Daily analysis 06/24/2024

24. 6. 2024 - Josef Brynda

Latest news

• Earlier this month, the Consumer Price Index (CPI) showed inflation continuing to cool, a report that bolstered investor bets the Federal Reserve would cut rates later this year
• European shares open flat as falling mining stocks curb gains
• Stocks Fluctuate as Traders Await Inflation Cues
• Dollar steady; yen wobbles near 160 as intervention worries linger
• Yen Is Under Pressure Even as Japan Steps Up Its Verbal Warnings
• BoJ Summary Shows Board Discussed Possibility Of Early Rate Hike
• The NZ dollar fell to a 6-day low of 0.6105 against the U.S. dollar and a 4-day low of 1.7510 against the euro
• The Australian dollar weakened against other major currencies in the Asian session on Monday
• NZ exports reach new high in May, pass $7 billion for first time ever
• Saving less and spending less, Australian households are unique
• US millionaires support Joe Biden’s plan to tax super-wealthy, poll shows
• Rich countries plan to buy more gold despite record price
• Australian uranium company Paladin Energy PDN  has agreed to buy Canada’s Fission Uranium in a deal that has an equity value of roughly 1.14 billion Canadian dollars (US$833 million) and aims to create a globally significant supplier of the nuclear fue

News summary

• At the beginning of June, key economic events influenced global markets and currencies. The Consumer Price Index (CPI) showed cooling inflation, raising investor expectations for a Federal Reserve rate cut later this year, which could boost the U.S. economy.
• European shares opened flat due to falling mining stocks, and investors are awaiting further inflation signals. The dollar remained steady, while the yen wobbled near 160 amid intervention concerns. The Bank of Japan discussed an early rate hike, potentially strengthening the yen.
• The New Zealand dollar hit a six-day low against the U.S. dollar and a four-day low against the euro. The Australian dollar weakened against major currencies, possibly due to economic slowdown concerns and unique household saving and spending patterns.
• New Zealand's exports reached a record high in May, potentially strengthening the NZD long-term. Australian uranium company Paladin Energy agreed to buy Canada's Fission Uranium, aiming to create a significant global nuclear fuel supplier.
• U.S. millionaires support Joe Biden’s plan to tax the super-wealthy, which could reduce income inequality. Rich countries plan to buy more gold despite record prices, indicating economic uncertainty and inflation concerns.
• These events suggest a potential weakening of the U.S. dollar, a possible strengthening of the yen, and temporary weakness in the Australian and New Zealand dollars, with European markets remaining stable but sensitive to further economic indicators.

BOE Rate-Cut Bets in August Fade as Services Inflation Runs High

19. 6. 2024 - Josef Brynda

Money markets are now pricing in a 30% chance of a cut in August, compared to 45% before the data was released. There’s one quarter-point cut fully priced for this year, by November, with a 60% chance of a second reduction — down from 80% on Tuesday.

Although the headline inflation number slowed to the central bank’s target for the first time in almost three years, traders are betting that the closely-watched services sector number will keep policymakers cautious. Expectations for BOE rate cuts have fallen sharply since the start of the year, when the market was betting on as many as six reductions.

The central bank is widely expected to keep rates on hold at 5.25% when it meets on Thursday.

Daily analysis 06/19/2024

19. 6. 2024 - Josef Brynda

Latest news

• Holidays in USA
• Australian stocks traded lower the day after the Reserve Bank kept interest rates on hold at a 12-year high
• UK inflation hits its 2% target, but the Bank of England unlikely to move on rates just yet.
• Nvidia has overtaken Microsoft to become the world's most valuable company, ending the day with a market capitalization of $US3.22 trillion
• European stocks drift lower despite UK inflation falling to targe
• It will take years for the oil and gas market to recover from the 'mother of all shocks,' Harvard economist says
• US pushing Netherlands, Japan to restrict more chipmaking equipment to China, source says
• Bitcoin (BTC) Receives Critical Hit, Shiba Inu (SHIB) in Catastrophe Mode, Can Lose $0.00001 Again, XRP Stronger Than It Should Be
• Low investment blocking UK growth, says think tank
• Global central banks indicated a continued willingness to increase gold holdingsv
• EU to Slam France Over Budget Deficit, Adding to Political Woes
• Traders May Overestimate Impact of BOJ Cutting Bond Purchases
• Japan’s exports rise for sixth straight month, thanks to cars and chip equipment
• The British Pound rose after the UK reported another strong services inflation print

News summary

• In the United States, holidays impact trading activities and markets. In Australia, stocks traded lower after the Reserve Bank kept interest rates on hold at a 12-year high. In the UK, inflation hit its 2% target, but the Bank of England is unlikely to move on rates just yet. The British pound may strengthen due to strong services inflation, while the Australian dollar may remain under pressure.
• Nvidia has overtaken Microsoft to become the world's most valuable company, ending the day with a market capitalization of $3.22 trillion.
• European stocks drifted lower despite UK inflation falling to target. According to a Harvard economist, it will take years for the oil and gas market to recover from the 'mother of all shocks.'The US is pushing the Netherlands and Japan to restrict more chipmaking equipment to China, according to sources.
• Bitcoin (BTC) received a critical hit, while Shiba Inu (SHIB) is in catastrophe mode and could lose $0.00001 again. Conversely, XRP is stronger than it should be.
• Low investment is blocking UK growth, says a think tank.
• EUR/USD continues to hover around 1.07 due to the political mood in Europe

Sterling eases ahead of BoE rate decision this week

17. 6. 2024 - Josef Brynda

LONDON, June 17 (Reuters) - The pound eased modestly on Monday, ahead of a policy meeting by the Bank of England this week at which the central bank is not expected to cut interest rates, but might telegraph the likely timing of the first drop.

Political turmoil in France last week rattled risk appetite and sent investors fleeing from French assets and the euro which fell 0.6% against sterling last week .

By Monday, the euro had recovered some stability, rising 0.1% against the pound to 84.46 pence.

Against the dollar, the pound has fared less well, falling 0.6% last week, in its largest weekly slide in two months. Sterling was last down 0.1% at $1.2674.Recent data has shown inflation in the United States is not slowing as quickly as many had anticipated, while the Federal Reserve has said it sees only one rate cut this year.

Meanwhile, UK headline consumer inflation is falling towards the BoE's 2% target and markets are increasingly convinced the central bank, which meets on Thursday, will deliver two cuts this year, with close to a 90% chance of rates dropping to 4.75% by December.

Daily analysis 06/17/2024

17. 6. 2024 - Josef Brynda

Latest news

• No macroeconomic events are scheduled for Monday (06/17). Thus, low volatility and weak movements are expected for both currency pairs during the day
• Cryptocurrencies extend declines at the start of the week. Bitcoin lost nearly 0.7%, Ethereum nearly 1.5% and Solana nearly 2.2% at the start of Monday's session. Friday saw another consecutive net daily outflow of nearly $190 million from spot ETFs.
• The Australian Dollar (AUD) extends downside for the third consecutive day on Monday on the back of the stronger US Dollar (USD) broadly
• BoE interest rates are expected to remain unchanged on Tuesday morning
• The Greenback remains well-supported by the expectation that US interest rates will stay higher for longer, with the median projection from Federal Reserve (Fed) officials calling for one interest rate cut this year
• Asian stocks fell in connection with the French political crisis
• Rising risk premium on French government bonds plagues the euro
• Inflation Must Improve for ECB Cut in September, Vujcic Says
• UK inflation is expected to fall to the Bank of England’s target for the first time in almost three years
• Chinese retail sales beat forecasts, up 3.7% yoy
• The Euro is likely to remain weak, as it has remained weak, due to the RN party in France slightly strengthening its opinion poll lead, suggesting that the far right will take power in some form after the election is held within a few weeks.
• French stocks have struggled since Macron called for election

News summary

• No significant macroeconomic events are scheduled for Monday, June 17, 2024, leading to expectations of low volatility and weak movements in currency pairs throughout the day. The Australian Dollar (AUD) continues its downward trend for the third consecutive day, influenced by the stronger US Dollar (USD). The USD remains well-supported due to expectations that US interest rates will stay higher for longer, with Federal Reserve (Fed) officials projecting one interest rate cut this year.
• In the cryptocurrency market, declines persist at the start of the week. Bitcoin has lost nearly 0.7%, Ethereum nearly 1.5%, and Solana nearly 2.2% at the beginning of Monday's session. Friday saw another consecutive net daily outflow of nearly $190 million from spot ETFs.
• Asian stocks have fallen due to the political crisis in France. The euro is likely to remain weak, plagued by the rising risk premium on French government bonds. French stocks have struggled since President Macron called for elections, with the RN party strengthening in opinion polls, suggesting potential power shifts that add to market uncertainty.
• UK inflation is expected to fall to the Bank of England’s target for the first time in almost three years, providing a positive outlook for the UK economy. Meanwhile, Chinese retail sales have beaten forecasts, growing by 3.7% year-over-year. On the European front, ECB member Vujcic stated that inflation must improve for the ECB to consider a rate cut in September.
• In summary, financial markets are experiencing a period of low volatility due to the absence of significant economic events. The strong US Dollar is putting pressure on both the Australian Dollar and the Euro. Cryptocurrencies continue to decline amid ETF outflows. Political developments in France are causing uncertainty in European markets, while positive economic news comes from China and a hopeful inflation outlook in the UK.

The Fed isn't really taking 2 rate cuts off the table

13. 6. 2024 - Josef Brynda

On Wednesday, the Federal Reserve revised its outlook for interest rate policy in 2024, signaling just one cut instead of the three seen back in March.

A disappointing outlook on the surface for investors hoping for more reductions to interest rates this year — but as Fed Chair Jerome Powell reminded us, the projection is hardly set in stone.

As has often been the case, Powell reiterated that the projections are just a "forecast" and don't reflect a "really strong commitment to a particular rate path."

Daily analysis 06/13/2024

13. 6. 2024 - Josef Brynda

Latest news

• U.S. Crude Production Growth Challenges OPEC+ Control Over Prices
• Canadian Delinquencies and Non-Mortgage Debt Signal Mounting Financial Strain
• Fed Signals One Rate Cut This Year, But Keeps Door Open to Two in 2024
• Dollar falls after CPI, Fed meeting; PPI release due
• The EUR/USD price stopped at $1.0840, which created a strong resistance. The price then started to show a downward trend and approached the support level at $1.0795
• Analysts expect a short-term decline, after which the EUR/USD price should rise further
• Forecast for the Australian Dollar on June 13, 2024, predicts an attempt to test the support level near 0.6545, followed by growth above 0.6795. A test of the trend line on the RSI will signal further rise. If the price falls and breaks below 0.6455, it indicates continued decline with a target below 0.6235
• The G7 leaders are meeting in Italy from June 13-15 to discuss issues like the wars in Ukraine and the Middle East, West-China tensions, and the global economy
• The World Bank has upgraded its global growth forecast for 2024 to 2.6%, up from 2.4% in January, largely due to the resilience of the U.S. economy which is now expected to grow 2.5% this year. However, the projected growth rates are still below the pre-pandemic average of 3.1%
• According to the technical analysis prepared by Forex24.pro, it expects a slight decline to the level of 1.368. Expect confirmation of the pair’s growth with a breakdown of the resistance area and closing of the USD/CAD pair quotes above the level of 1.3835
• An interesting indicator today will be the initial jobless claim, which is forecast to be almost stable rather than the previous lower number. This may indicate stable economic growth and stable inflation.
• The ppi value is predicted to rise by less than 4 tenths of a percent, which suggests to us a slight increase in prices, but with the strengthening of the dollar this should not be so dramatic. 

News summary

• The growth in U.S. crude oil production challenges OPEC+ control over global prices, hinting at potential market volatility. In Canada, rising delinquencies and non-mortgage debt signal increasing financial strain. The Federal Reserve may cut rates once this year, possibly twice in 2024, amid economic uncertainty. The World Bank upgraded global growth to 2.6% for 2024, driven by the resilient U.S. economy expected to grow 2.5% this year. G7 leaders meet to discuss global issues, including Ukraine, Middle East conflicts, and West-China tensions. Steady initial jobless claims suggest stable growth and inflation, with mild inflationary pressure shown by a slight PPI rise.
• The U.S. dollar fell post-CPI and Fed meeting, with the PPI release anticipated to clarify inflation trends. The EUR/USD stopped at $1.0840 resistance, with a short-term decline expected before a rise after testing support at $1.0795. For the Australian Dollar, a test of support at 0.6545 is forecasted, followed by potential growth above 0.6795. USD/CAD is expected to see a slight decline to 1.368 and breakdown of the resistance area and closing of the USD/CAD pair quotes above the level of 1.3835
• Based on the available information, such as the stable cpi, unchanged fed funds rates, and the largely unchanged initial jobless claim, it can be assumed that financial capital will continue to be found, for example, in bonds, which suggests a further strengthening of the dollar. The euro is weakening slightly in light of the unexpected events following the euro elections. 

Daily amalysis 06/12/2024

12. 6. 2024 - Josef Brynda

Latest news

• The USD/CAD exchange rate is influenced by the strong US dollar and expectations about the Fed's decision.
• Strong US employment data and expectations that the Fed will not change interest rates are supporting the US Dollar
• US stock futures edge higher ahead of Fed rate decision, CPI data
• Oil perks up on inventory drawdown forecasts for this year
• Morgan Stanley sees 3 more rate cuts from Bank of Canada in 2024
• Euro Hits Monthly Low Amid Political Instability in France
• From its high point on Friday to its lowest so far this week, the EUR/USD has fallen about 170 pips, or 1.57% in the pace of two and a half sessions
• As expected, the Fed is not expected to cut interest rates, so rates should remain at 5.50%
• U.S. stocks mixed at close of trade; Dow Jones Industrial Average down 0.31%
• UK GDP flatlines as PM Sunak pins election campaign on economy
• World Bank revises India's FY25 growth forecast to 6.6% 
• ECB’s Lane Says Euro Moves Haven’t Impacted Inflation
• China Inflation Stays Low Amid Tepid Consumer Spending
• EUR/USD Forex Signal: Gets Oversold Ahead of Fed and US CPI Data
• The year-on-year US Consumer Price Index (CPI) is expected to fall by one tenth, which could indicate a future slowdown in inflation
• US Consumer Price Index (CPI) MoM is forecast unchanged, but this suggests the economy is not overheating further

News summary

• The US Dollar is supported by strong US employment data and expectations that the Federal Reserve (Fed) will not change interest rates, which are expected to remain at 5.50%. That said, the dollar should remain strong as stable interest rates and positive economic data usually attract investors.
• The euro is struggling with political instability in France, which has led to EUR/USD falling by around 1.57% in two and a half trading sessions. Moreover, ECB chief economist Philip Lane said that the euro's movements have not had an impact on inflation, suggesting that the ECB does not need to intervene in monetary policy due to fluctuations in the euro. This could mean that the euro will remain under pressure, especially if the political situation in Europe does 
• The Canadian dollar is affected by several factors. The Bank of Canada (BoC) is expected to cut interest rates three times in 2024, which could weaken the CAD. On the other hand, an increase in oil prices due to the expected decline in inventories could provide some support to the Canadian dollar as Canada is a major oil exporter.
• The global economy faces various challenges and opportunities. In the US, inflation is expected to slow, which could indicate a stabilisation of the economy. In Europe, the situation is more complex due to political instability and stagnating growth in some countries such as the UK. In Asia, China is facing low inflation and weak consumer demand, which may affect global trade flows. On the other hand, India has a positive outlook with GDP growth 
• Overall, the US dollar is expected to remain strong, the euro will be under pressure, the Canadian dollar will be affected by conflicting factors and the global economy will face different challenges and opportunities depending on regional conditions.