2023 Market Forecast by Solid ECN

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Silver Prices Bounce Back​

Solid ECN – Silver prices have risen above $27 per ounce after a dip to one-month lows near $26.3 last week. This rebound aligns with other precious metals and reflects investor anticipation of a possible interest rate cut by the Federal Reserve in September.

The recent U.S. jobs report, which did not meet analysts' expectations, has further convinced traders that the Fed might reduce interest rates later this year. Such economic signals are critical for investors looking to understand potential market movements.

Additionally, silver's demand increased as investors sought safe-haven assets following a military operation in Rafah by Israel, prompting evacuation warnings to Palestinian civilians. This situation has added to the precious metal's appeal during geopolitical uncertainty.​

 

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Canadian Dollar Climbs as US Jobs Disappoint​

Solid ECN – The Canadian dollar peaked at 1.36 per USD, marking its strongest position since April 9th. This surge comes as the U.S. dollar experiences widespread weakness triggered by disappointing labor market data.

The U.S. economy added 175,000 jobs in April, falling short of the anticipated 243,000. This underperformance, coupled with a higher jobless rate and slowed wage growth, fuels speculation that the Federal Reserve might implement its first rate cut in September.​

Economic Slowdown Signals Potential Rate Cuts in Canada​

In parallel, Canada's economic indicators suggest a similar downturn, hinting at a possible earlier rate adjustment by the Bank of Canada. The Manufacturing PMI in Canada dropped to 49.4 in April 2024, signaling continuous contraction in factory activity for a twelfth consecutive month and falling below the expected 50.2.

Furthermore, with the economy only growing by 0.2% in February and predictions of stagnation in March, pressures mount for monetary policy adjustments.​

 

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Economic Indicators Show Growth and Stability in Mexico​

Solid ECN – The Mexican peso has rallied to approximately 16.8 per USD, marking a significant rebound from its five-month trough of 17.2 on April 25th. This upturn is primarily attributed to a widespread weakening of the U.S. dollar, spurred by indications that the Federal Reserve might implement two rate cuts within the year.

These speculations were fueled by a moderated growth in U.S. job numbers for April and a surprising increase in the unemployment rate, compounded by Federal Reserve Chair Powell's earlier dismissal of any forthcoming rate hikes.​

Stable Monetary Outlook as Mexican Economy Grows​

On the domestic front, Mexico's central bank, Banxico, is expected to maintain its interest rates at 11% in its upcoming May 9th meeting, consistent with its rate cut in March. However, emerging data might spark discussions among Banxico's Governing Council members about potential policy adjustments.

Additionally, Mexico's economic growth has accelerated, with a 0.2% expansion in Q1 of 2024 compared to 0.1% in the previous quarter, surpassing market expectations. Business confidence remains robust, near an 11-year peak, even as inflation persists above 4%.​

 

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BTC Bulls Eye Higher Targets Despite Price Dip​

Solid ECN – Bitcoin broke out of the descending trendline (in blue), but the bulls failed to stabilize the price above the EMA 50 and the middle line of the Bollinger Band. Consequently, the pair formed a long-wick bearish candle on the daily chart. As of this writing, the BTC/USD pair has dipped and is currently testing the broken resistance at $61,896.

The technical indicators provide mixed signals. RSI hovers below 50, but AO is bullish, showing a green line.

From a technical perspective, the bullish outlook remains valid if the BTC/USD price remains above $61,896. In this case, the next target could be $67,333.

On the flip side, the downtrend will resume if the price falls below the support level, with $56,460 as the next support level.​

 

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NZDUSD: Fed Officials Hint at Prolonged Rates​

Solid ECN – The New Zealand dollar (NZD) has shown a minor decline to $0.59, influenced by a slight rise in the US dollar. This movement comes as traders anticipate crucial US economic data that might hint at the Federal Reserve's timing for interest rate reductions. The US will soon disclose figures on jobless claims and consumer sentiment, with significant inflation data on the horizon.​

Fed's Strategy on Interest Rates​

Comments from Federal Reserve officials, particularly Fed Bank of Boston President Susan Collins, suggest a cautious approach to monetary policy. Collins indicated that high interest rates might persist longer than expected to mitigate inflation, affecting forex market dynamics.​

Anticipation of NZ Central Bank​

In New Zealand, the focus shifts to the upcoming central bank meeting scheduled for May 22nd. With inflation exceeding initial forecasts, the bank is poised to maintain the interest rate at 5.50%. This decision could shape the short-term trajectory of the NZD in forex markets.​

 

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USDJPY: Yen Holds Steady Amid BOJ Inflation Warnings​

Solid ECN – The Japanese yen has shown relative stability, holding at about 155.6 per dollar following the release of the Bank of Japan's (BOJ) April policy meeting summary. During the meeting, the board highlighted potential inflation risks and deliberated on conditions that might necessitate future interest rate increases.

A significant focus was on the yen’s depreciation, which has been a key driver of escalating prices and draws particular scrutiny from the central bank.​

BOJ’s Monetary Policy Outlook​

Despite the inflation concerns, the BOJ plans to keep financial conditions accommodating and closely monitor the development of economic and price trends. This stance comes amid slowing wage growth in Japan for March, which complicates the BOJ’s projections of a positive feedback loop between rising wages and prices.

Furthermore, the yen's recent performance reflects a nearly 2% decline over the week, even amid indications of potential government interventions to stabilize the currency, following a sharp 5.2% rally from its lows, supported by about $60 billion in spending by the BOJ to defend its value.​

 

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EURUSD Bearish Outlook​

Solid ECN – As of the latest trading session, the Euro continues to decline, trading at approximately 1.07 against the U.S. dollar, notably below the 38.2% Fibonacci retracement level. The current technical indicators support the bearish outlook; the Awesome Oscillator (AO) has dipped below zero, while the Relative Strength Index (RSI) remains under the median line, suggesting weakened momentum.

The EUR/USD downtrend appears poised to continue as it trades below a significant descending trendline. The primary resistance level is at the 50% Fibonacci level of 1.079.

If this resistance holds, the downtrend initiated on May 3rd will likely extend, potentially reaching a target of 1.069. This target aligns with the ascending trendline and the 23.6% Fibonacci level, providing a technical confluence that supports the bearish scenario.​

 

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Bitcoin Dips Below Key $61.9K Level​

Solid ECN – Bitcoin dipped below $61,896 in today's trading session. The technical indicators are bearish, with the RSI hovering below 50 and the Awesome Oscillator bars in red.

From a technical standpoint, the downtrend momentum that started earlier this week will likely continue, with the median line of the Bollinger Band acting as resistance. If BTC/USD remains below this line, the next milestone for sellers will likely be $59,559.

Conversely, the bearish outlook could be invalidated if the price crosses and stabilizes above $62,702.​

 

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AUDUSD Analysis​

Solid ECN – The AUD/USD pair has resumed its uptrend from 0.655 after testing the 50-day EMA. Currently, the Australian dollar is trading around 0.660 against the U.S. dollar, with bulls aiming to stabilize above the 23.6% Fibonacci retracement level.

The RSI is above 50, indicating momentum in favor of the upward move. Technically, 0.6557 serves as the primary support for the bullish trend. If the price holds above this level, the next target is likely around 0.664.​

 

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Key Reports to Influence Gold Prices​

Solid ECN – Gold prices soared to $2,350 per ounce this past Friday, reacting to traders' expectations of a Federal Reserve rate cut. The anticipation grew after Thursday’s economic report showed a surprising increase in Americans filing for unemployment benefits, hinting at a potential cooling of the labor market.

Such economic indicators often lead to a softer approach to interest rates, benefiting assets like gold, which thrives in lower-rate environments.​

Monitoring Future Economic Indicators​

Investors and traders are now poised to closely analyze the upcoming Consumer Price Index (CPI) and Producer Price Index (PPI) reports. These indicators will provide further clarity on the Federal Reserve's stance.

Despite some Federal officials expressing caution about easing policies too quickly, the general sentiment leans towards reducing rates, especially with pressures from global economic uncertainties and market demand.​

Influences on Gold’s Market Performance​

Significant factors such as increased over-the-counter market investments, ongoing central bank acquisitions, and rising demand in Asian markets continue to push gold prices upward.

Additionally, geopolitical tensions in the Middle East and Ukraine are escalating, further increasing gold's appeal as a safe-haven asset. With these dynamics, gold is on track for a 2.2% weekly gain.​