GOLD Price Analysis – Oct 21, 2024
Daily Price Outlook
Gold prices (XAU/USD) started this week on a bullish trend and maintain their intraday gains during the early European session, trading around the all-time high of $2,731. However, the easing of monetary policies and ongoing geopolitical tensions in the Middle East have created a bullish environment for the non-yielding yellow metal. Moreover, uncertainty in US politics has contributed to the recent upward momentum over the past couple of weeks.
At the same time, expectations of modest rate cuts from the Federal Reserve have supported US Treasury bond yields, which, in turn, boosted the US Dollar. The USD Index (DXY) is now nearing its highest level since early August. Hence, this strength in the Dollar, along with slightly overbought technical conditions, could limit further gains in Gold in the near term.
US Dollar Strength and Geopolitical Risks Shape Gold Price Trends
On the US front, the broad-based US Dollar has gained bullish traction as expectations of modest rate cuts by the Federal Reserve (Fed) help keep US Treasury yields higher. However, the USD Index (DXY), which tracks the dollar against a basket of major currencies, is inching closer to its highest level since August. Investors have ruled out the possibility of a large interest rate cut by the Fed in November, as the US economy continues to show resilience in recent macroeconomic data.
Fed officials, like Atlanta Fed President Raphael Bostic, have indicated that they're not in a hurry to cut rates, with expectations that rates will eventually fall to around 3-3.5% by the end of next year. In contrast, weak inflation data from the UK has fueled expectations of more aggressive easing from the Bank of England. Despite higher US bond yields, the positive trend in Gold prices remains intact, driven by safe-haven demand amid geopolitical risks and broader market uncertainties.
Therefore, the strengthening US dollar and higher Treasury yields may limit further gains in Gold prices. However, ongoing geopolitical risks and market uncertainties continue to drive safe-haven demand, keeping the precious metal's upward trend intact despite these headwinds from the Dollar.
Geopolitical Tensions and Political Uncertainty Fuel Gold Prices to New Highs
On the other hand, the increasing geopolitical tensions in the Middle East continue to boost Gold prices. Despite the killing of Hamas leader Yahya Sinwar, the conflict shows no signs of easing, as Israel prepares to respond to Iran’s October strike. Israel’s Prime Minister, Benjamin Netanyahu, remains determined to continue the war despite attacks by Hezbollah.
However, the situation has escalated with Israeli airstrikes across Lebanon and intensified attacks in Gaza, raising fears of a larger regional conflict. This has heightened safe-haven demand for Gold, helping it maintain its upward momentum and reach a new all-time high during the Asian session on Monday.
In addition to geopolitical risks, political uncertainty in the US also supports Gold's rise. Recent polls show a tight race between Donald Trump and Vice President Kamala Harris, adding to market uncertainty and boosting demand for Gold. Furthermore, investors welcomed two new funding schemes launched by the People's Bank of China on Friday, aimed at supporting capital market development.
These combined factors have helped Gold reach a fresh all-time high during the Asian session on Monday, continuing its strong upward trend.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,721.90, showing an intraday increase of 0.06%. The market sentiment remains bullish as prices hold above critical support levels.
Gold continues to extend its bullish momentum, with prices maintaining an upward channel formation. On the 2-hour chart, XAU/USD has bounced off its immediate support level at $2,713.94, driven by buying interest around this key pivot zone. The precious metal is steadily climbing towards the next resistance levels, suggesting a possible rally if prices break through the critical barrier of $2,732.08.
Technical indicators also reinforce this positive outlook. The Relative Strength Index (RSI) is currently hovering at 69.44, suggesting a moderately overbought condition but still leaving room for potential gains. The 50-period Exponential Moving Average (EMA) is positioned at $2,678.89, offering solid support to the ongoing trend.
Should gold hold above $2,714.00, the immediate upside target lies at $2,732.00. A breakout above this resistance would open the door for a further advance towards the $2,740 level. However, failure to maintain the $2,713 support could result in a pullback, with next support levels at $2,703.00 and $2,693.00.
Conclusion: The overall outlook for gold remains bullish as long as prices stay above $2,714. Entry points for traders may include buying above $2,714 with a take-profit target of $2,732 and a stop-loss at $2,703. The RSI and 50 EMA suggest positive momentum, making the current price zone an attractive entry for upward positions.
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S&P500 (SPX) Price Analysis – Oct 18, 2024
Daily Price Outlook
The S&P 500 index is trading robustly around the 5,850 level, demonstrating a bullish trend driven by optimism in the market. Investors are reacting positively to expectations that major central banks will implement interest rate cuts. Lower interest rates generally enhance the attractiveness of equities as an investment choice, as they reduce borrowing costs and boost corporate profitability.
Alongside this, positive economic data from the U.S. has bolstered confidence. Strong retail sales and resilient job market indicators have painted a picture of economic strength, encouraging traders to buy into the market. The combination of low interest rates and solid economic indicators is encouraging investors to allocate more capital to the stock market, further driving the index upward.
Central Banks' Rate Cuts and Positive Economic Data Impact on the S&P 500
Central banks globally, including the Federal Reserve and the European Central Bank, are expected to implement interest rate cuts in response to weakening economic indicators. The prospect of lower rates typically supports equity markets as borrowing costs decline, making it cheaper for companies to invest and expand.
In the meantime, the recent economic data, such as better-than-expected retail sales and low initial jobless claims in the U.S., indicate a strong consumer base, which is crucial for economic expansion. On the data front, the US Census Bureau showed that retail sales increased by 0.4% in September, surpassing expectations of 0.3%. Furthermore, initial jobless claims fell to 241,000, lower than the anticipated 260,000.
Meanwhile, the Philadelphia Federal Reserve reported an increase in the business conditions index from 1.7 to 10.3 in October, beating consensus estimates. Traders are now focusing on upcoming US housing market data and Fed Governor Christopher Waller's speech for short-term trading opportunities.
Consequently, these factors are reinforcing the positive outlook for the S&P 500, making it an appealing option for investors seeking stability in their portfolios.
Geopolitical Uncertainty and Its Impact on the S&P 500 Index
Despite the positive trends, geopolitical uncertainties loom, impacting market sentiment around the S&P 500 index. Ongoing tensions in the Middle East and uncertainty surrounding the upcoming U.S. Presidential election have made investors wary. These geopolitical issues can lead to market volatility and may prompt investors to seek safe-haven assets, potentially impacting stock prices negatively.
However, the tight race between Donald Trump and Kamala Harris adds to the unpredictability, influencing traders' strategies. As geopolitical developments unfold, the S&P 500 could experience fluctuations, highlighting the need for investors to stay vigilant amid these uncertainties.
S&P 500 - Technical Analysis
The S&P 500 (SPX) is trading marginally lower at $5,841.48, marking a 0.02% decline in today's session. Despite the dip, the index remains in a consolidation phase, hovering around the key pivot point of $5,807.87. Immediate resistance is set at $5,878.04, with further hurdles at $5,912.64 and $5,939.55. A break above these levels could spark a bullish rally toward the $5,900 region, where traders may look to take profits.
On the downside, the immediate support level sits at $5,772.26, with additional support at $5,727.47 and $5,689.71. Should the index dip below these support zones, a steeper correction could be on the horizon, pushing prices toward the $5,600 range.
The 50-day Exponential Moving Average (EMA) is positioned at $5,775.78, offering solid support that aligns closely with the pivot point, reinforcing the current price consolidation. Meanwhile, the Relative Strength Index (RSI) is at 58, indicating neutral market conditions, with neither overbought nor oversold signals dominating. This suggests potential buying opportunities, particularly if prices hold above $5,828.
A technical breakout above $5,828 is expected to trigger a bullish trend, targeting $5,905 with a stop loss placed at $5,778. However, if prices slip below the immediate support, the outlook could turn bearish.
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GOLD Price Analysis – Oct 18, 2024
GOLD Price Analysis – Oct 18, 2024
Daily Price Outlook
Gold prices (XAU/USD) soared to a new record high near the 2,710 level on Friday, continuing an impressive bullish bias. This surge reflects growing expectations that major central banks might cut interest rates soon, a move that often boosts demand for gold, which doesn’t pay interest.
At the same time, rising tensions in the Middle East and the uncertainty surrounding the upcoming US Presidential election are making gold more attractive as a safe haven for investors. With all these factors at play, it’s no surprise that many are turning to gold in these turbulent times.
In addition to this, the recent decline of the US Dollar from its highest levels since early August has been a boost for gold prices. On top of that, the positive US macroeconomic data released on Thursday has reinforced the idea that the Federal Reserve might opt for modest interest rate cuts. This situation could help stabilize the dollar's downward trend while also making gold a more appealing option for investors looking for a safe place to park their money.
Fed Rate Cuts and Positive Economic Data Drive Gold Demand Amid Market Uncertainty
On the US front, the Federal Reserve (Fed) is expected to lower interest rates again after a significant cut in September. At the same time, weak inflation data from the UK has increased expectations that the Bank of England may cut rates more aggressively. Meanwhile, the European Central Bank (ECB) recently lowered rates for the third time this year, marking the first back-to-back cuts in 13 years due to worsening economic conditions. These moves by central banks, along with a slight drop in the US Dollar, have supported rising gold prices, as lower interest rates tend to make gold more attractive.
In addition to central bank actions, positive US economic data is also influencing the market. The US Census Bureau reported that retail sales rose by 0.4% in September, beating expectations of 0.3%, and initial jobless claims dropped to 241,000, better than the forecasted 260,000. Furthermore, the Philadelphia Federal Reserve's business conditions index increased significantly in October, reaching 10.3.
As traders focus on upcoming US housing data and a speech by Fed Governor Christopher Waller, the combination of expected interest rate cuts and positive economic news is likely to keep boosting demand for gold, as investors turn to it for stability during uncertain times.
Geopolitical Uncertainty Fuels Gold's Rise Amid Middle East Tensions and US Election Concerns
On the geopolitical front, escalating tensions in the Middle East and uncertainty surrounding the upcoming US Presidential election are also driving up gold prices. The tight race between Donald Trump and Kamala Harris has added to the unpredictability, prompting investors to seek the safety of gold. As a result, this increased demand has pushed gold prices to a new all-time high.
The situation in the Middle East intensified after the Israeli military confirmed the death of Hamas leader Yahya Sinwar, following a long pursuit. Additionally, Hezbollah, backed by Iran, has escalated its conflict with Israel, further heightening regional instability. Hence, these geopolitical tensions have had a stronger impact on market sentiment, with investors focusing more on safe-haven assets like gold.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) continues its upward momentum, rising by 0.39% to trade at $2,704.52. Currently, the pivot point stands at $2,720, a key level to watch as it could determine whether gold pushes further into resistance zones. Immediate resistance is at $2,714.04, followed by stronger barriers at $2,723.35 and $2,733.55. A successful breach of these levels would set the stage for a continuation of the bullish trend.
The 50-day EMA, currently at $2,671, provides solid support, underpinning the broader uptrend. On the downside, immediate support is found at $2,684.56, with further backing at $2,673.03 and $2,660.17. Should gold prices fall below these levels, a deeper retracement could materialize.
The Relative Strength Index (RSI) stands at 66, suggesting the metal is nearing overbought conditions, but still has some room to rally before facing significant selling pressure. Traders eyeing this level may see opportunities to buy on dips, particularly if prices remain above the $2,696 mark. A break below $2,685, however, could trigger a more bearish sentiment.
Conclusion:
The technical outlook suggests buying above $2,696, targeting the $2,720 pivot with a stop loss set at $2,685. Gold remains bullish, supported by strong technical indicators, but traders should be mindful of resistance levels and overbought signals from the RSI.
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USD/JPY Price Analysis – Oct 17, 2024
Daily Price Outlook
During the European trading session, the USD/JPY currency pair maintained its bullish momentum, holding strong around the 149.80 level. Earlier in the day, the Japanese Yen surrendered modest intraday gains, edging back towards its lowest level since early August. This decline was triggered by disappointing data showing Japan's exports fell in September for the first time in 10 months, raising concerns about weakening global demand.
Adding to the pressure, Japanese Prime Minister Shigeru Ishiba's unexpected opposition to further rate hikes complicated the Bank of Japan's efforts to move away from its ultra-easy monetary policy.
Meanwhile, a positive sentiment in equity markets further undermined the Yen’s safe-haven appeal. On the other hand, the US Dollar held firm, bolstered by expectations of modest rate cuts by the Federal Reserve next year and supported by strong US Treasury yields, which kept the USD/JPY pair comfortably above the 149.50-149.55 range.
Weak Japanese Export Data and Political Uncertainty Pressure the Yen
On the JPY front, the Japanese Yen faces pressure due to Prime Minister Shigeru Ishiba’s unexpected opposition to further rate hikes. This adds uncertainty to the Bank of Japan’s (BoJ) plans to exit its long-standing ultra-easy monetary policy. A recent Reuters poll indicates that most economists expect the BoJ will hold off on raising interest rates again this year, given the uncertainty over the new political leadership’s stance on monetary policy.
Adding to the Yen's challenges, data from Japan's Ministry of Finance revealed that exports fell by 1.7% in September, missing expectations and marking the first decline in 10 months. This drop was influenced by weak demand from China, Japan's biggest trading partner, and a slowdown in the US economy.
The Yen's recent appreciation following the BoJ's interest rate hike in July also impacted export values. While this complicates the BoJ's rate hike plans, geopolitical risks from the Middle East may still offer some support for the Yen.
Consequently, the combination of weak Japanese export data and political uncertainty around future rate hikes is keeping the Yen under pressure, which supports the US Dollar. As a result, the USD/JPY pair remains strong, trading above the 149.50 level.
Impact of US Economic Conditions and Middle East Tensions on the USD/JPY Pair
On the US front, the US Dollar hit its highest level since early August due to expectations of a more gradual easing of Federal Reserve policy. Investors are betting on a potential 25 basis points rate cut at the Fed's November meeting. Although the yield on the 10-year US government bond dropped to a one-week low, it remains above 4.0%, which supports USD strength and helps keep the USD/JPY pair well-supported.
In the Middle East, tensions are rising as the United Nations reported Israeli forces firing at its peacekeeping troops, injuring over a dozen in southern Lebanon. A potential Israeli counterstrike, following Iran's October 1 attack, is reportedly prepared, increasing fears of broader regional conflict.
Traders are also watching for key US economic data, including Retail Sales, Weekly Jobless Claims, and the Philly Fed Manufacturing Index, which could impact market sentiment during the North American session.
Therefore, the rising US Dollar strengthens against the Yen, supported by expectations of a rate cut and resilient bond yields. Meanwhile, escalating tensions in the Middle East may further boost demand for the safe-haven Yen, adding volatility to the USD/JPY pair.
USD/JPY – Technical Analysis
The USD/JPY pair is trading at 149.598, down 0.10% for the day, hovering near the critical pivot point at 150.24. Immediate resistance is seen at 149.97, and a break above this level could open the door for further gains toward 150.59 and 151.17.
The 50-day Exponential Moving Average (EMA) at 149.37 acts as crucial support, helping maintain a bullish outlook. The RSI is at 55, signaling neutral-to-slightly bullish conditions. Traders are closely watching the 150.24 pivot point for signs of a breakout.
If the pair clears this level, bullish momentum could accelerate, while a failure may push USD/JPY toward the support at 148.47.
For a short-term strategy, traders could consider entering a buy position above 149.052, targeting a take-profit level of 150.24. A stop-loss at 148.37 is recommended to limit downside risks.
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AUD/USD Price Analysis – Oct 17, 2024
Daily Price Outlook
The AUD/USD currency pair reversed its three-day bearish streak, climbing to an intra-day high of 0.6711. This upward movement followed the release of a robust Australian employment report on Thursday, which revealed a seasonally adjusted Employment Change of 64.1K in September. This figure significantly exceeded market expectations of a 25.0K increase and brought total employment in Australia to a record 14.52 million, following a revised rise of 42.6K in the previous month.
Meanwhile, the US dollar gained strength from solid labor and inflation data, which has tempered expectations for aggressive easing by the Federal Reserve (Fed). Consequently, the bullish outlook for the USD may limit further gains for the AUD/USD pair.
Australian Dollar Strengthens on Employment Report Amid Weak Consumer Confidence
On the AUD front, the Australian Dollar (AUD) ended its three-day losing streak against the US Dollar (USD) after a strong employment report was released. In September, Australia saw a surge of 64.1K in seasonally adjusted Employment Change, bringing total employment to a record 14.52 million. This was well above the market expectation of a 25.0K increase and followed a revised gain of 42.6K in the previous month. The unemployment rate held steady at 4.1%, which was better than the anticipated 4.2%.
Despite these positive employment figures, consumer confidence in Australia showed little improvement. The ANZ-Roy Morgan Consumer Confidence index remained unchanged at 83.4 this week, continuing a trend of being below 85.0 for 89 consecutive weeks. Although this week’s reading was slightly higher than the 2024 weekly average of 82.1, overall consumer sentiment remains weak.
Looking ahead, the Commonwealth Bank of Australia predicts a 25 basis point rate cut by the Reserve Bank of Australia (RBA) by the end of 2024. This expectation hinges on a stronger disinflationary trend than the RBA currently anticipates. Meanwhile, in China, the Consumer Price Index (CPI) remained unchanged at 0% in September, and the Producer Price Index (PPI) dropped by 2.8% year-on-year, both indicating economic pressures that could influence Australia's economic outlook.
Impact of US Economic Strength on AUD/USD Dynamics
On the US front, the US dollar gained strength from solid labor and inflation data, reducing expectations for aggressive interest rate cuts by the Federal Reserve (Fed). According to the CME FedWatch Tool, there is now a 92.1% chance of a 25-basis-point rate cut in November, but markets do not expect a larger 50-basis-point reduction. This sentiment reflects a cautious approach to monetary policy.
On Tuesday, Raphael Bostic, the President of the Federal Reserve Bank of Atlanta, shared his view that he anticipates only one more interest rate cut of 25 basis points this year. He mentioned that during last month’s central bank meeting, the median forecast indicated a potential for 50 basis points of cuts in addition to the 50 basis points already implemented in September. Bostic's projection aligns with a more measured approach to adjusting rates.
In addition to this, Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, reassured markets by emphasizing the Fed's data-driven strategy. He noted the strength of the US economy and the ongoing easing of inflationary pressures, despite a recent slight increase in the overall unemployment rate. This perspective supports a stable outlook for the dollar as the Fed evaluates future policy moves.
Therefore, the strengthening USD, driven by solid labor data and tempered rate cut expectations, may limit gains for the AUD/USD pair. As the Fed adopts a cautious monetary stance, the Australian Dollar could face downward pressure against the stronger US Dollar.
AUD/USD – Technical Analysis
The AUD/USD pair is trading at $0.66843, up 0.35% for the day, as it hovers below the key pivot point of $0.6704. The immediate resistance at $0.6732 is crucial; a break above this level could lead to further gains toward the next resistance levels of $0.6758 and $0.6781. However, with the price currently below the 50-day Exponential Moving Average (EMA) at $0.6711, there is potential for bearish momentum to reassert itself.
On the downside, immediate support lies at $0.6662, with further support levels at $0.6639 and $0.6617. The RSI is currently at 45, indicating a neutral market sentiment but leaning toward bearish territory as it remains below the midpoint. This suggests that further downward pressure could build if the pair fails to break above the pivot point.
Traders should be cautious of the 50-day EMA as it represents a critical barrier for any bullish attempts. A move below the immediate support at $0.6662 could trigger selling pressure, potentially driving the price toward $0.6639. The pivot point at $0.6704 will be a key indicator for future direction, with selling opportunities emerging below this level.
Given the current technical setup, a short position could be considered if the price remains below $0.6704. Traders could target $0.66603 for profit, while placing a stop-loss at $0.67256 to manage risk in case of a bullish breakout.
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- GOLD Price Analysis – Oct 17, 2024
GOLD Price Analysis – Oct 17, 2024
Daily Price Outlook
Gold prices (XAU/USD) maintained a bullish trend, climbing for the third consecutive day and reaching a fresh all-time high of 2,685 ahead of the European session on Thursday. This bullish momentum is supported by weak inflation data from Europe and the UK, which have heightened expectations for more aggressive monetary easing by both the European Central Bank (ECB) and the Bank of England (BoE). Apart from this, the ongoing speculation of a 25 basis point (bps) rate cut by the Federal Reserve in November has bolstered demand for the non-yielding yellow metal.
Moreover, the escalating conflicts in the Middle East have heightened the appeal of gold as a safe haven. Nevertheless, traders have moderated their expectations for more aggressive easing by the Fed, which has led to higher US Treasury bond yields. This keeps the US Dollar (USD) near its highest level since early August, limiting the upside for gold.
Weak Inflation and Central Bank Actions Heighten Gold Demand
As we mentioned, weak inflation data from Europe and the UK has increased expectations for more aggressive policy easing by the European Central Bank (ECB) and the Bank of England (BoE). This aligns with predictions of a 25 basis point (bps) rate cut by the Federal Reserve (Fed) in November, supporting demand for gold, a non-yielding asset.
Notably, the ECB is expected to announce its third interest rate cut of the year this Thursday, while falling UK inflation strengthens the case for a BoE rate cut next month. Meanwhile, the CME Group's FedWatch Tool shows over a 90% probability of a 25 bps rate cut from the Fed, which has lowered US bond yields to a one-week low.
As a result, the US Dollar has continued its upward trend, reaching its highest level since early August, but this hasn’t deterred gold buyers. Moving ahead, traders will watch key US economic data, including Retail Sales, Weekly Initial Jobless Claims, and the Philly Fed Manufacturing Index. In the meantime, the ECB’s monetary policy decision may also increase market volatility and provide opportunities for traders, especially in the safe-haven gold market.
Geopolitical Tensions and Central Bank Purchases Drive Demand for Gold
Apart from this, recent comments from officials at the London Bullion Market Association's annual conference indicate that central banks are continuing to purchase gold. They are doing this to diversify their reserves for both financial stability and strategic reasons. This trend highlights gold's ongoing importance as a safe-haven asset amid global uncertainties.
In southern Lebanon, the United Nations (UN) reported that Israeli forces have fired at its peacekeeping position, forcibly entered a base, and halted critical logistical movements. This situation has resulted in injuries to more than a dozen UN troops. The escalating tensions in this region raise concerns about stability and security in the area.
Furthermore, a source familiar with the situation revealed that Israel has prepared a plan to respond to Iran’s attack on October 1. This development heightens the risk of further geopolitical tensions and could lead to a full-scale war in the Middle East.
In another part of the world, China’s housing minister announced plans to add 1 million village urbanization projects and implement monetization measures for these initiatives, reflecting the government's commitment to urban development.
Therefore, the ongoing geopolitical tensions, particularly in the Middle East, coupled with central banks' increased gold purchases for diversification, are likely to boost demand for gold as a safe-haven asset, driving prices higher amid market uncertainties and global instability.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is showing bullish momentum, trading at $2,682.10, up 0.36% on the day. The 4-hour chart reveals that the price is approaching a critical resistance at $2,674.26, which, if broken, could trigger further gains toward the next resistance levels at $2,685.25 and $2,694.23. However, a failure to break this level may see gold retreat to immediate support at $2,655.79, with further support lying at $2,646.42 and $2,637.84.
From a technical perspective, the 50-day Exponential Moving Average (EMA) at $2,659.66 is providing solid support, suggesting a positive outlook for gold as long as the price remains above this level. The Relative Strength Index (RSI) is currently at 63, indicating a bullish trend without reaching overbought territory, leaving room for further upward movement.
The pivot point at $2,693.00 serves as a key indicator, with potential gains if prices surpass this level. Traders may look to enter positions above $2,674, aiming for a take-profit target around $2,693. However, caution is advised if the price falls below $2,665, where a stop-loss could help mitigate risks in a downward scenario.
Overall, gold remains bullish as long as the price holds above the $2,674 mark, supported by strong technical indicators. A break above immediate resistance could see gold testing new highs, while a drop below key support may signal a short-term pullback.
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GBP/USD Price Analysis – Oct 16, 2024
Daily Price Outlook
During the European trading session, the GBP/USD currency pair extended its downward slide, facing significant selling pressure. This came after the UK’s Office for National Statistics (ONS) released a weaker-than-expected Consumer Price Index (CPI) report for September, adding to concerns about the UK economy.
At the same time, the US Dollar remained strong, hovering near a two-month high, as traders factored in the possibility of only moderate rate cuts from the Federal Reserve (Fed) later this year. These combined factors weighed heavily on the GBP/USD pair.
Looking ahead, market participants will be closely watching Thursday’s release of the US Retail Sales data for September. The report, which is a key indicator of consumer spending, is projected to show a 0.3% increase.
GBP/USD Declines as Weak Inflation Data Fuels Rate Cut Expectations
As we mentioned, the GBP/USD pair is facing heavy selling pressure after the UK Office for National Statistics (ONS) released a weaker-than-expected Consumer Price Index (CPI) report for September. The annual headline inflation rate dropped to 1.7%, falling short of the anticipated 1.9% and down from 2.2% in August.
Month-on-month inflation stayed flat, while core CPI inflation, which excludes volatile items like food and energy, also decreased faster than expected to 3.2%, below the 3.4% estimate. Services inflation, a key focus for the Bank of England (BoE), slowed to 4.9% from 5.6%.
This significant drop in inflation is increasing expectations that the BoE will cut interest rates in its upcoming policy meetings in November or December, possibly by 25 basis points. A slowdown in wage growth, which rose by 4.9% in the three months ending in August—the slowest in two years—also contributed to the market's belief that inflationary pressures will ease further. Market participants are now more confident that the BoE will move toward rate cuts as inflation continues to decelerate.
Therefore, the weaker inflation data and rising expectations of a Bank of England interest rate cut are driving the GBP/USD pair lower, as reduced rate hike prospects make the British pound less attractive to investors, increasing selling pressure on the currency.
US Dollar Strengthens Amid Rate Cut Expectations and Resilient Economic Data
On the US front, the US Dollar is holding strong near a two-month high as traders anticipate moderate interest rate cuts from the Federal Reserve (Fed) in upcoming policy meetings. The US Dollar Index (DXY) is maintaining its gains around 103.30 after the Fed initiated its policy-easing cycle with a significant 50 basis point (bps) cut in September. According to the CME FedWatch tool, traders are expecting further rate cuts of 25 bps in both November and December meetings.
Despite these expectations, recent positive US economic data has reduced fears of an economic slowdown. Key indicators like Nonfarm Payrolls (NFP) and ISM Services PMI showed strong growth in September, suggesting economic resilience. Additionally, inflation pressures increased unexpectedly, indicating that the battle against rising prices is ongoing.
Therefore, the strength of the US Dollar, supported by anticipated Fed rate cuts and positive economic data, is exerting downward pressure on the GBP/USD pair. Looking ahead, investors are keenly awaiting the release of September's US Retail Sales data.
GBP/USD – Technical Analysis
The GBP/USD pair is trading at $1.30095, down 0.51% as bearish momentum continues to pressure the currency pair. On the 4-hour chart, the price has dipped below the pivot point of $1.3037, signaling a continuation of the recent downtrend.
Immediate resistance is observed at $1.3076, with further levels at $1.3102 and $1.3133. However, with the pair trading near key support at $1.3002, a break below this level could accelerate selling toward the next support zones at $1.2969 and $1.2942.
Technical indicators point to a bearish outlook, with the Relative Strength Index (RSI) at 31, hovering near oversold territory. This suggests the possibility of a short-term bounce, but the overall trend remains downward.
The 50-period Exponential Moving Average (EMA) is currently at $1.3062, reinforcing the bearish sentiment as the price remains well below this level. Traders should watch for further declines, especially if the pair breaches $1.3002.
A potential trading strategy could involve selling below $1.30353, targeting $1.29842, with a stop loss set at $1.30636 to mitigate risks.
The oversold RSI offers a note of caution, signaling the possibility of a short-term corrective move, but overall, the downward trend appears dominant.
This analysis highlights the key levels and indicators driving the GBP/USD’s short-term outlook, with a bearish bias prevailing for now.
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GOLD Price Analysis – Oct 16, 2024
Daily Price Outlook
Gold prices (XAU/USD) continued their upward momentum, reaching around $2,675, marking a three-week high during the first half of the European session on Wednesday. This rise is largely driven by ongoing geopolitical tensions and disappointment over the lack of details surrounding China’s fiscal stimulus, which has dampened investors’ enthusiasm for riskier assets. Moreover, the current risk-averse sentiment has contributed to a decline in U.S. Treasury bond yields, further supporting gold's appeal as a non-yielding asset.
However, there are some headwinds for gold as well including stronger expectations for a less aggressive policy shift from the Federal Reserve, along with predictions for a standard 25 basis points (bps) rate cut in November, which are likely to boost U.S. bond yields. This environment has also lifted the U.S. dollar to its highest level in over two months, which may deter bullish traders from making new investments in gold.
Impact of U.S. Dollar Strength and Fed Policy on Gold Prices
On the U.S. front, the broad-based U.S. dollar has reached its highest level in over two months, driven by expectations for a less aggressive approach to policy easing by the Federal Reserve (Fed). Many investors anticipate a standard 25 basis points (bps) rate cut at the upcoming November meeting, which has contributed to higher U.S. bond yields. However, this stronger dollar could limit new investments in gold, which is seen as a safe-haven asset.
On Tuesday, U.S. Treasury bond yields fell for the second consecutive day due to weaker-than-expected manufacturing data and a decrease in inflation risks from declining oil prices. The New York Federal Reserve's Empire State Manufacturing Index dropped to -11.9 in October, indicating deteriorating economic conditions, the lowest reading since May.
As fears of supply disruptions ease and the outlook for demand weakens, crude oil prices fell to a two-week low, reducing inflationary pressures and making it easier for the Fed to consider further interest rate cuts.
Despite this, the market is pricing in a greater chance of smaller interest rate cuts at the next Federal Open Market Committee (FOMC) meeting in November. This is expected to support the U.S. dollar and limit any significant gains for gold (XAU/USD).
Additionally, comments from Fed officials like San Francisco Fed President Mary Daly suggest that the central bank is making progress in controlling inflation, with one or two more rate cuts possible this year, while Atlanta Fed President Raphael Bostic notes that the economy is performing well, with inflation trending back towards the 2% target.
Therefore the strengthening U.S. dollar and higher bond yields, alongside expectations of smaller interest rate cuts, may limit gold's gains. While easing inflation risks provide some support, overall sentiment could lead to reduced bullish activity in gold markets.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is currently trading at $2,670.6, up 0.51%, reflecting a continuation of its bullish momentum. On the 4-hour chart, prices are hovering near key resistance at $2,674, just below the pivot point of $2,682.
A break above this level could lead to further gains, with next resistance levels at $2,685 and $2,694. However, if gold fails to maintain momentum, immediate support is found at $2,656, with further downside potential toward $2,646 and $2,638.
The Relative Strength Index (RSI) is currently at 64, indicating that while bullish momentum remains intact, gold is approaching overbought territory. This suggests some caution for traders, as a pullback may be on the horizon.
The 50-period Exponential Moving Average (EMA) sits at $2,647, providing dynamic support. As long as prices remain above this level, the outlook remains positive.
Traders looking to capitalize on this trend might consider entering buy positions above $2,665, with a target of $2,682. A stop loss at $2,655 would protect against downside risks, particularly if gold dips below key support levels.
In conclusion, gold’s current trajectory remains bullish, but traders should watch key levels closely. A break above $2,674 could signal further gains, while a move below $2,656 might indicate a broader correction.
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EUR/USD Price Analysis – Oct 16, 2024
Daily Price Outlook
During the European trading session on Wednesday, the EUR/USD currency pair continued its downward trend, falling to around 1.0880. The Euro (EUR) is struggling amid growing expectations that the European Central Bank (ECB) will lower interest rates again on Thursday. This outlook has put significant pressure on the major currency pair.
At the same time, the US dollar has been on a strong upswing over the past few weeks, contributing to the Euro's decline. The US Dollar Index, which measures the Greenback against six major currencies, climbed to approximately 103.40. Traders are increasingly confident that the US Federal Reserve (Fed) will gradually reduce interest rates for the rest of the year, further bolstering the Dollar's strength.
EUR/USD Declines as ECB Rate Cut Expectations and Economic Concerns Weigh on the Euro
On the EUR front, the EUR/USD currency pair has dropped due to expectations that the European Central Bank (ECB) will cut interest rates again on Thursday. Analysts predict the ECB will lower its Rate on Deposit Facility by 25 basis points to 3.25%, marking the second consecutive rate cut. Investors are closely watching the monetary policy statement and ECB President Christine Lagarde’s press conference for insights into the future of interest rates.
Lagarde is likely to take a dovish stance, as inflation pressures in the Eurozone seem to be easing, while concerns about an economic slowdown are growing. Preliminary data shows that the Eurozone's Harmonized Index of Consumer Prices (HICP) fell to 1.8% in September.
Moreover, recent estimates for the Consumer Price Index (CPI) in France and Italy indicate lower-than-expected inflation. Compounding these concerns, speculation about former US President Donald Trump potentially winning the upcoming US presidential elections has raised worries about the EU’s export outlook. If Trump wins, tariffs on automotive imports to the US could increase, negatively impacting exports from Europe and further slowing economic growth.
Therefore, the anticipated rate cut by the ECB and easing inflation pressures are likely to weaken the Euro further, contributing to the EUR/USD pair's decline. In the meantime, concerns over potential tariffs from a Trump presidency could negatively affect EU exports, exacerbating Euro weakness.
US Dollar Strengthens as Fed Signals Gradual Rate Cuts and Retail Sales Data Looms
On the US front, the EUR/USD pair is facing pressure due to the strong performance of the US Dollar in recent weeks. The US Dollar Index (DXY), which measures the Greenback against six major currencies, has risen to nearly 103.40. The Dollar is gaining strength as traders expect the US Federal Reserve (Fed) to gradually lower interest rates for the rest of the year.
Analysts believe the Fed will shift from an "aggressive" to a "moderate" policy-easing approach, especially after strong Nonfarm Payrolls (NFP) data and the US Services Purchasing Managers Index (PMI) showed growth, along with rising price pressures in September.
However, Fed Governor Christopher Waller has warned against rushing into interest rate cuts. In a recent speech, he mentioned that while he anticipates gradual rate reductions over the next year, the labor market remains healthy even as demand for workers is slowing.
Looking ahead, the next important indicator for the US Dollar will be the Retail Sales data for September, set to be released on Thursday. Economists predict a 0.3% increase in Retail Sales after a modest rise of 0.1% in August, which could further influence the Dollar's trajectory.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.08798, down 0.09%, as the pair remains under mild bearish pressure. The price has dropped below the pivot point of $1.0892, indicating a continued downtrend.
Immediate resistance is seen at $1.0916, with further resistance levels at $1.0933 and $1.0952. On the downside, key support is located at $1.0866, followed by $1.0852 and $1.0837. If the pair breaks below these levels, further downside movement could follow.
The Relative Strength Index (RSI) is currently at 35, suggesting that while the pair is approaching oversold territory, there is still room for additional downward movement.
The 50-period Exponential Moving Average (EMA) at $1.0917 is acting as a dynamic resistance, reinforcing the bearish bias as long as the price stays below this level.
The overall trend appears bearish, with a potential for further declines if key support levels are breached.
Traders may consider entering short positions below $1.08922, with a target of $1.08570, and a stop loss at $1.09160 to protect against any upside reversal. The combination of the bearish trend and a low RSI suggests the possibility of continued weakness in the near term.
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USD/CAD Price Analysis – Oct 15, 2024
Daily Price Outlook
During the European trading session, the USD/CAD currency pair maintained its upward trend and remained well-bid around $1.3815 level, hitting the intra-day high of 1.3816 level. However, the reason for its upward trend can be attributed to the bullish US dollar, which gained positive traction on the back of expectations that the Federal Reserve will ease its policy less aggressively.
Apart from this, the upcoming CPI data from Canada could impact the USD/CAD pair significantly. A higher-than-expected inflation rate may strengthen the Canadian dollar as it raises prospects for tighter monetary policy, while weaker data might lead to a weaker CAD against the USD.
Canadian Inflation Data and Its Impact on the CAD Outlook
On the CAD front, Canada is set to release its latest inflation data on Tuesday, with forecasts suggesting that the Consumer Price Index (CPI) could have risen by 1.8% year-over-year in September. Alongside the headline CPI, the Bank of Canada (BoC) will publish its core CPI, which excludes volatile food and energy prices. In August, the core CPI decreased by 0.1% from the previous month and rose by 1.5% year-over-year.
However, the headline CPI also showed a modest increase of 2.0% over the past year, marking its lowest level since February 2021. The BoC has been in an easing cycle, having cut its policy rate by 25 basis points during its meetings in June, July, and September, bringing the rate down to 4.25%.
The Canadian Dollar (CAD) has been under pressure. Analysts are divided on the future of price pressures in Canada, but many expect the headline inflation to remain below the BoC’s target for now. The BoC's Governor, Tiff Macklem, indicated that while further rate cuts are likely, it’s crucial to keep inflation near the midpoint of the control range of 1%–3%.
US Dollar Strengthens Amid Fed Rate Cut Speculation, Impacting USD/CAD Trends
On the US front, the US Dollar has risen to its highest level since August 8, primarily due to expectations that the Federal Reserve will not be as aggressive in cutting interest rates. Traders are now anticipating a 25 basis point cut in November. Minneapolis Fed President Neel Kashkari mentioned that current monetary policy remains restrictive and that moderate rate cuts may be appropriate since the job market is still strong.
Furthermore, Fed Governor Christopher Waller pointed out that the economy is doing well and may not be slowing as much as previously thought, indicating that the Fed should be cautious with further cuts. This positive sentiment around the US Dollar could limit gains for the Canadian Dollar (CAD) against the USD, as a stronger dollar typically leads to a weaker CAD. Despite this, the CAD could receive support from ongoing concerns about geopolitical tensions, which often drive investors toward safe-haven assets.
As traders look ahead, attention will shift to the upcoming Empire State Manufacturing Index release and additional comments from Fed officials. These events could present short-term trading opportunities for the USD/CAD pair, influencing the currency's movements in the North American session.
USD/CAD - Technical Analysis
USD/CAD is trading at $1.38066, up 0.08%, as it continues its upward momentum, testing key resistance levels. The pivot point stands at $1.38387, indicating bullish sentiment in the market. Immediate resistance is seen at $1.38703, with further resistance levels at $1.39030. If USD/CAD breaks above these levels, we could see the pair push higher toward $1.39500.
On the downside, immediate support is located at $1.37583, with deeper support at $1.37273 and $1.37044. Any break below these levels could signal a pullback, potentially weakening the current uptrend. The 50-day EMA is at $1.35957, offering strong support, suggesting that the overall bias remains bullish.
The RSI is at 72, signaling that USD/CAD is in overbought territory. While this indicates strong buying pressure, it also suggests a potential short-term correction.
Given the technical outlook, traders may look to buy above $1.37914, targeting $1.38703, with a stop loss set at $1.37409.
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