Olivia

Pound Sterling stood tall, driving GBP/USD to fresh three-month highs above 1.2700. GBP/USD is set to find dip-demand, as the US employment data take center stage. GBP/USD buyers are likely to find strong support near 1.2450 if the correction extends. The Pound Sterling extended its reigns over the United States Dollar (USD) this week, pushing GBP/USD to the highest level in three months above 1.2700. Traders brace for the US Nonfarm Payrolls (NFP) in the upcoming week, keeping the sentiment around GBP/USD underpinned. Pound Sterling capitalizes on the US Dollar descent Divergent interest rate outlook between the US Federal Reserve (Fed) and the Bank of England (BoE) helped the Pound Sterling maintain its bullish momentum, as the US Dollar registered its worst month in a year in November. Expectations surrounding a dovish Fed policy pivot in 2024 gained ground throughout the week, underwhelming the US Dollar while the Pound Sterling benefited from the hawkish commentaries from several BoE officials, including Governor Andrew Bailey, following strong UK business PMI data last week. In lieu of this, the GBP/USD pair reached a three-month peak of 1.2733. Markets are pricing in a 97% chance of the Fed standing pat in its December meeting,… Read More »GBP/USD Weekly Forecast: Pound Sterling set to reach higher highs

Gold remains near record highs and achieved its highest monthly close ever in November. Global bond yields continue to decline as inflation further cools, supporting the upside in XAU/USD. With central banks expected to remain on hold, the focus will be US labor market data.  Gold decisively broke above the $2,010 level and moved closer to the record high area, boosted by a decline in global government bond yields. Evidence that inflation continues to edge lower in Europe and the US solidifies expectations that the Federal Reserve (Fed), the European Central Bank (ECB), and other central banks are finished with interest rate hikes. This has also bolstered equity prices and kept the US Dollar under pressure. Next week’s data, particularly US jobs figures, could challenge the current market sentiment, sparking a new debate. Gold shines, inflation slows Gold not only broke above $2,000 but also surpassed the significant $2,010 level, positioning itself to challenge record highs. In November, XAU/USD achieved its highest monthly close ever. A key factor driving the increase in Gold prices was the decline in government bond yields worldwide. Data showed a slowdown in inflation in November in the US, Europe, and Australia at a faster-than-expected rate,… Read More »Gold Price Weekly Forecast: XAU/USD looking at $2100 and US labor market data

EUR/AUD traded to 1.6303 target and a target first reported in August and September when EUR/AUD traded 1.7000’s. EUR/NZD traded to 1.7508 lows from 1.8282. EUR/NZD achieved a 700 pip drop in 15 trade days while EUR/AUD trade duration was 15 weeks.  Best trades for profit this week are long EUR/AUD, GBP/AUD, EUR/NZD, GBP/NZD and EUR/GBP.  Overnight interest rates  Overnight interest rates of the eight major nations. NZD and RBNZ 5.50 DXY and Fed 5.33 GBP and BOE 5.18 CAD and BOC 5.02 EUR and ECB 3.89 AUD and RBA 4.35 CHF and SNB 1.70 JPY and BOJ 0.98 The Mid point of the range is located at 3.24 and a total range  from 5.72 – 2.26. BOJ is subtracted as BOJ interest rates won’t  move anytime soon then the range becomes 5.75 – 3.09.  RBNZ interest rates historically trade above the FED and the RBNZ is the central bank to watch for the first rate cut and signal among the G 8 nations. EUR and ECB rates traditioally trade below Fed rates. The question to successive interest cuts is not seen but rather a slow gradual process over a long period of time if and /or when a drop cycle… Read More »FX weekly — DXY and 14 currency pair levels and targets

After encouraging inflation data in early summer, progress stalled in August and September amid robust consumer activity. But with tighter financial and credit conditions set to weigh further on corporate pricing power, supplemented by slowing rents and falling gasoline and used car prices, we expect to see inflation move close to 2% in 2Q. Progress being made, but the Fed wants much more At the recent FOMC press conference, Federal Reserve Chair Jerome Powell said that the economy has “been able to achieve pretty significant progress on inflation without seeing the kind of increase in unemployment that has been very typical of rate hiking cycles like this one”. Nonetheless, there was the acknowledgement that “the process of getting inflation sustainably down to 2% has a long way to go”. Headline US consumer price inflation has indeed fallen sharply from a peak of 9.1% year-on-year in June 2022, hitting a low of 3% in June 2023. However, this stalled in August and September with the annual rate rebounding to 3.7% as higher energy costs and resilience in some of the core (ex-food and energy) components re-emerged amid a strong summer for consumer spending. The annual rate of core inflation has continued to soften from a peak of… Read More »US could soon see 2% inflation

Summary Despite the 525 bps of rate hikes that the Federal Open Market Committee (FOMC) has implemented since March 2022, the U.S. economy generally remains resilient due, in large part, to continued strength in consumer spending. Meanwhile, inflation has receded. We believe it would be premature to claim that the economic storm has passed, because the battle against inflation has not yet been decisively won. There already are some cracks that are beginning to appear in the economy, and these strains likely will intensify in the coming months as monetary restraint remains in place. Our base case is that real GDP will contract modestly starting in mid-2024. We look for the FOMC to cut its target range for the federal funds rate by 225 bps by early 2025, which is more than both Fed policymakers and market participants currently project. Even if Fed policymakers are able to pull off a “soft landing,” real GDP growth in 2024 likely will be subpar, at best, due to the elevated level of real interest rates that will be needed to wring inflation out of the economy. The Sun Belt and Mountain West have outperformed the Northeast and the Midwest in recent years, and… Read More »Annual outlook: Weathering the storm

Easing inflation figures fueled speculation central banks will refrain from hiking rates further. The focus shifts to United States data next week, featuring the Nonfarm Payrolls report. EUR/USD turned bearish after meeting selling interest around a Fibonacci resistance level. The EUR/USD pair started the week on a strong footing but lost momentum and is set to close the week in the red, well below the 1.0900 mark. Market participants mainly traded on sentiment, betting against the US Dollar amid optimism about a change in the monetary policies’ tightening cycles worldwide. European Central Bank officers take down the tone European Central Bank (ECB) President Christine Lagarde gave different speeches throughout the week, repeating her well-known message about the risks of higher inflation and the need to keep interest rates higher for longer. However, different ECB officials eased their tone and started skewing to the dovish side. ECB Governing Council member Yannis Stournaras warned about premature bets on rate cuts but added he would expect such a move in mid-2024, earlier than that could be a bit optimistic, according to Stournaras. Also, ECB executive board member and Governor of the Bank of Italy Fabio Panetta said that the current interest rates level… Read More »EUR/USD Weekly Forecast: Could the Nonfarm Payrolls report confirm the monetary policy shift?

Gold price is back under $2,100, consolidating the upsurge to fresh record highs of $2,144. Renewed geopolitical tensions, Fed rate cut bets and thin liquidity triggered a sharp Gold price rally. Golden Cross remains in play amid overbought RSI on the daily chart. Where is Gold price headed next? Gold price is consolidating the sharp pullback from fresh record highs of $2,144 reached in early Asia on Monday. Gold price is back under the $2,100 level, as the dust settles over the massive volatility seen in Gold price at the start of the United States (US) Nonfarm Payrolls week.   Gold price outshines amid supportive fundamental factors Multiple factors can be attributed to the latest upsurge in Gold price, as buyers built on Friday’s rally at the start of the week on Monday. Gold price benefited from a fresh boost of safe-haven flows, in the wake of fresh geopolitical risks emanating between Yemen and the US over the weekend. The US military said on Sunday that Yemen’s Houthi rebels fired ballistics missiles and struck three commercial ships in the Red Sea. In retaliation, a US warship shot down three drones during the hours-long assault. The US military’s Central Command said in… Read More »Gold Price Forecast: XAU/USD hits fresh all-time-highs near $2,150, what’s next?

US non-farm payrolls (Nov) – 08/12 – Last month’s October jobs report was the first one this year when the headline number came in below market expectations, though not by enough to raise concerns over the resilience of the US economy. Unlike September, when US jobs surged by 297k, jobs growth slowed in October to 150k, while the unemployment rate ticked higher to 3.9%, in a sign that the US economy is now starting to slow in a manner that will please the US central bank. Combined with a similarly weak ADP report the same week, where jobs growth slowed to 113k, and a softer ISM services survey yields have slipped back significantly from their October peaks, as well as being below the levels they were a month ago in a sign that the market thinks that rate hikes are done and has now moved on to when to expect rate cuts. This is the next challenge for the US central bank who will be keen to continue to push the higher for longer rates mantra. It’s also worth noting that JOLTS job openings are still at elevated levels of 9.55m, and weekly jobless claims continue to trend at around… Read More »The week ahead – US non-farm payrolls, RBA and Bank of Canada, China trade, Frasers and GameStop results

Despite more recent weakness in the oil market, a tight balance in the second half of next year should see prices trade higher. Meanwhile, we expect Europe to end the 2023/24 winter with comfortable gas storage. In the metals market, we see gold prices hitting record levels in 2024 as the Federal Reserve starts to cut rates. Oil back above $90 in second half of 2024 The oil market is expected to be largely balanced over the first half of 2024 if Saudi Arabia extends its additional voluntary supply cut through until the end of the year’s first quarter. Doing so should ensure that Brent remains above US$80/bbl over the first half of the year. However, we do forecast a tighter market through the latter part of 2024 and, as a result, expect Brent to average a little over US$90/bbl in the second half of next year. A key downside risk is if the Saudis decide against rolling over their voluntary cuts. This would be a strange move, given the effort they have put in this year to support the market –although there are signs of growing disagreement between some OPEC members. While geopolitical tensions have eased somewhat – at least… Read More »Three calls for commodity markets

EUR/USD finds support near the 1.0780 area and stalls its recent pullback from a multi-month top. The upside potential seems limited amid a turnaround in the sentiment surrounding the greenback. The stellar US NFP report should allow Fed to keep hiking interest rates and favours the USD bulls. The EUR/USD pair witnessed heavy selling for the second straight day on Friday and retreated further from its highest level since April 2022 touched the previous day. The US Dollar rallied across the board in reaction to the stellar US monthly employment details and turned out to be a key factor exerting downward pressure on the major. The headline NFP print showed that the economy added 517K jobs in January, surpassing even the most optimistic estimates. The previous month's reading was also revised higher to show an addition of 260K vacancies as compared to the 223K reported originally. Furthermore, the unemployment rate unexpectedly dipped from 3.5% in December to 3.4% – the lowest since May 1969. Average Hourly Earnings, meanwhile, rose 0.3% MoM and 4.4% over the past 12 months, down from 0.4% in December and 4.9%, respectively. Nevertheless, the data was strong enough to allow the Federal Reserve to keep hiking… Read More »EUR/USD Forecast: Ascending channel support holds the key for bulls amid post-NFP USD recovery