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GBP/USD calm ahead of UK GDPThe UK economy has been struggling and Friday's GDP is expected to indicate negative growth, with a market consensus of -0.1% q/q for the third quarter. In Q2, GDP showed a small gain of 0.2%. August GDP is expected at 0.0% m/m, after a 0.2% gain in September. A soft GDP report will raise speculation about a recession and could weigh on the pound. Bank of England Chief Economist Huw Pill appeared to backtrack earlier today after saying on Wednesday that market pricing of a rate cut in August 2024 was "not totally unreasonable". Pill stated on Thursday that the BoE expected to maintain restrictive rates for an extended period, but would not make any promises. On Wednesday, Governor Bailey dismissed the possibility of rate cuts in the short term, and Pill may have wanted to put to rest any speculation that his remarks contradicted Bailey's comments. The BoE maintained rates at 5.25% last week and holds its next meeting on 14 December. Federal Reserve Chair Jerome Powell didn't discuss monetary policy in public remarks on Wednesday, and the markets will again be looking for some hints about monetary policy when Powell speaks later in the day. Earlier this week, two Fed members sounded hawkish about inflation. On Wednesday, Philadelphia Fed President Harker said he expected rates to stay higher for longer and there were no signs that the Fed would trim rates in the near term. This followed Dallas Fed President Logan, who said that inflation remains too high and looks to be trending towards 3% rather than the Fed's 2% inflation target. Logan warned that the Fed would have to maintain tight financial conditions in order to bring inflation back to target. 1.2287 is a weak resistance line. Above, there is resistance at 1.2340 There is support at 1.2214 and 1.2175
by OANDA
NZD/USD edges higher ahead of manufacturing PMIThe New Zealand dollar is in positive territory on Wednesday. In the European session, NZD/USD is trading at 0.5926, up 0.26%. New Zealand's manufacturing sector has been in decline for seven consecutive months and little change is expected from the October PMI, which will be released on Friday. The market consensus stands at 45.0, compared to 45.3 in September, which marked a 2-year low. Business activity in the manufacturing sector has been dampened by weak global demand and elevated borrowing costs have exacerbated the prolonged slump. China has been struggling with a significant slowdown, which is bad news for the New Zealand economy, as China is New Zealand's number one trading partner. China is grappling with deflationary pressures, and the October inflation report was softer than expected due to a sharp decline in the price of pork. Inflation in China fell by 0.2% y/y in October, down from 0.0% in September and lower than the market consensus of -0.1%. Monthly, CPI declined by 0.2%, versus a 0.2% rise in September and below the market consensus of 0.0%. If deflation continues, it could cause a downturn in inflation expectations that could dampen consumer spending. Federal Reserve Chair Jerome Powell didn't discuss monetary policy in public remarks on Wednesday, and the markets will again be listening carefully as Powell speaks later today. Earlier this week, two Fed members sounded hawkish about inflation. On Wednesday, Philadelphia Fed President Harker said he expected rates to stay higher for longer and there were no signs of rate cuts in the near term. This followed Dallas Fed President Logan, who said that inflation remains too high and looks to be trending towards 3% rather than the Fed's 2% inflation target. Logan warned that the Fed would have to maintain tight financial conditions in order to bring inflation back to target. NZD/USD continues to test support at 0.5929. The next support line is 0.5858 There is resistance at 0.5996 and 0.6069
by OANDA
USD/JPY breaks above 146, Tokyo Core CPI dips to 2.8%USD/JPY has posted small gains on Friday, enough to push above the symbolic 146 line. On the data calendar, Tokyo Core CPI dipped lower and Fed Chair Powell addresses the Jackson Hole Symposium later today. Japan released the Tokyo Core CPI earlier today. This is the first inflation release of the month, making it a key event. In August, Tokyo Core CPI rose 2.8% y/y, down from 3.0% in July and just under the consensus estimate of 2.9%. Despite the drop in inflation, the indicator has remained above the Bank of Japan's 2% target for some fifteen months. Earlier in the month, the so-called "core-core index", which excludes fresh food and energy, remained at 4.0%. This points to broad inflationary pressure and raises questions about the BoJ's insistence that inflation is transient. The BoJ has said it will not exit its ultra-loose monetary policy until wage growth rises enough to keep inflation sustainable around 2%. Still, the markets have been burned before by the BoJ making unexpected moves and are on guard for the BoJ tightening policy, especially with the yen at very low levels. The markets are keeping a close eye on the Jackson Hole symposium, with Fed Chair Powell and BoJ Governor Ueda both attending. Powell delivers a key speech on Friday and Ueda will participate in a panel discussion on Saturday. If either one provides insights into future rate policy, it could mean some volatility from USD/JPY on Monday. What does the Fed have planned? That depends on which Fed member is addressing the media. Philadelphia Fed President Patrick Harker said on Thursday that he didn't see a need to raise rates further, absent any unexpectedly poor data, but added that the Fed wouldn't be lowering rates anytime soon.  However, Boston Fed President Susan Collins said that rate increases might still be necessary. The Fed is likely to pause at the September meeting, but what happens after that is unclear. USD/JPY is facing resistance at 146.41, followed by 147.44 There is support at 145.54 and 144.51
by OANDA
Australian dollar edges higher after mixed confidence dataThe New Zealand dollar is showing limited movement on Wednesday, trading at 0.6060 in the European session. Like most major central banks, the Reserve Bank of New Zealand has been waging a long and tough battle against inflation by raising interest rates. CPI fell to 6.0% in the second quarter, down from 6.7%. That's certainly good news, but let's remember that inflation is still rising sharply and is much higher than the RBNZ's 2% target. The central bank is also concerned about inflation expectations, which can become embedded when inflation is high and translate into even higher inflation. Wednesday's 2-year inflation expectations release showed a rise to 2.83% in the third quarter, up from 2.79% in the second quarter. One-year inflation expectations fell to 4.17% in Q3, down from 4.17% in Q2. The data indicates that inflation expectations remain high, and that perception could make the life of policy makers more difficult in the fight to bring down inflation. The RBNZ has a long way to go before inflation falls to the 2% target, and that will likely mean further rate hikes unless inflation levels fall sharply. The RBNZ held rates at 5 .50% in July and meets next on August 16th. China is experiencing a bumpy recovery, and that is bad news for the global economy. Commodity currencies such as the New Zealand dollar are sensitive to Chinese economic releases and a soft Chinese trade release on Tuesday sent NZD/USD lower by as much as 80 basis points. The bad news continued on Wednesday as China's CPI for July declined by 0.3% y/y, down from 0.0% in June and just above the consensus estimate of -0.4%. This marked the first decrease in CPI since February 2021 and points to weakness in the Chinese economy, which will likely mean less demand for New Zealand exports, a negative scenario for the New Zealand dollar. NZD/USD continues to put pressure on support at 0.6031. Below, there is support at 0.5964 0.6129 and 0.6196 are the next resistance lines
by OANDA
$QQQ Outlook 05/30 - 06/02The tech sector is on a tear. NASDAQ:NVDA earnings set the tone last week and the AI craze is on. NASDAQ:QQQ had a bullish week, closing up +3.53%, bringing it up +8.76% on the month. Strong earnings, job cuts, and developments in AI technology has sent the sector higher. Technical Analysis: The last two weeks saw NASDAQ:QQQ break out of the rising wedge we were watching. Last week’s high signaled a test of a bullish channel. This channel uses the same uptrend support line we’ve been watching since the beginning of March. We are looking to see if this continues higher, or if the channel resistance is respected. My general lean for this week is bullish, although after last week’s incredible run, I do expect a bit of a retrace before we head higher. A healthy pullback is due so we can continue to move up this channel. I would be bullish if price action can continue to hold above last week’s close of 348.40. Bear case if we can break below last week’s open at 336.25. I’d expect a bounce here as it is in the golden pocket (0.618 retrace would be 337.08), but if we cannot hold this level, we could target the gap to fill below down to 332.91 which would invalidate the golden pocket. Upside Targets: 348.40 → 349.25 → 350.72 → 352.46 → 354.43 Extended: 356.78 Downside Targets: 346.38 → 344.57 → 341.31 → 338.19 → 336.25 Extended: 334.35
NASDAQ:QQQLong
by peterjames_6
$SPY Outlook 05/30 - 06/02With a tentative agreement to raise the debt ceiling reached over the weekend, we now look to see how the markets react when it is voted on later this week. Technical Analysis: The megaphone pattern we’ve been watching all month is still in play. We also have the macro uptrend line that we have not tested since March. My general lean for this week is bullish. Bulls will want AMEX:SPY to hold above last week’s open at 418.64. Barring any additional news, I’m expecting us to fill the gap above to 420.77 - 421.22 when markets open on Tuesday. I do see a 15 minute Fair Value Gap around last week’s open at 418.64 where we could potentially form a support base before we head higher into the 423-425 range. Although I can see the market moving higher in the short term, I’d expect some corrective action in the coming weeks. Bear case if we fail to hold the 418.64 level, we could potentially retrace to the 0.618 fib at 414.04. Should we invalidate a golden pocket bounce, our next support zone would be the daily gap under the 50 SMA from 409.87- 407.27. Under this… megaphone plays out and we test the macro support trendline. Upside Targets: 420.77 → 421.22 → 421.97 → 422.82 → 423.54 Extended: 425.26 Downside Targets: 418.64 → 417.30 → 416.25 → 414.94 → 414.15 Extended: 408.87
AMEX:SPYLong
by peterjames_6
Pound slides on Truss resignation falloutThe British pound is showing strong volatility in the wake of Prime Minister's Truss resignation. Truss resigned on Thursday after just 44 days in office, and the pound jumped as much as 1% before paring most of the gains. The reality of the political maelstrom engulfing the UK has set in and GBP/USD has plunged 1.1% today. The currency has touched a low of 1.1100, its lowest level since October 13th. The deep political crisis in the UK has seen two prime ministers resign in just two months and leaves the Conservatives in turmoil. The Conservatives will elect a new leader next week and fortunately for them, they do not need to call an election for two more years. Still, Truss's brief period as prime minister has caused political and financial chaos, and the new leader will have their work cut out to establish some semblance of normality for the country after the circus over the past few weeks. The Bank of England meets on November 3rd and with inflation climbing back into double digits, the Bank has little choice but to continue delivering oversize rates. Policy makers will likely be deliberating between a 0.75% and a full-point hike, which could give the beleaguered pound a much-needed boost. The Federal Reserve has signalled that it plans to remain aggressive, as priority number one remains the fight against soaring inflation. This hawkish position was outlined by Philadelphia Federal Reserve President Patrick Harker on Thursday. Harker was blunt, saying that the Fed's rate hikes had failed to curb inflation and that rates would continue to rise "for a while". He added that rates would be "well above" 4% by the end of the year. Currently, the benchmark is at 3.25%, with the Fed holding its next meeting on November 2nd. The markets have received the message loud and clear, pricing in two more 0.75% increases in November and December. GBP/USD is testing resistance at 1.1254. Above, there is resistance at 1.1399 There is support at 1.1162 and 1.1085
by OANDA
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