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Inflation

240729 Weekly OutlookThe following week have major data release including, 240730 Tue CB Consumer Confidence **** 240731 Wed Fed Interest Rate Decision ***** 240801 Thu Initial Jobless Claims **** 240801 Fri Nonfarm Payrolls ***** Unemployment Rate ***** Consumer Confidence is the major leading indicator alongside Michigan Consumer index. Investors should follow the rise of two indexes to lead increase in economic data like inflation, GDP, labor market conditions, as well as economic conditions. Fed rate is expected to remain unchanged, while market discounting the first cut in the cycle to come in September. Labor market show resilience all the way that give space to maintain higher rates in this cycle for longer. Even the first rate cute is forecasted for September, I would still expect the higher rates to stay here for longer period due to resilient labor market, as shown by labor market indicators. There are no signs for S&P to weaken this time, rather shuttle up and down at high levels. Note that last adjustment in S&P followed the deviation of 12% from major trend line 200SMA. Attentive investors could observe it previously. When the market finally digest selling orders, S&P should resume the rising trend.
AMEX:VOO
by moncap2023
Inflation's Impact on Stock ReturnsInflation's Impact on Stock Returns Inflation's pervasive influence on the financial landscape cannot be understated. It affects everything from everyday spending to large-scale investing. This FXOpen article dives into the intricate relationship between inflation and stock returns, unravelling the multifaceted dynamics at play. Join us as we dissect the mechanics of the impact of inflation on the stock market, offering clarity in a world of economic ebbs and flows. Understanding Inflation Inflation represents the rising prices of goods and services over time. While a moderate level of inflation is often viewed as a sign of a growing economy, high inflation can erode purchasing power, making everyday items more expensive for consumers. Those trading and investing during high inflation face challenges as it can diminish the real returns on investments. Stock Returns Defined Stock returns denote the gains or losses an investor realises from stock investments. These returns typically manifest in two ways: dividends and capital appreciation. Dividends are regular payments made by corporations to shareholders from their profits. Capital appreciation, on the other hand, refers to the increase in a stock's price over time. It's important to note that stock returns can also be negative if a stock's price decreases. Influencing these returns are a myriad of factors, including company performance, market sentiment, and broader economic conditions. Mechanisms: How Inflation Affects Stock Prices Inflation, with its overarching grip on the economy, wields a substantial influence on stock prices. Understanding this dynamic is vital for traders looking to navigate the stock market during inflation. Below, we'll delve into the various mechanisms through which inflation affects stocks. Cost of Goods Sold and Company Profitability When there's inflation, the costs of raw materials and production generally rise. This escalation can squeeze a company's profit margins unless they pass these increased costs onto the consumers. For some industries, hiking prices might result in decreased demand, further impacting profitability. Consequently, stock prices can see downward pressure as potential investors foresee lower earnings. Consumer Purchasing Power Inflation erodes the value of money, meaning consumers can buy less with the same amount of money as before. This diminished purchasing power can lead to reduced consumer spending. Companies, especially those in the retail and consumer goods sector, may witness a dip in revenue. As revenues play a crucial role in determining stock value, a decline can lead to lower stock prices. Central Bank Responses and Interest Rates Central banks often intervene to counteract high inflation, primarily by raising interest rates. When interest rates rise, borrowing becomes more expensive for companies, which can hinder expansion plans and reduce profitability. Additionally, when inflation and interest rates rise, alternative investments like bonds become more appealing than stocks, leading to reduced demand for stocks. By grasping these mechanisms, traders can better anticipate inflation's effect on stocks and devise strategies that account for the intricate relationship between inflation and the stock market. Inflation's Dual Impact: Sectors and Market Caps The impact of inflation isn't uniform across the board; it varies significantly between sectors and company sizes. Certain sectors, like commodities or energy, might benefit from rising prices, turning inflation into an advantage. Conversely, retail or consumer goods sectors might suffer as consumers' purchasing power diminishes, leading to decreased spending. When examining company sizes, the inflation rate and stock market dynamics reveal nuanced patterns. Large-cap companies, with their diversified operations and global reach, often have better tools to hedge against inflationary pressures. In contrast, small-cap stocks, which might be more regionally focused and have fewer resources, can be more vulnerable to the negative effects of high inflation. Historical Perspective: Inflation and Stock Market Performance Historical data provides traders with valuable insights into the dynamics between inflation and stock market performance. For instance, during the 1970s, the US experienced a period of stagflation—simultaneous high inflation and stagnant economic growth. This era saw the S&P 500 struggle to provide real returns, largely due to soaring oil prices and tight monetary policy. Another example can be traced to emerging markets like Argentina in the early 2000s. Faced with skyrocketing inflation rates, the stock market initially surged as locals shifted money into assets to retain value. However, long-term sustainability was challenged by economic instability and a lack of foreign investments. Mitigation: How Traders Can Prepare for Inflation Inflation can unsettle even the savviest traders, but with proper preparation, its challenges can be mitigated. When investing during inflation, diversifying assets becomes paramount. Spreading investments across different asset classes and instruments can act as a buffer against inflation's adverse effects. For instance, you can trade forex or commodity, cryptocurrency*, and ETF CFDs on FXOpen’s TickTrader platform and further equip yourselves with the real-time data and tools necessary to make effective decisions. Additionally, stocks of companies with strong pricing power, which can pass on increased costs to consumers, might fare better than others. Moreover, bonds, especially those with interest rates adjusting to inflation, can be among the best investments during inflation, offering a degree of protection to portfolios. The Bottom Line In understanding inflation's intricate relationship with stock returns, traders arm themselves with valuable insights. To navigate these economic complexities and optimise trading strategies, consider taking the next step: open an FXOpen account, a trusted broker that provides the tools and resources to thrive in ever-evolving financial markets. *At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules, respectively. They are not available for trading by Retail clients. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
NASDAQ:MSFTEducation
by FXOpen
2
USD/JPY remains volatile, US PCE Price Index nextThe Japanese yen has hit the brakes on this week’s impressive rally. USD/JPY is trading at 154.34 in the European session, up 0.30% on the day. On Thursday, the yen climbed as much as 1.3% but gave up all of those gains after the strong US GDP report. Still, the yen is up 1.9% this week. Tokyo Core CPI rose to 2.2% y/y in July, a notch higher than the 2.1% gain in June and matching the market forecast. This is the third straight acceleration and the highest level since March. Higher electricity prices drove the gain. Earlier this week, service inflation for businesses rose to 3% in July, up from 2.7% in June and above the market forecast of 2.6%. This was the highest level in 33 years. The Bank of Japan faces a tough task and must decide whether to maintain policy or deliver a rate hike at next week’s meeting. It’s a close call as to what decision the central bank will make and Bank officials can be expected to maintain radio silence. There are strong arguments for both sides. Inflation and wage growth have been moving higher which would support a rate hike. As well, a rate hike could give a boost to the yen, which has been trading at multi-year lows. On the other hand consumption remains weak and a rate hike would only further dampen consumer spending. Later today, the US releases Core PCE Price index, which is the Federal Reserve’s preferred inflation measure. The index is expected to rise 0.1% m/m in June, matching the May figure. The PCE Price index is expected to ease to 2.5% y/y, down a notch from 2.6% in May. USD/JPY has pushed past resistance at 154.03 and is testing resistance at 154.39, followed by 154.68 153.74 and 153.38 are the next support levels
by OANDA
Is the market crashing? The SPY and IWM have completely diverged. On the back of rate cut expectations, many investors are piling back into the junk and high beta names. A clear relative strength move has occurred in small caps: IWM Whilst the megacap stocks have been sold off. The SPY sliced through the 50 MA yesterday and cofirmed the break below. Although this is typically bearish, we are getting into an area of oversold support. If the SPY gaps down tomorrow, I think traders will be buying the dip with both hands. The IWM has blasted above the 50MA, basically moving the exact opposite of the S&P500. The question remains....are small caps going to hold their gains inside of the weekly topping tail?
AMEX:IWM
by Trading-Capital
USD/JPY – Yen on a tear, US GDP blows past forecast The Japanese yen continues to gain ground against the US dollar. USD/JPY is trading at 153.68 early in the North American session, down 0.14% on the day. Earlier today, USD/JPY fell as low as 151.93 (1.3%), its lowest level since May 3, before paring most of these losses. The yen has soared, rising 2.4% this week and a staggering 4.5% in the month of July. There’s plenty of buzz but also uncertainty in the air as the yen has gone on a torrid run against the hapless US dollar. The yen jumped 1.1% on Wednesday after a senior Japanese official urged the Bank of Japan to normalize policy. As well, the sharp drop in global tech stocks sent investors fleeing to traditional safe havens, including the Japanese yen. The Bank of Japan meets on July 30-31 and it’s a close call as to whether it will stay on the sidelines or raise interest rates. The central bank is also expected to announce details of a plan to cut bond purchases in order to reduce its massive monetary stimulus. The BoJ has hinted that a rate hike is coming, but the question of timing is up in the air. Core inflation rose to 2.6% in June and wages have climbed sharply, setting up the case for the central bank to raise rates. On the other side of the coin, consumer spending has been weak and inflation is relatively moderate. The US economy climbed 2.8% y/y in the second quarter, double the 1.4% rate in the first quarter and blowing past the forecast of 2.0%. An increase in consumer spending helped drive the strong gain. On the inflation front, the personal consumption expenditures price index, a key measure for the Federal Reserve, eased to 2.6%, down from 3.4% in Q1. USD/JPY tested support at 152.68 earlier. Below, there is support at 151.45 There is resistance at 154.33 and 155.56
by fisherkj4
USD/CAD unmoved by Bank of Canada rate cutThe Canadian dollar is almost unchanged on Wednesday, after the Bank of Canada cut rates at today’s meeting. In the North American session, USD/CAD is trading at 1.3778, up 0.05% on the day at the time of writing. The Bank of Canada lowered rates by 25 basis points, bringing the key interest rate to 4.50%. The markets had priced in a rate cut at close to 90%, so the move was widely expected and the Canadian dollar has shown almost no reaction. The BoC has now lowered rates in two straight meetings, as economic data has supported a shift in policy. Headline and core CPI have fallen within the 1-3% target band and monthly CPI posted its first decline since December 2023. The central bank expects the downtrend in inflation to continue in the second half of the year and that inflation will fall to the 2% by 2025. As well, the unemployment rate has risen to 6.4%, up from 5.7% in January. The labor market has performed well under the weight of steep interest rates but is showing cracks. BoC Governor Macklem said after the meeting that if inflation continues to fall as the Bank expects, “it is reasonable to expect further cuts in our policy interest rate”. This is a strong signal that further rate cuts are coming, barring any unpleasant surprises from inflation. There is still more work for the BoC to do, but it is unlikely to cut rates again before the Federal Reserve does so, as further widening of the US/Canada rate differential will weaken the Canadian dollar. The markets have priced in a Fed cut in September at above 90%. USD/CAD has support at 1.3774 and 1.3703 There is resistance at 1.3820 and 1.3891
by OANDA
UK100 Extends Consolidation on Murky Monetary Policy OutlookUK100 has pulled back following its May record peak and has entered consolidation mode, as uncertainty around BoE’s policy path has taken hold. Although policymakers have pointed to a less restrictive stance ahead, there is no clarity around the timing of a pivot. The last inflation print did not help, as market pared back bets for a cut in August, since CPI persisted at 2% and the services component remained sticky. This sustains risk for a breach of the pivotal 38.2% Fibonacci of this year’s rally, which would bring the 200Day EMA (blue line) in the spotlight, although deeper weakness does not look easy. The central bank has hinted at lower rates ahead, price pressures have moderated and the economy exited its brief recession. Furthermore, the new government could usher in a much needed period of stability, while the change in listing rules cam reinvigorate the IPO market and boost sentiment. UK100 has already defended the 38.2% Fibonacci multiple times, containing the correction to levels that reaffirm the upside potential. Bulls have the ability to reclaim 8,369 and eventually push for new all-time highs (8,488). Stratos Markets Limited (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Europe Ltd (trading as “FXCM” or “FXCM EU”), previously FXCM EU Ltd (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Trading Pty. Limited (www.fxcm.com): Trading FX/CFDs carries significant risks. FXCM AU (AFSL 309763). Please read the Financial Services Guide, Product Disclosure Statement, Target Market Determination and Terms of Business at www.fxcm.com Stratos Global LLC (www.fxcm.com): Losses can exceed deposits. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this video are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed via FXCM`s website: Stratos Markets Limited clients please see: www.fxcm.com Stratos Europe Ltd clients please see: www.fxcm.com Stratos Trading Pty. Limited clients please see: www.fxcm.com Stratos Global LLC clients please see: www.fxcm.com Past Performance is not an indicator of future results.
FX:UK100Long
by FXCM
S&P 500 Daily Chart Analysis For Week of July 19, 2024Technical Analysis and Outlook: The Spooz has once again demonstrated resilience in this week's trading session by banging on Key Res 5635 and completed Inner Index Rally 5642. This week's achievement was also the completion of Inner Index Rally 5668. The prevailing price action suggests a continuous primary decline toward the Mean Support at 5449 and a conceivable extension to the Mean Support at 5420. Anticipation surrounds a prompt recovery after attaining these targets, directing the price toward the designated target of Mean Resistance at 5567, with a conceivable extension to Key Resistance at 5666 in the impending week's trading session.
SP:SPX
by TradeSelecter
$JPIRYY -Japan Inflation Rate YoYECONOMICS:JPIRYY (March/2024) The annual inflation rate in Japan ticked lower to 2.7% in March 2024 from February's 3-month peak of 2.8%, matching market consensus. There were slowdowns in prices of transport (2.9% vs 3.0% in February), clothes (2.0% vs 2.6%), furniture & household utensils (3.2% vs 5.1%), healthcare (1.5% vs 1.8%), communication (0.2% vs 1.4%), and culture & recreation (7.2% vs 7.3%). At the same time, inflation was stable for food (at 4.8%), housing (at 0.6%), education (at 1.3%), and miscellaneous (at 1.1%). Meanwhile, prices of fuel, and light dropped the least in a year (-1.7% vs -3.0%), with electricity (-1.0% and -2.5%) and gas (-7.1% vs -9.4%) falling at softer paces as energy subsidies from the government would fully end in May. The core inflation rate fell to 2.6% from a four-month top of 2.8%, slightly below forecasts of 2.7%. Monthly, consumer prices rose by 0.2% in March, the most since last October, after being flat in the prior two months. source: Ministry of Internal Affairs & Communications
ECONOMICS:JPIRYY
by Mr_J__fx
$GBIRYY - CPI (YoY)ECONOMICS:GBIRYY 2.3% (April/2024) source: Office for National Statistics The annual inflation rate in the UK eased to 2.3% in April 2024, the lowest since July 2021, compared to 3.2% in March and market forecasts of 2.1%. The largest downward pressure came from falling gas (-37.5% vs -26.5% in March) and electricity (-21% vs -13%) cost, due to the lowering of the Office of Gas and Electricity Markets (Ofgem) energy price cap in April. At the same time, prices slowed for food (2.9%, the lowest since November 2021 vs 4%) and recreation and culture (4.4% vs 5.3%). On the other hand, the largest, partially offsetting, upward contribution came from cost of motor fuels. The average price of petrol rose by 3.3 pence per litre between March and April 2024 to stand at 148.1 pence per litre, up from 145.8 pence per litre in April 2023. Prices also rose faster for restaurants and hotels (6% vs 5.8%) and miscellaneous goods and services (3.6% vs 3.4%). Compared to the previous month, the CPI rose 0.3%.
ECONOMICS:GBIRYY
by Mr_J__fx
Trade Alerts: SA Rates and BoC Decision Trade Alerts: SA Rates and BoC Decision South African Inflation South Africa is expected to maintain its key interest rates at 8.25% and 27.25% on Thursday, citing persistent inflationary pressures. Central bank Governor Lesetja Kganyago has emphasized that rate reductions are unlikely until inflation sustainably returns to the 4.5% midpoint of the target range. Despite annual inflation holding at 5.2% in May, it has remained above this midpoint for over three years. Kganyago, in the central bank’s annual report last month, stressed the importance of restoring confidence in their ability to achieve this target. Bank of Canada Decision The Canadian Dollar (CAD) weakened on Wednesday as investors reassessed Consumer Price Index (CPI) inflation data released earlier in the week. While headline inflation figures showed a decline due to easing pressures in heavily weighted measures, core inflation gauges remained elevated. The Bank of Canada (BoC) is set to announce its latest rate decision next week. Canada’s central bank is anticipated to cut interest rates next Wednesday in a bid to ease price pressures in the housing investment market. The real estate sector accounts for about 9% of Canada’s total economic output, nearly double the OECD average of 4.8%.
by BlackBull_Markets
EUR/USD – slightly lower as ECB holds interest ratesThe euro has edged lower on Thursday. Early in the North American session, EUR/USD is trading at 1.0919, down 0.18% on the day. The euro hasn’t posted a losing day since July 9, gaining 1% during that period. The European Central Bank maintained its key lending rate at 3.75% at today’s meeting, after cutting rates by a quarter-point in June. The decision to hold rates was widely expected, especially after the June cut, and the euro has had a calm day. The markets are following ECB President Lagarde’s press conference, hoping for clues about future rate policy. The rate statement noted that “services inflation is elevated and headline inflation is likely to remain above the target well into next year”. The markets weren’t perturbed by this hawkish comment as the ECB has demonstrated that it is willing to lower rates even when inflation is above the 2% level, as it did in June. The markets have priced in two more quarter-point cuts in September and December. ECB policy makers have been cautious and the rate statement reiterated that the ECB was “not pre-committing to a particular rate path”. ECB officials have stressed that inflation remains high and wage growth, which is feeding services inflation, needs to come down in order for the ECB to feel confident in lowering rates further. In the US, Fedspeak will be in focus, with five public appearances from FOMC members before the week is over. Investors will be hoping to get some insights on Fed rate policy, with the markets widely expecting a rate cut in September. EUR/USD is testing support at 1.0928. Below, there is support at 1.0907 1.0960 and 1.0981 are the next resistance lines
by OANDA
GBP/USD at 1-year high as UK CPI remains at 2%The British pound continues to roll and is up for a sixth straight day. GBP/USD is trading at 1.3038 in the European session, up 0.51% on the day. The pound has sparkled in July, climbing 3% and hitting its highest level since July 2023. UK consumer inflation remained at 2% y/y in July, unchanged from June. This was higher than the market estimate of 1.9% but it’s hard to complain when inflation is at the BoE’s 2% target for two months running. Monthly, inflation dipped to 0.1%, down from 0.3% a month earlier, and matching the market estimate. Core inflation rose 3.5% y/y, unchanged from June and matching the market estimate. Monthly, core inflation dropped from 0.5% to 0.2%, below the market estimate of 0.1%. The inflation report was positive and the pound responded by extending its impressive July rally. The fly in the ointment was services inflation, which the Bank of England watches keenly for signs of domestic inflationary pressure. Services inflation has been an outlier and was unchanged at 5.7% in July. How will the BoE view the inflation report? Overall the release was positive, but services inflation is almost three times higher than the 2% target, which is a concern for policy makers. The cash rate is currently at 5.25%, unchanged since August 2023 when inflation was 7.9%. There is pressure on the BoE to provide relief and hit the rate-cut trigger but the central bank may lack the confidence to make a move at the next meeting on August 1. The remainder of the week will be busy, with the UK releasing the employment report on Thursday and retail sales on Friday. GBP/USD is testing resistance at 1.3008. Above, there is resistance at 1.3051 1.2987 and 1.2944 are the next support levels
by OANDA
NZD/USD Rises despite Soft NZ InflationThe Reserve Bank of New Zealand kept rates at 5.5% last week, but adopted a softer tone compared to the hawkish messaging of the previous meeting, raising chances of a rate cut this year. Today’s soft inflation data help towards such action, since CPI eased to 3.3% in Q2 and the lowest in three years. Despite these prospects, NZD/USD contains its fall and rebounds today, as there is still a high bar for an RBNZ pivot. At the same time, the Fed may have adopted a cautious stance, but Chair Powell appears to be laying the groundwork for a September cut, as the disinflation trend has resumed, with markets pricing in three moves this year. The monetary policy dynamics are a bit murky, but likely support further upside. Having defended crucial technical levels, NZD/USD can regain the EMA200 (black line) and push for new monthly highs (0.6148), but we are cautious around greater advance 0.6223. But market bets for three cuts by the Fed are very aggressive and would require the Fed to move in three consecutive meetings. This optimism could be disappointed, just as prospects of an RBNZ pivot are strengthening. Below the EMA200, immediate bias is on the downside and risk of a breach of the 50% Fibonacci and the daily Ichimoku Cloud persists. This would make NZD/USD vulnerable t0 0.5952, but sustained weakness is not easy based on the monetary policy dynamics. Stratos Markets Limited (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. S tratos Europe Ltd (trading as “FXCM” or “FXCM EU”), previously FXCM EU Ltd (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Trading Pty. Limited (www.fxcm.com): Trading FX/CFDs carries significant risks. FXCM AU (AFSL 309763). Please read the Financial Services Guide, Product Disclosure Statement, Target Market Determination and Terms of Business at www.fxcm.com Stratos Global LLC (www.fxcm.com): Losses can exceed deposits. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this video are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed via FXCM`s website: Stratos Markets Limited clients please see: www.fxcm.com Stratos Europe Ltd clients please see: www.fxcm.com Stratos Trading Pty. Limited clients please see: www.fxcm.com Stratos Global LLC clients please see: www.fxcm.com Past Performance is not an indicator of future results.
by FXCM
Trump, Fed Speculation Drive Gold to New Heights Trump, Fed Speculation Drive Gold to New Heights Gold price cleared the May 20 high of $2450 on Tuesday, as expectations intensify that the U.S. Federal Reserve will commence an easing cycle in September. Fed Chair Jerome Powell addressed the Economic Club of Washington this week, noting the economy's solid performance and signaling potential rate cuts once inflation trends towards the 2% target. The CME FedWatch Tool indicates near-certain odds of a 25-basis point rate cut in September, with many forecasting a total of 50 basis points in cuts through 2024. But one has to question the accuracy of these optimistic predictions. The next FOMC meeting is in 14 days. Adding to the upward momentum on gold is the potential election of former President Donald Trump in November. Trump's proposed policies, including tariff hikes and tax cuts, are anticipated to increase the U.S. budget deficit and spur inflationary pressures. Bullish momentum in gold appears intact, supported by the Relative Strength Index (RSI) on the daily chart. Although it is trending higher and approaching typical overbought conditions.
BLACKBULL:XAUUSD
by BlackBull_Markets
NZ dollar can’t find its footingThe New Zealand dollar has posted sharp losses for a second successive day. NZD/USD is trading at 0.6042 in the North American session, down 0.54% on the day at the time of writing. The New Zealand dollar has declined 1.3% this week and is trading at its lowest level since May 15. New Zealand releases the second quarter inflation report early Wednesday. The market estimate stands at 3.5% y/y, compared to 4% in the first quarter. Quarterly, inflation is expected to remain steady at 0.6%. The inflation report will be a key factor in the Reserve Bank of New Zealand’s rate decision on August 14. The central bank stunned the markets with a dovish stance at last week’s rate meeting. The RBNZ held the cash rate at 5.5% as expected but left the door open to rate cuts if inflation falls as expected. The dovish pivot means that the August meeting will be live. At the previous meeting in May, the RBNZ discussed a rate hike but made a dramatic shift at the July meeting, noting that it was concerned the economy could be cooling faster than it had expected. US retail sales dipped to 2.3% y/y in June, down from 2.6% in May but higher than the forecast of 2.1%. Monthly, retail sales were unchanged in June, down from a revised 0.3% in May and matching the market estimate. This was the second time in three months that retail sales were unchanged, pointing to weakness in consumer spending. NZD/USD pushed below support at 0.6071 earlier. Below, there is support at 0.6024 There is resistance at 0.6160 and 0.6202
by OANDA
US Labor Market Cools and Inflation Pulls BackTakeaways US labor market and inflation showed signs of cooling in June: The unemployment rate rose to 4.1% and CPI, a core inflation measure, increased just 3.3% year-over-year. US House can’t override Biden veto: US lawmakers fell short of the two-thirds majority needed to overturn Biden’s veto of a Congressional resolution to overturn an SEC bulletin that puts additional pressure on firms that custody crypto assets. The Labour Party won a decisive victory in the UK general election last week: The win ended 14 years of Conservative rule and left the direction of crypto regulation somewhat uncertain. Spot bitcoin ETFs experienced nearly $300 million in net inflows on Monday: It was the highest since early June, with buying led by BlackRock’s IBIT and Fidelity’s FBTC. VanEck and 21Shares have updated their S-1 registrations with the SEC to list spot Ethereum ETFs: The ETFs are expected to begin trading shortly after approval, which should come later this summer. Doja Cat's Twitter account was hacked to promote a Solana-based meme coin named $DOJA: The breach prompted the star to alert her Instagram followers that she was not responsible for the tweets. 🔄 Topic of the Week: The Render Network (RNDR) 🫱 Read more here
GEMINI:BTCUSD
by Gemini
USD/JPY stabilizes after massive slideThe Japanese yen has edged lower on Friday, after posting huge gains a day earlier. USD/JPY is trading at 159.16 in the European session, up 0.26% on the day at the time of writing. The US dollar was down against most of the major currencies on Thursday, after a softer--than-expected US CPI report raised expectations for a rate cut in September. The yen was the big winner on the day, surging as much as 2.7% and climbing to 157.41 against the dollar. The US dollar recovered some of these losses and USD/JPY closed at 158.76, down 1.8% on the day. US inflation fell to 3.0% y/y/ in June, its lowest level in a year. This was down from 3.3% in May and below the market estimate of 3.1%. The monthly reading was impressive at -0.1%, the first decline since May 2020. Core inflation also eased in June and market expectations for a September rate cut have jumped to 86%, compared to 69% a day just prior to the inflation report. The Federal Reserve has gone to great lengths to dampen rate cut expectations but may send a more dovish signal to the markets following the very soft inflation data. The US dollar had a bad day at the office on Thursday but the extent of the slide against the yen raised suspicions that Tokyo had intervened in the currency markets. A report on Japanese TV said that the government and the Bank of Japan had intervened after the US dollar posted losses following the US inflation report. Japan’s chief currency diplomat, Masato Kanda, didn’t surprise anyone by saying “no comment” as to whether there was an intervention on Thursday. Japan is embroiled in a constant cat-and-mouse game with yen speculators and its policy is to keep market participants in the dark about currency interventions. With the Bank of Japan signaling that it plans to tighten policy, we can expect additional volatility from the Japanese currency. USD/JPY tested resistance at 159.37. Above, there is resistance at 161.30 There is support at 156.97
by OANDA