Daily Market Report

[FOREX.com]

AUD/USD breaks out, USD/JPY rolls over amidst worst day of 2024 for USD. May 16, 2024​

The US dollar suffered its worst day of the year and Fed fund futures now imply with near certainty that the Fed will cut by September. And that saw AUD/USD breakout in style and USD/JPY roll over, breaking below two handles on Wednesday.

By : Matt Simpson, Market Analyst

My hunch for a disappointing set of USD inflation data was incorrect, as traders enjoyed a double dose of softer inflation and retail sales figures. Even if data was mostly in line with expectations. Core CPI slowed to its slowest pace since April 2021 at 3.6% y/y, or 0.3% m/m – both as expected. Retail sales slowed to 0.3% m/m, compared to 0.4% prior and expected. Core retail sales was downgraded to 0.9% m/m from 1.1% although reached the 0.2% estimate. Whilst this is a step in the right direction, it should be remembered that prices are still rising and consumers are still spending.


Fed member Goolsbee added to the excitement of cuts by saying that “if decreases in housing inflation seen in April CPI data continues, that’s great”. Yet annual inflation levels remain well above the Fed’s 2% target, and we may have some more bumps in the road before they hit it. Still, for now traders got what they wanted, and that weighed on US yields and the dollar overnight.

USD dollar technical analysis:​

The US dollar index suffered its worst day of the year to safely claim ‘weakest FX major’ currency of the day. All of April’s gains have evaporated with May now on track for a bearish engulfing month at current levels. And if US data continues to soften, even modestly, bets are on for two 25bp Fed cuts this year.


However, the daily chart shows that support was found almost perfectly at the 200-day average, just beneath the Q3 open. Trend support is also nearby, in close proximity to the 104 handle and high-volume node. Furthermore, the daily RSI (2) is oversold. So whilst the monthly and weekly charts points to a lower US dollar, bears may want to trad with caution around current levels with so much support nearby.


Click the website link below to get our Guide to central banks and interest rates in Q2 2024.

https://www.forex.com/en-us/market-outlooks-2024/q2-central-banks-outlook/

• Fed fund futures are now implying a 52.7% chance of a 25bp in September (or a 99.3% chance of a cut by September)
• Wall Street wasted no time sending indices higher with the S&P 500, Dow Jones and Nasdaq 100 all reaching new record highs
• The ASX 200 futures market (SPI 200) tracked Wall Street higher overnight and shows the potential to reach the 7866 target mentioned in yesterday’s report
• The US dollar was the weakest FX major, sending the USD index beneath the 104.30 target (but is not trying to fund support around its 200-day average)
• EUR/USD closed at a 2-month high and is less than 20-pips from testing the 1.09 handle
• AUD/USD broke above its key resistance zone around 0.6650 – 0.6660 to reach a new YTD high
• USD/JPY fell just over 1% to mark its worst day since BOJ interventions, and further losses and move back to at least 152 seem likely with the US dollar bull-case quickly unravelling
• Bitcoin finally enjoyed the bullish range expansion we’ve been waiting for, rising above 66k for the first time in three weeks

Economic events (times in AEST)​

• 09:50 – Japan GDP, foreigner stock/bond purchases
• 11:30 – Australia labour market report
• 14:30 – Japan capacity utilisation
• 20:00 – EU Economic Forecasts
• 22:30 – US building permits, housing starts, jobless claims, import/export prices, Philly Fed manufacturing
• 23:15 – US capacity utilisation, industrial production, manufacturing production

Click the website link below to get our exclusive Guide to AUD/USD trading in Q2 2024.

https://www.forex.com/en-us/market-outlooks-2024/q2-aud-usd-outlook/

AUD/USD technical analysis:​

The breakout of the Q3 and Q2 open prices were clean and done with conviction on AUD/USD. Prices stalled just beneath the 0.6700 handle and high-volume node from the January decline, so I suspect we may see some fickle price action around these levels early in today’s session. Note that support was found at the Q2 open on the 1-hour chart, which is also near the weekly R2 pivot – making 0.6685 a potential pivotal level for intraday traders.


But with traders on guard for even the slightest whiff of softer US data, AUD/USD could find itself extending its rally and heading for the daily R1 pivot or 0.6726 high should US data lean the ‘dovish’ way later today.

USD/JPY technical analysis:​

After two (or maybe three) BOJ interventions, it seems market forces are now taking USD/JPY the direction the central bank wants; lower. Wednesday’s bearish day saw prices cut through two handles and close below 155, and it now appears set to test 154 sooner than later. However, take note of a high-volume node around current levels which may provide interim support ahead of its next anticipated leg lower. The daily S1 pivot sits just above the 154 handle to make it a zone for bears to keep an eye on, a break beneath which brings 152 into focus.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[jomina]

Thank you, it helped a lot

 

[FOREX.com]

AUD/USD, ASX 200 eye a solid close for the week: Asian Open May 17, 2024​

AUD/USD and the ASX 200 have flourished this week thanks to renewed bets of Fed cuts, even though softer employment and wages data for Australia rekindled hopes of a lower RBA cash rate.

By : Matt Simpson, Market Analyst

• US data was mixed overnight, which saw the probability of a June cut by the Fed dip back below 50%, according to Fed fund futures
• Whilst building permits, housing starts and the Philadelphia manufacturing index were lower, the import price index – a gauge of inflation – rose 0.9% m/m compared with 0.2% expected, or 1.1% compared to 0.4% previously
• Wall Street indices came out of the gate with confidence to see all three major indices hit new highs and the Dow Jones tap 40k for the first time on record, yet gains were short lived with the S&P 500, Nasdaq and Dow Jones all closing slightly lower for the day
• The US dollar index recoup some of Wednesday’s heavy losses after finding support around the 104 handle and December trendline
• We essentially saw all FX major retrace against Wednesday’s moves to various degrees, none of which seriously threatens the potential bearishness of the US dollar if incoming economic data continues to soften on aggregate
• USD/JPY closed back above 155 after finding support just below our 154 target, EUR/USD handed back earlier gains after failing to quite reach the 1.09 handle and USD/CHF rebounded strongly after a false break of the 0.9 handle.
• A Reuters poll showed that 53% of economists expect the BOE to cut rate by 25bp in August, 39% estimate June
• This comes ahead of a key inflation report for the UK next week, which could be the decider as to whether the BOE will opt for a June or August cut
• RBA cash rate futures slowly began repricing the potential for an RBA cut this year after the ABS labour market report showed unemployment rose to 4.1% for the second time in four years, and the prior print was upwardly revised to 3.9% from 3.8% previously
• Australia’s 2-year yield extended losses for a second day below 4% and closed at a 17-day low

Click the website link below to get our exclusive Guide to AUD/USD trading in Q2 2024.

https://www.forex.com/en-us/market-outlooks-2024/q2-aud-usd-outlook/

Economic events (times in AEST)​

• 08:45 – New Zealand PPI
• 11:30 – China retail sales, industrial production, house prices, fixed asset investment, unemployment, NBS press conference
• 14:30 – Japan capacity utilisation
• 18:00 – BOE member Mann speaks
• 19:00 – Eurozone CPI
• 00:00 – US leading index
• 00:15 – Fed Waller speaks
• 02:15 – FOMC Daly speaks

ASX 200 at a glance:​

• Thursday was the best day for the ASX 200 this year, which closed just shy of the 7900 handle and record high
• This sets it on track for a fourth consecutive bullish week, and a market that seems primed to bream to a new record high sooner than later
• 10 of its 11 sectors rose led by real estate and information technology
• Only the energy sector closed lower as it tracked crude oil prices from Wednesday
• However, SPI 200 futures were lower with Wall Street overnight, which points to a small lower gap for the ASX 200 cash index today
• The SPI 200 1-hour chart shows prices are pulling back towards a 38.2% Fibonacci level, but as we saw very strong volumes during the initial break above 7850, the bias is to seek dips towards the 7840/7850 area for a potential long setup
• The RSI (2) is also approaching oversold to hint at a swing low, and the 10-bar EMA sits around the 7841 high for potential support
• I doubt we’ll see it break to new highs this week, but odds favour an eventual break to a new record high in due course

AUD/USD technical analysis:​

The Australian dollar looks set to close the week around its highest levels since early January, unless a surprise catalyst jolts markets, or China’s data performs poorly later today. The daily chart shows an indecision candle formed on Thursday which closed between the Q2 and Q3 prices. With traders betting on Fed cuts and coming around to the idea that the RBA may also have to cut rates, it seems to have killed momentum around the cycle highs. And that means traders may want to stick to intraday timeframes for AUD/USD as we head towards the weekend.

The 1-hour chart shows prices retraced back towards 0.6650 in a relatively straight line, although a bullish engulfing candle suggests support around this key level. Prices are now consolidating within the Q2 and Q3 open zone, so I a on guard for another pop higher towards 0.6700 in the earlier stages of today’s Asian session.

Unless China data is particularly strong, I question its ability to simply break to a new high today. In which case I am also on guard for another dip lower towards 0.6630

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge


The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[jomina]

thank you

 

[FOREX.com]

AUD/USD weekly outlook: 4-Month high for AUD, yet resistance looms. May 20, 2024​

Whilst flash PMIs, FOMC and RBA minutes are on the menu this week, the success of AUD/USD is likely to come down to how the US dollar performs.

By : Matt Simpson, Market Analyst

Key themes and events for AUD/USD this week:​

There is little in the way of domestic data. At least in terms of anything that may be a market mover. The RBA minutes released on Tuesday are not likely to reveal much we don’t already know; the RBA may hike again if inflation were to turn higher, but for now that seems like an outside chance and rates are likely to remain at 4.35% for the rest of the year.

However, with bets now on that the Fed may actually cut rates at least once this year thanks to softer CPI and NFP data (among others) and lower wages data for Australia, money markets are now trying to price in a cut this year form the RBA. Even if it remains an outside chance.

Whilst not directly linked , CPI reports from the UK and Canada may warrant a look to see if they soften at a rate that excites markets into pricing in global cuts. If consumer prices are easing overseas, it build a case that domestic prices can fall faster in the future too.



Click the website link below to get our exclusive Guide to AUD/USD trading in Q2 2024.

https://www.forex.com/en-us/market-outlooks-2024/q2-aud-usd-outlook/

The RBNZ are likely to keep monetary policy unchanged on Wednesday. And there is little chance of them switching to an easing bias in their communications. However, they will update their quarterly forecasts so we’ll keep an eye out for any downward revisions (if any) to their inflation numbers and OCR outlook.

Flash PMIs for Australia might provide an inside look at inflation pressures and underlying trends for potential growth an employment, but this is rarely much of a market mover for AUD/USD. However, sentiment from Australian and Japan’s PMIs can sometimes provide a lead on what to expect for the PMI reports across the UK, Europe and US released later that day.



We do have a host of Fed members scheduled to speak throughout the week, with Fed Chairman Jerome Powell himself kicking things off at 05:30 on Monday. Yet looking through the titles and events of many of these speeches suggests monetary policy might not be discussed. And the FOMC minutes released in the early hours of Thursday have likely been superseded by softer NFP and CPI figures from the US.



US data is likely to have the final say where AUD/USD closes as we head into the weekend, particularly inflation expectations from the Michigan University consumer sentiment report. 1 and 5-year CPI expectations unexpectedly rose in the preliminary report, but if they are revised lower if may provide some weakness to the US dollar and support AUD/USD.

AUD/USD futures – market positioning from the COT report:​

• Net-short exposure to AUD/USD futures rose for the first week in four among asset managers and large speculators
• Australia’s combination of softer wages and higher unemployment data last week may have seen net-short exposure rise further since Tuesday, although AUD/USD is stronger on the back of a weaker USD (on bets of Fed cuts).
• Ultimately, the ability for AUD/USD to continue climbing is likely down to the US dollar.
• And as the US dollar index is trying to rally from a key bullish trendline / 104 handle, we have a clear line in the sand between for USD sentiment (a break below 104 assumes another leg higher for AUD/USD)

AUD/USD technical analysis​

The daily chart (left) shows that prices are meandering around the Q2 open, and for now AUD/USD seems hesitant to close above 67c. Even if the US dollar falls next week, take note of trend resistance near the upper 1-week implied volatility level around 0.6750, which could be the next major resistance level for bulls to monitor.

However, the 1-hour chart (right) shows an established uptrend with the 20/50/100 EMAs in a healthy bullish sequence. What bulls would like to see early in the week is a pullback towards the 0.6650 area, which may spur about bout of buying with a more attractive reward to risk for a potential move to the bearish trendline ~0.6750.

Should the US dollar regain its footing, a break below 0.6630 suggests a deeper retracement is underway for AUD/USD.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.