  does
  not
  need
  to
  fall
  below
  the
  2%
  mark
  to
  begin
  rate
  cuts,
  Fed
  still
  lacks
  firm
  confidence
  to
  lower
  rates
  soon.
• While
  RBA
  considers
  a
  hike
  and
  the
  market
  braces
  for
  a
  Fed
  cut,
  Aussie
  might
  see
  additional
  gains.

Technical
analysis:
AUD/USD’s
rising
streak
continues,
consolidation
anticipated

The

AUD/USD
remains
on
a
bullish
path,
resulting
in
the
pair
making
gains
on
Thursday.
The

outlook
remains
positive,
with

indicators
including
the
Relative
Strength
Index
(RSI)
and
Moving
Average
Convergence
Divergence
(MACD)
staying
strong
in
deeply
positive
territory.
While
consolidation
is
possible,
the
pair
may
have
some
room
left
to
continue
rising
before
correcting.

The
support
levels
to
monitor
in
case
of
a
pullback
are
0.6670,
0.6650
and
0.6630
in
case
of
a
correction.
The
0.6760-0.6780
range
is
the
aspirational
target
for
buyers,
with
the
region
beyond
0.6800
also
in
sight.

Dow Jones Industrial Average middles post-US CPI inflation

401833   July 12, 2024 02:39   FXStreet   Market News  

• 
  Dow
  Jones
  stuck
  to
  Thursday’s
  opening
  range
  after
  CPI
  inflation
  cools.
• 
  Rate
  cut
  expectations
  pinned
  to
  the
  ceiling
  as
  price
  pressures
  ease.
• 
  Market-wide
  pivot
  out
  of
  tech
  stocks
  limits
  gains
  from
  rate
  cut
  hopes.

The
Dow
Jones
Industrial
Average
(DJIA)
mostly
stuck
to
familiar
territory
on
Thursday,
clipping
into
the
high
end
after
US
Consumer
Price
Index
(CPI)
inflation
came
in
below
expectations
and
sparking
an
uptick
in
broad-market
rate
cut
expectations
in
2024.
Despite
easing
inflation,
a
pivot
out
of
tech
stocks
kept
equity
indexes
pinned
close
to
flat
during
Thursday’s
American
market
session.

June’s
US
CPI
inflation
broadly
fell
below
forecasts,
with
annualized
headline
CPI
inflation
easing
to
3.0%
YoY
from
the
previous
3.3%
and
falling
even
lower
than
the
forecast
3.1%.
CPI
inflation
actually
contracted
-0.1%
MoM
in
June,
falling
back
from
the
previous
month’s
flat
0.0%
and
below
the
forecast
0.1%.

US
Initial
Jobless
Claims
fell
to
222K
for
the
week
ended
July
5,
down
from
the
previous
week’s
revised
239K
and
improving
from
the
forecast
236K.
Thursday’s
Initial
Jobless
Claims
figure
helped
to
push
the
four-week
average
down
to
233.5K
from
the
previous
238.75K.

With
US
CPI
inflation
cooling
at
an
accelerated
pace,
market
expectations
for
a
rate
hike
from
the

Federal
Reserve
(Fed)
are
pricing
in
the
possibility
of
three
quarter-point
rate
cuts
in
2024.
According
to
the
CME’s
FedWatch
Tool,
rate
market
bets
of
a
September
rate
cut
have
soared
to
95%.

Dow
Jones
news

The
Dow
Jones
looked
for
gains
on
Thursday,
but
topside
momentum
remained
crimped
as
tech

stocks
declined.
While
the
Dow
Jones
was
up
around
a
fifth
of
a
percent
on
the
day
overall,
concentrated
losses
in
familiar
technology
names
kept
a
lid
on
gains.
3M
Co.
(MMM)
and
Home
Depot
Inc.
(HD)
rose
around
2.5%
on
Thursday,
rising
to
$104.20
and
$352.60
per
share,
respectively.

Intel
Corp.
saw
a
-4.24%
decline,
falling
to
$33.38
per
share
while
Amazon.com
Inc
(AMZN)
also
backslid
-3.0%,
declining
to
$193.76
per
share.

Dow
Jones
technical
outlook

Dow
Jones
found
slim
gains
on
Thursday,
but
momentum
remains
stilted
as
the
index
tests
the
water
of
a
supply
zone
priced
in
near
the
40,000.00
major
price
handle.
The
Dow
Jones
has
been
slowly
battling
back
into
reach
of
all-time
high
bids
sets
just
north
of
40,000.00
back
in
May,
recovering
nearly
5%
from
the
post-peak
swing
low
towards
38,000.00.

Dow
Jones
five
minute
chart

Dow
Jones
daily
chart

Canadian finance minister could walk the plank. Mark Carney could be tapped

401832   July 12, 2024 02:18   Forexlive Latest News   Market News  

A
report
in
the
Globe
and
Mail
reports
that
the
relationship
between
Canadian
PM
Trudeau
and
finance
minister
Chrystia
Freeland
has
become
tense
and
that
a
cabinet
shuffle
could
be
coming.

“Senior
officials
in
Prime
Minister
Justin
Trudeau’s
office
are
concerned
that
Finance
Minister
Chrystia
Freeland
has
not
been
effective
in
delivering
an
upbeat
economic
message
as
the
Liberal
government
struggles
to
reconnect
with
Canadians
amid
low
approval
ratings,
sources
say,”
the
report
says.

The
Prime
Minister
is
polling
dreadfully
but
doesn’t
have
to
call
an
election
until
November
2025
so
long
as
the
left-wing
NDP
continues
to
support
his
Liberal
party.

The
report
(and
another
one
in
the
Toronto
Star)
says
that
former
BOC
and
BOE
Governor
Mark
Carney
could
be
tapped
to
replace
Freeland.
He’s
not
an
MP
but
neither
was
Michael
Wilson,
who
served
as
Minister
of
Finance
from
1984
to
1991
under
Prime
Minister
Brian
Mulroney.
Wilson
was
first
unelected
and
held
the
position
but
was
later
elected
in
a
by-election.

I
strongly
suspect
that
Carney
could
have
the
position
if
he
wanted
it
but
I’m
not
sure
he
wants
to
latch
himself
to
a
ship
that’s
surely
sinking.
However
he
may
be
seduced
by
freedom
to
craft
a
new
budget
that
marks
a
different
path
and
would
set
himself
up
to
succeed
Trudeau.

United States Monthly Budget Statement registered at $-66B above expectations ($-83B) in June

401831   July 12, 2024 02:16   FXStreet   Market News  

Canadian Dollar softens after US CPI inflation cools

401828   July 12, 2024 02:14   FXStreet   Market News  

• 
  The
  Canadian
  Dollar
  eased
  lower
  across
  the
  board
  on
  Thursday.
• 
  Canada
  remains
  absent
  from
  the
  economic
  calendar
  this
  week.
• 
  US
  CPI
  inflation
  contracted
  in
  June,
  sparking
  fresh
  rate
  cut
  bets.

The
Canadian
Dollar
(CAD)
fell
against
all
of
its
major
currency
peers
on
Thursday
as
an
empty
economic
release
calendar
left
CAD
at
the
mercy
of
broader
market
forces.
US
Consumer
Price
Index
(CPI)
inflation
eased
faster
than
expected
in
June,
reigniting
investor
expectations
for
an
increased
pace
of
rate
cuts
in
2024.

Canada
will
continue
to
provide
no
meaningful

economic
data
for
CAD
traders
until
the
next
iteration
of
Canada’s
own
CPI
inflation
print,
slated
for
next
Tuesday
and
released
side-by-side
with
US
Retail
Sales
figures.
In
the
meantime,
US
Producer
Price
Index
(PPI)
wholesale
inflation
is
due
on
Friday,
and
is
still
expected
to
tick
upwards
on
an
annualized
basis.

Daily
digest
market
movers:
Canadian
Dollar
softens,
gets
left
behind
by
broad-market
risk
bid

• US
  CPI
  inflation
  fell
  in
  June,
  printing
  a
  -0.1%
  contraction
  versus
  the
  expected
  0.1%
  uptick
  from
  the
  previous
  0.0%.
• Core
  US
  CPI
  inflation
  also
  ticked
  down
  to
  3.3%
  YoY
  compared
  to
  the
  forecast
  hold
  at
  3.4%.
• Cooling
  inflation
  data
  has
  reignited
  broad-market
  hopes
  for
  an
  accelerated
  pace
  of
  rate
  cuts
  from
  the
  Fed.
• Rate
  markets
  have
  priced
  in
  95%
  odds
  of
  at
  least
  a
  quarter-point
  rate
  cut
  when
  the
  Federal
  Open
  Market
  Committee
  (FOMC)
  meets
  on
  September
  18.
• 
  Read
  more:
  
  US
  CPI
  inflation
  drops
  to
  3%
  in
  June
  vs.
  3.1%
  expected

Technical
analysis:
CAD
softens
despite
Greenback
weakness,
dataless
slump
continues

The
Canadian
Dollar
(CAD)
was
down
across
the
board
on
Thursday,
tumbling
2%
against
the
Japanese
Yen
(JPY)
and
falling
over
half
a
percent
against
the
Pound

Sterling
(GBP)
and
Swiss
Franc
(CHF).
Despite
broad-market
weakness
in
the
US
Dollar
(USD),
the
Canadian
Dollar
still
shed
one-tenth
of
one
percent
against
the
USD.

USD/CAD
kicked
off
the
American
trading
session
with
a
quick
plunge
to
its
lowest
bids
since
mid-April,
but
firm
CAD
selling
pressure
gave
the
Greenback
a
leg
up.
Short
momentum
could
not
keep
up
the
pressure,
and
USD/CAD
has
rebounded
from
the
200-day
Exponential
Moving
Average
(EMA)
near
the
1.3600
handle.
Despite
the
intraday
turnaround,
the
pair
remains
swamped
out
as
USD/CAD
grinds
sideways
in
congestion
that
has
mired
the
daily
candlesticks
since
April.

USD/CAD
hourly
chart

USD/CAD
daily
chart

The knives continue to come out for Biden

401827   July 12, 2024 01:43   Forexlive Latest News   Market News  

The
betting
markets
are
increasingly
wary
of
Biden’s
ability
to
stay
in
the
race.

Ultimately,
the
choice
comes
down
to
him
but
every
day
there
is
a
new
name
calling
for
him
to
step
down.
A
House
Democrat
from
Michigan
today

said
he
should
leave
the
race
as
the
chorus
continues
to
grow.

The
New
York
Times

reports
some
heavy
hitters
are
plotting
behind
the
scenes:

Some
longtime
aides
and
advisers
to
President
Biden
have
become
increasingly
convinced
that
he
will
have
to
step
aside
from
the
campaign,
and
in
recent
days
they
have
been
trying
to
come
up
with
ways
to
persuade
him
that
he
should,
according
to
three
people
briefed
on
the
matter.

Critical
for
him
to
have
any
chance
at
survival
will
be
a
press
conference
today
at
6:30
pm
ET.
If
he
fumbles
it,
we
could
be
seeing
some
major
pressure.

A
separate
NYT

report
says
Biden’s
campaign
is
quietly
testing
the
strength
of
a
Kamala
Harris
Presidential
campaign.
If
Biden
drops
out,
there
is
a
good
chance
that
it
turns
into
a
short,
open
campaign
ahead
of
the
Aug
19
DNC
rather
than
a
coronation
for
Harris.

While
some
of
Mr.
Biden’s
top
aides
have
quietly
argued
that
Ms.
Harris
could
not
win
the
election,
donors
and
other
outside
supporters
of
the
vice
president
believe
she
might
be
in
a
stronger
position
after
the
debate,
and
could
be
a
more
energetic
communicator
of
the
party’s
message.

Ultimately
though,
the
only
person
that
can
take
Biden
off
the
ticket
is
him
and
he
will
need
to
be
convinced
that
he
can’t
win.

Update:
Now
Axios

reports
that
Trump
is
expected
to
face
a
‘deluge’
of
calls
from
House
Democrats
for
him
to
drop
out.
So
far,
11
House
members
and
Sen.
Peter
Welch
have
publicly
called
for
him
to
drop
out.

“I
think
people
are
just
waiting
until
after
the
[NATO
summit]
is
done,
regardless
of
how
he
does
…
They
just
don’t
want
to
take
away
from
his
discussions
with
world
leaders,”
said
one
person
considering
calling
for
him
to
drop
out.

Fed’s Musalem: CPI data points to encouraging further progress, recession risks are low

401826   July 12, 2024 01:39   FXStreet   Market News  

Federal
Reserve
(Fed)
Bank
of
St.
Louis
President
Alberto
Musalem
noted
on
Thursday
that
while
the
disinflation
process
is
ongoing,
the
Fed
policymaker
would
like
to
see
more
progress
and
highlighted
that
recession
risks
remain
low.

Key
highlights

High
interest
rates
are
pressuring
parts
of
the
economy.

The
disinflation
process
is
ongoing.

I
see
the
economy
growing
between
1.5%
and
2%
this
year.

I
don’t
think
recession
risks
are
high
right
now.

I
don’t
see
a
recession
as
likely,
I
see
around
20%
odds.

The
current
unemployment
rate
is
still
low
despite
the
recent
rise.

I
supported
Fed’s
rate
decision
at
June
meeting.

Companies
are
still
facing
cost
pressures,
but
workers
are
easier
to
find.

Companies
saying
wage
growth
returning
to
pre-pandemic
levels.

AUD/USD Forecast: immediately to the upside comes 0.6870

401824   July 12, 2024 01:39   FXStreet   Market News  

• 
  AUD/USD
  rose
  to
  the
  boundaries
  of
  the
  0.6800
  barrier.
• 
  The
  Greenback
  collapsed
  post-US
  CPI
  data.
• 
  Australian
  Consumer
  Inflation
  Expectations
  dropped
  in
  July.

Another
robust
session
saw
AUD/USD
continue
its
upward
movement,
this
time
coming
in
just
pips
away
of
the
0.6800
milestone
on
Thursday,
extending
its
positive
streak
for
the
third
day.

The
pair’s
consecutive
increase
was
propelled
by
extra
weakness
in
the
US
Dollar
(USD),
especially
after
US
inflation
readings
came
in
below
expectations
in
June,
which,
at
the
same
time,
added
to
speculation
of
a
potential
interest
rate
cut
by
the
Fed
as
soon
as
September.

The
above
remained
in
contrast
to
the
latest
comments
from
Chair
Jerome
Powell’s
testimonies
before
Congress,
where
he
took
a
cautious
approach
regarding
the
potential
timing
of
a
Fed
interest
rate
cut,
stating
that
more
evidence
of
inflation
moving
towards
the
target
is
required
before
any
rate
adjustments
are
made.

On
another
front,
daily
retracements
of
both
copper
and
iron
ore
prices
seem
to
have
limited
the
upside
impetus
in
the

Aussie
dollar.

Regarding
monetary
policy,
both
the
Reserve
Bank
of
Australia
(RBA)
and
the

Federal
Reserve
(Fed)
are
expected
to
be
among
the
last
G10
central
banks
to
begin
cutting
interest
rates.

At
its
latest
meeting,
the
RBA
maintained
a
hawkish
stance,
keeping
the
official
cash
rate
at
4.35%
and
indicating
flexibility
for
future
decisions.
The
meeting
minutes
revealed
that
the
decision
to
hold
the
policy
rate
was
mainly
due
to
“uncertainty
around
consumption
data
and
clear
evidence
of
financial
stress
among
many
households.”

The
RBA
is
not
in
a
hurry
to
ease
policy,
anticipating
that
it
will
take
some
time
before
inflation
consistently
falls
within
the
2-3%
target
range.
There
is
approximately
a
25%
chance
of
a
rate
cut
in
August,
increasing
to
around
50%
in
the
following
months.

Additionally,
potential
easing
by
the
Fed,
contrasted
with
the
RBA’s
likely
prolonged
restrictive
stance,
could
support
AUD/USD
in
the
upcoming
months.

However,
concerns
about
slow
momentum
in
the
Chinese
economy
might
hinder
a
sustained
recovery
of
the
Australian
currency
as
China
continues
to
face
post-pandemic
challenges.
In
addition,
the
persistent
lack
of
traction
in
Chinese
inflation
could
lead
to
some
stimulus
from
the
People’s
Bank
of
China
(PBoC),
which
could
eventually
morph
into
some
sort
of
support
for
AUD.

Meanwhile,
in
Oz,
Consumer
Inflation
Expectations
dropped
to
4.3%
in
July
(from
4.4%),
according
to
the
Melbourne
Institute.
Despite
the
drop,
the
gauge
remains
well
above
the
RBA’s
2%–3%
target
band.

AUD/USD
daily
chart

AUD/USD
short-term
technical
outlook

If
bulls
push
higher
and
AUD/USD
clears
the
July
high
of
0.6798
(July
8),
it
might
test
the
December
2023
top
of
0.6871,
followed
by
the
July
2023
peak
of
0.6894
(July
14),
all
before
the
key
0.7000
barrier.

Bearish
attempts,
on
the
other
hand,
may
drive
the
pair
lower,
first
to
the
June
low
of
0.6574
(June
10)
and
subsequently
to
the
key
200-day
SMA
of
0.6569.
A
further
decline
might
result
in
a
return
to
the
May
low
of
0.6465
and
the
2024
low
of
0.6362
(April
19).

Overall,
the
uptrend
should
continue
as
long
as
the
AUD/USD
remains
above
the
200-day
SMA.

The
4-hour
chart
shows
an
acceleration
of
the
upside
momentum.
That
said,
0.6798
appears
to
be
the
first
barrier,
ahead
of
0.6871.
On
the
other
side,
0.6709
provides
quick
support,
prior
to
the
100-SMA
of
0.6688.
The
RSI
dropped
to
roughly
61.