Olivia

AUD/USD bounces off YTD lows near 0.6520. The Australian jobs report disappointed investors. Extra pullbacks are likely below the 200-day SMA. In quite a volatile session, AUD/USD managed to reverse several sessions of losses and advance marginally on Thursday. The daily recovery in the Aussie dollar came despite the intense march north in the greenback and disheartening prints from the domestic labour market report for the month of December. On the latter, the Unemployment Rate held steady at 3.9%, while Employment Change shrank by 65.1K individuals. Of note is that Full-Time Employment Change dropped by 106.6K, the largest single-month drop since May 2020. Meanwhile, the pair fully faded the rally seen in the second half of December, while the recent break below the 200-day SMA leaves the door wide open to further retracements in the short-term horizon. Back to the monetary policy front, recent inflation figures tracked by the Monthly CPI Indicator in combination with soft readings from the jobs report allow us to infer that the RBA will most likely keep its OCR unchanged at its February meeting. In the meantime, US dollar dynamics, persistent disappointment from Chinese fundamentals, intense weakness in commodity prices (especially copper and iron ore),… Read More »AUD/USD Forecast: Door remains open to further losses

XAU/USD Current price: 2,015.53 Federal Reserve´s Raphael Bostic repeated rate cuts may come in the third quarter. Wall Street shrugged off the negative tone of its overseas counterparts, posting modest gains. XAU/USD corrects near-term oversold conditions, bears hold the grip. Gold consolidates weekly losses, trading at around $2,015 a troy ounce. XAU/USD posted a multi-week low on Wednesday at $2,001.68, bouncing back amid a modest improvement in the market’s mood. The US Dollar maintained its positive tone throughout the first half of the day as Asian shares fell, with Chinese headlines leading the way. Turmoil in the housing sector and tepid growth-related data suggest the economy is in worse shape than previously believed. Market players became more optimistic with Wall Street’s opening, as United States (US) data was generally better than expected. Housing Starts and Building Permits were up more than anticipated in December, while Initial Jobless Claims printed at 187K in the week ending January 12, beating the 207K expected. On a negative note, the Philadelphia Fed Manufacturing Survey Index posted -10.6, worse than the expected -7 but improving from the previous -12.8. Meanwhile, Federal Reserve (Fed) officials fail to provide fresh clues. Different authorities hit the wires but… Read More »Gold Price Forecast: XAU/USD bounces from near $2,000, bears on pause

EUR/USD Current price: 1.0882 ECB President Christine Lagarde will participate in a panel discussion in Davos. The United States will publish housing and employment-related data. EUR/USD at risk of falling further, support at around 1.0845. The EUR/USD pair trades little changed for a second consecutive day, changing hands at around 1.0880 ahead of the United States (US) opening. The trading range is limited, as EUR/USD peaked at 1.0906, while it met a bottom at 1.0876. The soft tone of Asian share markets limited the upside for the Euro, while demand for the US Dollar receded on the back of more stable government bond yields that put a halt to their latest rally. Chinese headlines weigh on the market mood after the country released tepid macroeconomic data, spiced with trouble in the housing sector. At the same time, a resilient US economy weighed down the odds for a March rate cut, further undermining the sentiment. Meanwhile, the Eurozone released the November Current Account, which posted a seasonally adjusted surplus of €24.6 billion, while Construction Output in the same month was down 1%. The American session will bring US Initial Jobless Claims, the Philadelphia Fed Manufacturing Survey, Building Permits and Housing Starts.… Read More »EUR/USD Forecast: A dismal mood maintains the pair under selling pressure

The eurozone as a whole is still struggling to break free from sluggish growth. And with numerous elections this year, efficient decision-making is becoming increasingly difficult. But some countries are doing quite a bit better than others. The war in Ukraine will soon enter its third year. New geopolitical events like the war in Gaza, tensions in the Red Sea, and the energy and green transition at home are still shaping the eurozone economy. Restrictive monetary policy, at least in the first months of this year, are weighing on the bloc’s growth outlook. As are less expansionary fiscal policies. So, here we go again: another year of sluggish growth is in the offing, at best. While many of the external factors have and will continue to hit all eurozone countries, though not to the same extent, there are clearly some differences across the continent. So, let’s start with those common features: the still-unfolding impact of the European Central Bank’s rate hikes and potential new supply chain frictions. These are both growth-limiting. On the flip side, relatively solid labour markets and improving real wages could support growth. Where countries differ more significantly is, for example, around the energy transition and the share… Read More »Eurozone – Still caught between stagnation, transition and geopolitics

Investors continue to come back to their senses and the latter involves trimming the interest rate cut expectations that went ahead of themselves over the past few months. Yesterday, the Federal Reserve’s (Fed) Beige Book survey suggested that resilient consumer spending during the holiday season helped propel the US economy, and another solid rise in the US retail sales confirmed that spending in the US didn’t slow by the end of last year. The probability of a March cut fell to around 60% from around 80% at the start of the year. The market and the central bankers have started to move toward each other, even though the time gap between when investors price in the first cuts and when central bankers contemplate rate reductions should continue narrowing to find an optimal balance and that should involve a deeper downside correction in stock and bonds, and a further recovery in the US dollar. The euro gives back field, sterling is cautiously bid following surprise jump in UK inflation last month while the Aussie falls of the bed on soft China, soft domestic data and strong dollar. In energy, crude oil is better bid and the barrel of American crude is… Read More »Rate cut expectations get a hair cut [Video]

EUR/USD ticks higher for the second straight day amid a modest USD weakness. Reduced bets for a March Fed rate cut should limit any meaningful USD decline. Mixed signals from ECB policymakers to cap the upside for the shared currency. The EUR/USD pair builds on the overnight bounce from its lowest level since December 13, around the 1.0845 region, which coincides with the 200-day Simple Moving Average (SMA) and gains some follow-through traction on Thursday. Spot prices draw support from a softer US Dollar (USD) and stick to modest intraday gains around the 1.0900 round-figure mark through the early European session. That said, the fundamental backdrop warrants caution for aggressive bullish traders and before positioning for any further appreciating move. The USD downtick could be attributed to some profit-taking following the recent run-up to over a one-month peak and is likely to be limited amid doubts over an early interest rate cut by the Federal Reserve (Fed). Against the backdrop of the recent hawkish remarks by Fed officials, the US Retail Sales data released on Wednesday pointed to a still-resilient consumer spending and suggested that the economy is in good shape. This gives the US central bank more headroom to… Read More »EUR/USD Analysis: Manage to defend and rebound from 200-day SMA, not out of the woods yet

Investors continue to come back to their senses and the latter involves trimming the interest rate cut expectations that went ahead of themselves over the past few months. Yesterday, the Federal Reserve’s (Fed) Beige Book survey suggested that resilient consumer spending during the holiday season helped propel the US economy, and another solid rise in the US retail sales confirmed that spending in the US didn’t slow by the end of last year. On the contrary, the latest data printed its highest pace in three months. As such, robust economic data added to the thinking that, yes, maybe March is too early for the Fed to announce the first rate cut; there is no apparent reason for the Fed to rush to the rate cuts as early as in March. The Fed will likely start cutting in the H1 but March seems overly optimistic given the ongoing strength of the economic data. The probability of a March cut fell to around 60% from around 80% at the start of the year, the US 2-year yield advanced 25bp since the start of the week, the 10-year steadies above the 4%, the US dollar index is pushing higher, the S&P500 comes under… Read More »Trimming and Davos vibes

Gold price is struggling just above $2,000 as the risk-off mood extends into Thursday. US Dollar retreats with bond yields, despite Middle East geopolitical risks and easing Fed cut bets. Gold price leans bearish, with $1,975 eyed as the next crucial support.    Gold price is trying hard to find a floor just above $2,000 early Thursday, despite a broad US Dollar (USD) pullback and ongoing Middle East geopolitical tensions. Attention turns toward the mid-tier US economic data and speeches from US Federal Reserve (Fed) policymakers for fresh trading impetus. Gold price languishes near five-week lows Risk sentiment continues to remain in a weak spot, in the wake of a likelihood of no further big stimulus from China, Red Sea geopolitical tensions and easing bets for aggressive Fed rate cuts. However, the US Dollar fails to benefit from the safe-haven flows, as the US Treasury bond yields pullback from multi-week highs remains a drag. This somewhat turns in favor of Gold price, as it looks to defend the $2,000 barrier, following two straight days of sharp declines. At the time of writing, the US Dollar Index is losing 0.18% on the day to trade at 103.30, extending the retreat from… Read More »Gold Price Forecast: XAU/USD defends the $2,000 mark but for how long?

Notes/observations – Falling equities corresponding with rising US dollar, which has been given momentum from Fed Waller hawkish commentary and geopolitical tensions in the Red Sea. – BOE rate cut expectations were also dialed down after an upside surprise to UK Dec inflation. – Abundance of ECB speakers heavily downplayed market pricing of rate cuts, uniformly chanting a similar stance. Chief Lagarde let slip that an ECB cut is likely by summer. – Overnight, China Q4 GDP and Dec Retail Sales missed expectations. Substantial weakness seen from Hang Seng and Kospi. – Asia closed lower with Hang Seng under-performing -3.7%. EU indices are -0.4% to -1.6%. US futures are -0.4% to -0.6%. Gold -0.2%, DXY 0.0%; Commodity: Brent -1.9%, WTI -2.1%, TTF -2.9%; Crypto: BTC -0.5%, ETH +0.2%. Asia – China Q4 GDP Q/Q: 1.0% v 1.1%e; Y/Y: 5.2% v 5.2%e. – China Dec Industrial Production Y/Y: 6.8% v 6.8%e. – China Dec YTD Fixed Urban Assets Y/Y: 3.0%. – China Dec YTD Property Investment Y/Y:-9.6% v -9.5%e. – China Dec Retail Sales Y/Y: 7.4% v 8.0%e. – China Dec Surveyed Jobless Rate: 5.1% v 5.0% prior; Youth Unemployment Rate (16–24-year-olds): 14.9% v 21.3% prior record level as methodology update.… Read More »Davos continues to throw cold water on rate cut expectations

AUD/USD dropped to six-week lows near 0.6530. Mixed Chinese data releases weighed on AUD. Markets’ attention now shifts to the Australian jobs report. Sellers continued to exert control during Wednesday’s session, prompting a retreat of AUD/USD to the low-0.6500s, marking six-week lows. This further extends the recent breach of the critical 200-day SMA (0.6581). In light of the ongoing price action, the pair fully faded the rally seen in the second half of December, while the recent break below the 200-day SMA leaves the door wide open to further retracements in the short-term horizon. Wednesday’s bearish developments around the Aussie dollar followed disheartening prints from the Chinese economy for the month of December released during early trade, where the GDP Growth Rate expanded below consensus by 5.2% in the October-December period, the Unemployment Rate ticked higher to 5.1%, Retail Sales increased less than predicted by 7.4%, and the House Price Index contracted 0.4% vs. the same month of 2022. On a brighter note, Industrial Production expanded 6.8% YoY. Adding to the persevering sour mood around the high-beta currency emerged another positive session in the greenback, which remained propped up by shrinking speculation of an interest rate cut in March.   In… Read More »AUD/USD Forecast: Weakness remains unabated so far