Daily Market Report

[FOREX.com]

AUD/USD breaks out, USD/JPY rolls over amidst worst day of 2024 for USD. May 16, 2024​

The US dollar suffered its worst day of the year and Fed fund futures now imply with near certainty that the Fed will cut by September. And that saw AUD/USD breakout in style and USD/JPY roll over, breaking below two handles on Wednesday.

By : Matt Simpson, Market Analyst

My hunch for a disappointing set of USD inflation data was incorrect, as traders enjoyed a double dose of softer inflation and retail sales figures. Even if data was mostly in line with expectations. Core CPI slowed to its slowest pace since April 2021 at 3.6% y/y, or 0.3% m/m – both as expected. Retail sales slowed to 0.3% m/m, compared to 0.4% prior and expected. Core retail sales was downgraded to 0.9% m/m from 1.1% although reached the 0.2% estimate. Whilst this is a step in the right direction, it should be remembered that prices are still rising and consumers are still spending.


Fed member Goolsbee added to the excitement of cuts by saying that “if decreases in housing inflation seen in April CPI data continues, that’s great”. Yet annual inflation levels remain well above the Fed’s 2% target, and we may have some more bumps in the road before they hit it. Still, for now traders got what they wanted, and that weighed on US yields and the dollar overnight.

USD dollar technical analysis:​

The US dollar index suffered its worst day of the year to safely claim ‘weakest FX major’ currency of the day. All of April’s gains have evaporated with May now on track for a bearish engulfing month at current levels. And if US data continues to soften, even modestly, bets are on for two 25bp Fed cuts this year.


However, the daily chart shows that support was found almost perfectly at the 200-day average, just beneath the Q3 open. Trend support is also nearby, in close proximity to the 104 handle and high-volume node. Furthermore, the daily RSI (2) is oversold. So whilst the monthly and weekly charts points to a lower US dollar, bears may want to trad with caution around current levels with so much support nearby.


Click the website link below to get our Guide to central banks and interest rates in Q2 2024.

https://www.forex.com/en-us/market-outlooks-2024/q2-central-banks-outlook/

• Fed fund futures are now implying a 52.7% chance of a 25bp in September (or a 99.3% chance of a cut by September)
• Wall Street wasted no time sending indices higher with the S&P 500, Dow Jones and Nasdaq 100 all reaching new record highs
• The ASX 200 futures market (SPI 200) tracked Wall Street higher overnight and shows the potential to reach the 7866 target mentioned in yesterday’s report
• The US dollar was the weakest FX major, sending the USD index beneath the 104.30 target (but is not trying to fund support around its 200-day average)
• EUR/USD closed at a 2-month high and is less than 20-pips from testing the 1.09 handle
• AUD/USD broke above its key resistance zone around 0.6650 – 0.6660 to reach a new YTD high
• USD/JPY fell just over 1% to mark its worst day since BOJ interventions, and further losses and move back to at least 152 seem likely with the US dollar bull-case quickly unravelling
• Bitcoin finally enjoyed the bullish range expansion we’ve been waiting for, rising above 66k for the first time in three weeks

Economic events (times in AEST)​

• 09:50 – Japan GDP, foreigner stock/bond purchases
• 11:30 – Australia labour market report
• 14:30 – Japan capacity utilisation
• 20:00 – EU Economic Forecasts
• 22:30 – US building permits, housing starts, jobless claims, import/export prices, Philly Fed manufacturing
• 23:15 – US capacity utilisation, industrial production, manufacturing production

Click the website link below to get our exclusive Guide to AUD/USD trading in Q2 2024.

https://www.forex.com/en-us/market-outlooks-2024/q2-aud-usd-outlook/

AUD/USD technical analysis:​

The breakout of the Q3 and Q2 open prices were clean and done with conviction on AUD/USD. Prices stalled just beneath the 0.6700 handle and high-volume node from the January decline, so I suspect we may see some fickle price action around these levels early in today’s session. Note that support was found at the Q2 open on the 1-hour chart, which is also near the weekly R2 pivot – making 0.6685 a potential pivotal level for intraday traders.


But with traders on guard for even the slightest whiff of softer US data, AUD/USD could find itself extending its rally and heading for the daily R1 pivot or 0.6726 high should US data lean the ‘dovish’ way later today.

USD/JPY technical analysis:​

After two (or maybe three) BOJ interventions, it seems market forces are now taking USD/JPY the direction the central bank wants; lower. Wednesday’s bearish day saw prices cut through two handles and close below 155, and it now appears set to test 154 sooner than later. However, take note of a high-volume node around current levels which may provide interim support ahead of its next anticipated leg lower. The daily S1 pivot sits just above the 154 handle to make it a zone for bears to keep an eye on, a break beneath which brings 152 into focus.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[jomina]

Thank you, it helped a lot

 

[FOREX.com]

AUD/USD, ASX 200 eye a solid close for the week: Asian Open May 17, 2024​

AUD/USD and the ASX 200 have flourished this week thanks to renewed bets of Fed cuts, even though softer employment and wages data for Australia rekindled hopes of a lower RBA cash rate.

By : Matt Simpson, Market Analyst

• US data was mixed overnight, which saw the probability of a June cut by the Fed dip back below 50%, according to Fed fund futures
• Whilst building permits, housing starts and the Philadelphia manufacturing index were lower, the import price index – a gauge of inflation – rose 0.9% m/m compared with 0.2% expected, or 1.1% compared to 0.4% previously
• Wall Street indices came out of the gate with confidence to see all three major indices hit new highs and the Dow Jones tap 40k for the first time on record, yet gains were short lived with the S&P 500, Nasdaq and Dow Jones all closing slightly lower for the day
• The US dollar index recoup some of Wednesday’s heavy losses after finding support around the 104 handle and December trendline
• We essentially saw all FX major retrace against Wednesday’s moves to various degrees, none of which seriously threatens the potential bearishness of the US dollar if incoming economic data continues to soften on aggregate
• USD/JPY closed back above 155 after finding support just below our 154 target, EUR/USD handed back earlier gains after failing to quite reach the 1.09 handle and USD/CHF rebounded strongly after a false break of the 0.9 handle.
• A Reuters poll showed that 53% of economists expect the BOE to cut rate by 25bp in August, 39% estimate June
• This comes ahead of a key inflation report for the UK next week, which could be the decider as to whether the BOE will opt for a June or August cut
• RBA cash rate futures slowly began repricing the potential for an RBA cut this year after the ABS labour market report showed unemployment rose to 4.1% for the second time in four years, and the prior print was upwardly revised to 3.9% from 3.8% previously
• Australia’s 2-year yield extended losses for a second day below 4% and closed at a 17-day low

Click the website link below to get our exclusive Guide to AUD/USD trading in Q2 2024.

https://www.forex.com/en-us/market-outlooks-2024/q2-aud-usd-outlook/

Economic events (times in AEST)​

• 08:45 – New Zealand PPI
• 11:30 – China retail sales, industrial production, house prices, fixed asset investment, unemployment, NBS press conference
• 14:30 – Japan capacity utilisation
• 18:00 – BOE member Mann speaks
• 19:00 – Eurozone CPI
• 00:00 – US leading index
• 00:15 – Fed Waller speaks
• 02:15 – FOMC Daly speaks

ASX 200 at a glance:​

• Thursday was the best day for the ASX 200 this year, which closed just shy of the 7900 handle and record high
• This sets it on track for a fourth consecutive bullish week, and a market that seems primed to bream to a new record high sooner than later
• 10 of its 11 sectors rose led by real estate and information technology
• Only the energy sector closed lower as it tracked crude oil prices from Wednesday
• However, SPI 200 futures were lower with Wall Street overnight, which points to a small lower gap for the ASX 200 cash index today
• The SPI 200 1-hour chart shows prices are pulling back towards a 38.2% Fibonacci level, but as we saw very strong volumes during the initial break above 7850, the bias is to seek dips towards the 7840/7850 area for a potential long setup
• The RSI (2) is also approaching oversold to hint at a swing low, and the 10-bar EMA sits around the 7841 high for potential support
• I doubt we’ll see it break to new highs this week, but odds favour an eventual break to a new record high in due course

AUD/USD technical analysis:​

The Australian dollar looks set to close the week around its highest levels since early January, unless a surprise catalyst jolts markets, or China’s data performs poorly later today. The daily chart shows an indecision candle formed on Thursday which closed between the Q2 and Q3 prices. With traders betting on Fed cuts and coming around to the idea that the RBA may also have to cut rates, it seems to have killed momentum around the cycle highs. And that means traders may want to stick to intraday timeframes for AUD/USD as we head towards the weekend.

The 1-hour chart shows prices retraced back towards 0.6650 in a relatively straight line, although a bullish engulfing candle suggests support around this key level. Prices are now consolidating within the Q2 and Q3 open zone, so I a on guard for another pop higher towards 0.6700 in the earlier stages of today’s Asian session.

Unless China data is particularly strong, I question its ability to simply break to a new high today. In which case I am also on guard for another dip lower towards 0.6630

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge


The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[jomina]

thank you

 

[FOREX.com]

AUD/USD weekly outlook: 4-Month high for AUD, yet resistance looms. May 20, 2024​

Whilst flash PMIs, FOMC and RBA minutes are on the menu this week, the success of AUD/USD is likely to come down to how the US dollar performs.

By : Matt Simpson, Market Analyst

Key themes and events for AUD/USD this week:​

There is little in the way of domestic data. At least in terms of anything that may be a market mover. The RBA minutes released on Tuesday are not likely to reveal much we don’t already know; the RBA may hike again if inflation were to turn higher, but for now that seems like an outside chance and rates are likely to remain at 4.35% for the rest of the year.

However, with bets now on that the Fed may actually cut rates at least once this year thanks to softer CPI and NFP data (among others) and lower wages data for Australia, money markets are now trying to price in a cut this year form the RBA. Even if it remains an outside chance.

Whilst not directly linked , CPI reports from the UK and Canada may warrant a look to see if they soften at a rate that excites markets into pricing in global cuts. If consumer prices are easing overseas, it build a case that domestic prices can fall faster in the future too.



Click the website link below to get our exclusive Guide to AUD/USD trading in Q2 2024.

https://www.forex.com/en-us/market-outlooks-2024/q2-aud-usd-outlook/

The RBNZ are likely to keep monetary policy unchanged on Wednesday. And there is little chance of them switching to an easing bias in their communications. However, they will update their quarterly forecasts so we’ll keep an eye out for any downward revisions (if any) to their inflation numbers and OCR outlook.

Flash PMIs for Australia might provide an inside look at inflation pressures and underlying trends for potential growth an employment, but this is rarely much of a market mover for AUD/USD. However, sentiment from Australian and Japan’s PMIs can sometimes provide a lead on what to expect for the PMI reports across the UK, Europe and US released later that day.



We do have a host of Fed members scheduled to speak throughout the week, with Fed Chairman Jerome Powell himself kicking things off at 05:30 on Monday. Yet looking through the titles and events of many of these speeches suggests monetary policy might not be discussed. And the FOMC minutes released in the early hours of Thursday have likely been superseded by softer NFP and CPI figures from the US.



US data is likely to have the final say where AUD/USD closes as we head into the weekend, particularly inflation expectations from the Michigan University consumer sentiment report. 1 and 5-year CPI expectations unexpectedly rose in the preliminary report, but if they are revised lower if may provide some weakness to the US dollar and support AUD/USD.

AUD/USD futures – market positioning from the COT report:​

• Net-short exposure to AUD/USD futures rose for the first week in four among asset managers and large speculators
• Australia’s combination of softer wages and higher unemployment data last week may have seen net-short exposure rise further since Tuesday, although AUD/USD is stronger on the back of a weaker USD (on bets of Fed cuts).
• Ultimately, the ability for AUD/USD to continue climbing is likely down to the US dollar.
• And as the US dollar index is trying to rally from a key bullish trendline / 104 handle, we have a clear line in the sand between for USD sentiment (a break below 104 assumes another leg higher for AUD/USD)

AUD/USD technical analysis​

The daily chart (left) shows that prices are meandering around the Q2 open, and for now AUD/USD seems hesitant to close above 67c. Even if the US dollar falls next week, take note of trend resistance near the upper 1-week implied volatility level around 0.6750, which could be the next major resistance level for bulls to monitor.

However, the 1-hour chart (right) shows an established uptrend with the 20/50/100 EMAs in a healthy bullish sequence. What bulls would like to see early in the week is a pullback towards the 0.6650 area, which may spur about bout of buying with a more attractive reward to risk for a potential move to the bearish trendline ~0.6750.

Should the US dollar regain its footing, a break below 0.6630 suggests a deeper retracement is underway for AUD/USD.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

Gold hesitates at its ATH, USD drifting higher towards 105: Asian Open May 21, 2024​

Gold may have printed a record high on Monday, but with a gold basket hovering below resistance and the USD drifting higher, perhaps gold’s rally may at least pause for breath - if not retrace lower

By : Matt Simpson, Market Analyst

• The US dollar index crept higher alongside US yields on Monday ahead of Wednesday’s FOMC minutes, which saw AUD/USD form a bearish outside day after another false break of 67c
• NZD/USD also formed a bearish outside day, USD/JPY and USD/CHF rose for a third day – although the moves appear to be more on the general flow of markets as opposed to being driven by a fundamental catalyst
• It was a mixed start to the week on Wall Street with the Nasdaq 100 closing at a record high, the S&P 500 closing flat after failing to break above Thursday’s record high and the Dow Jones forming a bearish engulfing candle despite forming an intraday record high earlier in the day
• The Nasdaq was the top performer thanks to bets of another blowout earnings report for Nvidia (NVDA) on Wednesday
• Ether (ETHUSD) spiked 10% on Monday on reports that the SEC could approve spot Ether ETFs later this week, which helped Bitcoin (BTCUSD) rose over 3% and retest 70k
• Gold prices sneaked in a cheeky record high ahead of China's open on Monday. Yet as the move has not been confirmed with by a weaker US dollar, it seems have been caught a tailwind from higher metals futures on China's exchanges
• China has vowed to prohibit some US forms from importing and exporting activities to China in retaliation for the US significantly rising tariffs in some Chinese exports to the US last week

Click the website link below to get our exclusive Guide to gold trading in Q2 2024.

https://www.forex.com/en-us/market-outlooks-2024/q2-gold-outlook/

Economic events (times in AEST)​

• 09:00 – FOMC member Bostic speaks
• 10:30 – Australian consumer sentiment (Westpac)
• 11:30 – RBA meeting minutes
• 13:00 - New Zealand credit card spending
• 16:00 – German producer prices
• 18:00 – US Treasury Secretary Yellen speaks

Gold technical analysis:​

The left chart shows an equally-weighted gold basket of spot gold against FX majors. It aims to show the underlying of strength of gold in general, and dilute the inverse relationship between gold and the US dollar – which is the most widely followed gold market. On the right we can see the gold futures (gold/USD) reached a record high on Monday alongside higher trading volume, although it failed to hold onto gains above $2450 or the prior record high and retraced lower.



It is also interesting to note that the gold basket has stalled around $2800, just beneath its own record high set in April. A bearish divergence has also formed on the gold basket and gold futures contract, both of which are in the overbought zone.



It may be difficult to construct an immediate bearish case other than gold stalling around key resistance levels. But that can be good enough for gold bulls to take note and err on the side of caution.



We’ve already seen once false break of the April high for gold futures, so perhaps bulls may want to at least see the gold basket break to a new record high before assuming gold futures will hold on to gains. Of course, what could help with the latter case is to see the US dollar index break and hold below 104. Otherwise, another approach is for bulls to wait for a retracement before seeking evidence of a higher low for bullish swing trade at a more favourable price, in anticipation of a break to a new record high.

US dollar index (DXY) technical analysis:​

In yesterday’s COT report I noted that large speculators were net-long USD index futures for a second week, and that asset managers remained predominantly net-long despite a slight reduction of bullish exposure during the dollar's retracement lower. This also comes at a time when the US dollar index is trying to hold above the key bullish trendline from the December low.



USD prices were allowed to drift higher during quiet trade on Monday. And as the 4-hour chart shows, volumes were relatively thin during the fall from 105 down to 104. Therefore, the current drift higher may simply be the market trying to head for the high-volume node around 105.20. However, 105 may make a more sensible interim bullish target due to its round-number statues, which is also near a 100% projection ratio and the 100-bar EMA.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

AUD/USD weekly outlook: May 26, 2024​

A 2-week bearish reversal pattern below resistance suggests there could be some further downside potential for AUD/USD, although Friday's bullish engulfing day hints at a minor bounce first.

By : Matt Simpson, Market Analyst

We can probably expect a quiet start to the week with the UK and US on public holidays on Monday, although appetite for risk (and therefore AUD/USD) could benefit from strong industrial profit data from China on Monday.


Revised GDP data for the US will be released on Thursday. Whilst this is generally not an exciting release for markets, trades are likely to take more notice if growth is revised higher as it feeds back into the ‘higher for longer’ Fed rates narrative. And that could set the tone for the big calendar event of the week, US PCE inflation on Friday. Hot figures from either set could further strengthen the US dollar and yields to weigh on AUD/USD.


Click the website link below to get our exclusive Guide to AUD/USD trading in Q2 2024.

https://www.forex.com/en-us/market-outlooks-2024/q2-aud-usd-outlook/

Australian retail sales and inflation data in focus​

Domestically, the retail sales and the monthly CPI report stand out as data points worth keeping an eye on, given the RBA struck a slightly hawkish tone in their policy minutes. Although they had little choice with inflation data ticking higher and their desire to keep inflation expectations lower. Yet with retail sales underperforming so far this year, the strain on demand is apparent. We have also seen wages and employment data soften since the RBA’s last meeting.


So keep an eye on Tuesday’s retail sales figures, keeping in mind AUD/USD fell around -1.4% by the day’s close following last month’s soft retail sales and China PMIs. In all likelihood, retail sales will remain subdued and inflation will remain too high for the RBA’s liking. And neither seem likely to move the needle for the RBA’s policy in either direction.


To remove the RBA’s slightly hawkish bias requires inflation to fall with retail sales, and employment data to deteriorate further. For now, I see little chance of the RBA changing their cash rate from 4.35%.

AUD/USD 20-day rolling correlation​

• If you needed proof that AUD/USD really is just taking its directional cue from the US dollar, it can be seen in the chart below
• The 20-day correlation between AUD/USD and DXY is -0.97 which shows a strong inverted relationship (-1 would be perfectly inverted)
• Its positive correlation with gold and copper also increased over the past week, as all markets fell in tandem due to the stronger US dollar on the prospects of ‘higher for longer’ Fed rates
• Also note that the positive correlation between AUD/USD and iron ore is rising, although not strong at just 0.56

AUD/USD futures – market positioning from the COT report:​

• Net-short exposure among large speculators and asset managers fell to the least bearish level since late January
• Gross shorts were trimmed and new longs initiated
• However, as this data is only complete up to Tuesday 14th May, it does not account for the -0.7% fall on Wednesday
• Regardless, the reduction of short interest is a trend and that suggests limited downside for the Australian dollar

AUD/USD technical analysis:​

A two-bar bearish reversal pattern has formed on the weekly chart of AUD/USD (dark clod cover) which suggests further downside ahead. Although as stated in the cot analysis, its downside may be limited with futures traders generally trimming shorts in exchange for longs in recent weeks. But the reversal pattern below trend resistance clearly shows a hesitancy to continue higher for now. And that favours ‘sell the rallies’ on the daily chart or below.


The daily chart shows a bullish engulfing candle for Friday, which sent the RSI (2) over 50 after sitting on oversold on Wednesday and Thursday. With the UK and US on a public holiday on Monday, volatility is expected to be low. But it may allow AUD/USD to drift higher at the beginning of the week. At which point, bears could seek evidence of a swing high below 0.6650 or 0.6680 for an anticipated move lower.


Options markets suggests with a 66% probability that AUD/USD will close between 0.6560 – 0.6680 this week.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge


The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

AUD/USD, ASX 200 drift higher ahead of AU retail sales: Asian Open May 28, 2024​

Volatility levels were lower, as one would expect with the UK and US on a public holiday Monday. And that allowed AUD/USD to drift higher alongside the ASX 200 futures market, even if I do not fully trust the moves.

By : Matt Simpson, Market Analyst



Volatility levels were lower, as one would expect with the UK and US on a public holiday Monday. The US dollar mildly extended Friday’s losses which allowed al majors except the yen to drift higher during quiet trade. Call me pessimistic, but I don’t fully trust the moves. And we should also factor in ‘month end flows’ which can throw a few spanners into the works of pretty charts.


GBP/USD reached a 2-month high as the pound continues to benefit from freshly-announced election and hot inflation figures, which kills minor hopes of a June BOE rate cut. Commodity FX also benefitted with NZD/USD also closing at a 2-month high, thanks to the RBNZ’s surprisingly hawkish meeting last week. AUD/USD rose for a second day whilst USD/CAD retraced lower for a second day. USD/JPY continued to trade within a tight range, with 157 seemingly being its latest glass ceiling which beckons to be broken.


Gold drifted higher in line with my cautiously bullish bias outlined on Friday, yet I am also on the lookout for a swing high and for losses to push prices down to 2300 minimum (a break beneath which brings 2280 into focus).


Crude oil rose alongside gold for a second day thanks to the softer US dollar. Ultimately there has been little news to drive markets, which seems to be simply taking the US dollar’s direction as their key driver.

Economic events (times in AEST)​

Australian retail sales may garner some attention, given they previously contracted -0.4% to weigh on AUD/USD. In fact, the combination of soft retail trade, weak China PMIs, and a stronger US dollar sent AUD/USD down a -1.3% by the close. While China’s PMIs are not released until later this week, we do have a couple of FOMC members (Bowman, Mester) speaking alongside SNB's Jordan and ECB's Schnabel later this afternoon, which brings the potential for some volatility. Should FOMC members continue to push back on rate cuts, AUD/USD may hit resistance and try to realign with its bearish momentum of last week.

• 11:30 – Australian retail sales (ABS)
• 14:55 – FOMC Bowman, Mester, SNB Jordan and ECB Schnabel speaks
• 15:00 – Japan’s BOJ core CPI
• 16:00 – German WPI
• 23:55 – FOMC member Kashkari

Click the website link below to get our exclusive Guide to AUD/USD trading in Q2 2024.

https://www.forex.com/en-us/market-outlooks-2024/q2-aud-usd-outlook/

View key events and levels for the week:​

AUD/USD weekly outlook: May 26, 2024

AUD/USD technical analysis:​

The Australian dollar managed to break above Friday’s bullish engulfing day on Monday and notch up its second bullish day in a row. Yet, for now, the move higher is assumed to be a retracement against last week’s bearish candle, which formed below trend resistance and another false break above 67c.


Should retail sales surprise to the upside, AUD/USD could extend its lead as bets of RBA cuts diminish further. Although, I continue to suspect that any move higher is still part of a retracement before bearish momentum returns. The daily RSI (2) is not quite in overbought territory, but it should reach it if prices move higher today.


The 1-hour chart shows prices are consolidating above 0.6650 and prior support, and the strong trend structure of this timeframe could favour bulls who seek dips for a potential move to 0.6680 (which sits near the 20-day average range band and weekly S1 pivot point). However, prices are rising whilst volumes decline, which suggests the move is lacking new buyers. Therefore, I am also on the lookout for any bearish reversal patterns around resistance levels and will also keep an eye on the US dollar index for signs of a trough to identify any potential bearish reversal on AUD/USD.

ASX 200 at a glance:​

• Monday’s trade say the ASX 200 recoup most of Friday’s losses and snap a 4-day losing streak
• 10 of its 11 sectors rose (led by real estate, telecoms) and energy was the one to fall
• 88% of the stocks advanced, 8% declined, 4% remained unchanged
• The ASX200 is on track for a bullish inside month, yet seemingly lacks the appetite to retest its highs

ASX 200 futures (SPI 200) technical analysis:​

The strong rally on May 16th appears to have been a "last hurrah" from the bulls, as it marked a false close above 7900 before momentum eventually turned lower. While a bullish inside day formed on Monday and prices continued higher overnight ahead of today's open, I doubt its potential to retest 7900 for now.


Like AUD/USD, the ASX has risen on lower volumes which suggests an underlying weakness to the supposed rally. The bearish candle in the final hour of trade also serves as a warning for bulls, given it could also be a lower high beneath Thursday's high and a 61.8% Fibonacci level.


The bias is for a move lower, and to fade into pops higher with a stop above 7860, with 7800 and 7784 making potential downside targets for bears.

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

USD/JPY breaks its latest glass ceiling, crude oil surges ahead of OPEC+. May 29, 2024​

USD/JPY closed above 157 for the first time since the MOF last intervened, which brings 158 into focus for bulls. Crude oil also rose over 3% on Tuesday from arguably oversold levels.

By : Matt Simpson, Market Analyst



On May 1st, we saw USD/JPY plunge nearly 500 pips from its daily high in what is thought to have been the second intervention from the MOF (Japan's Ministry of Finance). While one could argue this goes against fundamentals and that it is futile for a central bank to fight them, it can also be argued that their objective was achieved: to slow the decline of the yen. The MOF (and BOJ) are more concerned with the speed of the yen's depreciation, rather than the specific level at which it trades.

However, this doesn't prevent market forces from establishing key levels of their own. This past week, 157 appeared to be the latest self-imposed glass ceiling for USD/JPY, until we saw a daily close above it on Tuesday.

Click the website link below to get our exclusive Guide to oil trading in Q2 2024.

https://www.forex.com/en-us/market-outlooks-2024/q2-oil-outlook/

USD/JPY technical analysis:​

The daily chart shows a bullish engulfing day that closed above a tight 3-day range and the 157 handle. Its low found support above the 156.28 high, and my bias remains bullish above this level. While I see the potential for further gains, I also suspect gains may be on the cautious side as we approach the 'MOF intervention level' near 158 – making it the latest self-imposed glass ceiling for prices. At least heading into Friday's PCE inflation report from the US. The 1-hour chart shows a strong rebound from the weekly pivot point, and prices are consolidating near the day's high. Pullbacks towards 157 may appeal to bulls, with the daily R1 pivot (near 157.40) and the weekly R1 pivot (near 157.60) providing potential upside targets.

Crude oil surges 3% ahead of OPEC+​

Crude oil rose over 3% on Tuesday on expectations that OPEC+ will extend their output cut at next week’s meeting. Whilst I cannot claim to have foresaw that particular rally, it did not come without warning. Managed funds and large specs reduced gross shorts for a second week up until last Tuesday, managed funds increased longs. And intraday spikes below $77 were consistently bought.

WTI crude oil rose at its fastest daily pace in two months with a firm close above the 200-day EMA, although it has met resistance around the 200-day average and $80. With momentum clearly picking up from the lows, it appears the upside could be the path of least resistance.

Crude oil technical analysis:​

Intraday prices action shows a very strong move higher since its recovery back above $77 with practically no pullbacks along the way. WTI is higher during early Asian trade, and any pullback towards the $80 – which is also near the monthly S1 pivot and high-volume node of the $77-$80 trading range are likely levels of support. The next stop of WTI crude oil seems to be the $81 - $81.57 range.

• The US dollar reversed its course upon the return of European and US trading desks, to recoup its earlier losses of the day become the strongest forex major by Tuesday’s close
• The US dollar index perfectly respected the December 2024 trendline and formed a small bullish hammer (along with USD/CHF) which saw AUD/USD, GBP/USD, and EUR/USD form shooting stars or bearish pinbars
• Gold retraced higher for a third day, although its mere 1.7% rise of the past three days remains overshadowed by the 4% plunge is endured last Wednesday and Thursday, which keeps gold on my ‘sell the rally’ watchlist

Economic events (times in AEST)​

Australia’s inflation report will be the main event for RBA watchers today, but unless we see a material drop off in prices it seems unlikely to sway the RBA’s current stance; rates to remain at 4.35% with a slight hawkish bias. Besides, as my colleague David Scutt pointed out to me this morning, “Just remember with cpi that this version is useless for services prices” as he thinks “two services categories are updated in the first month of the quarter”. As the case may be, a sudden and welcomed drop in the figures should make AUD/USD react with a bearish jolt and likely send the ASX 200 up from its lows, even if the RBA will want more data before dropping their hawkish bias.

• 11:30 – Australian monthly CPI report, construction work done
• 11:30 – BOJ board member Adachi speaks, household confidence
• 16:00 – German consumer sentiment (GfK)
• 18:00 – German state CPIs, Eurozone loans
• 22:00 – German CPI

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

 

[FOREX.com]

USD, Wall Street, gold: Risk seems to be falling apart at the seams. May 30, 2024​

I suspect we're seeing the early moves of a pullback of appetite for risk in general, which saw traders push Wall Street indices and gold lower on Wednesday thanks to weak treasury demand. And it seems to be paving the way for the next leg higher for the USD.

By : Matt Simpson, Market Analyst

Weak demand for US 7-year treasuries sent Wall Street indices lower on Wednesday, on concerns that funding the US deficit will drive up yields alongside ‘higher for longer’ Fed rates. And that manifested with a higher US yields curve and a stronger USD, which enjoyed at strongest daily performance in over a month.


This week I have warned of a potential pullback on US indices, the Nikkei 225, gold, copper alongside a stronger US dollar. And so far, all boxes have been ticked. The question of course ifs whether this is a minor bump in the road or the beginning of something far more sinister.

Gold formed a daily dark-cloud cover and erased most of Tuesday’s gains to mark the 2-day low-liquidity rally as a dead-cat bounce. Yet the reward to risk for bears seems unfavourable around current prices as it hovers above Friday’s low. A similar pattern emerged on copper and silver remains supported beneath its record high. And as US futures held above key support levels, I suspect gold may hold above last week’s low, at least for now.

Click the website link below to get our exclusive Guide to gold trading in Q2 2024.

https://www.forex.com/en-us/market-outlooks-2024/q2-gold-outlook/

Wall Street indices don’t look too happy at their highs​

US index futures were lower overnight, although the S&P 500 E-mini saw a false break of last week’s low and the cash market held above the March high, with gap support nearby. And with the Nasdaq 100 E-mini holding above the March high, it seems support is on hand to prevent a strong follow through. For now at least.


But if there is a canary in the coalmine it could be found in the Dow Jones which fell for a fourth day. The Dow E-mini contract filled gap support, which again points to near-term support. But as the week develops, they could break lower if traders get nervous about a hot or sticky PCE inflation report, or simply selloff if one arrives on Friday. And that could make for a messy close as traders will presumably want to avoid weekend gap risk and stampede for the exit before Friday’s close, sending risk broadly lower.

US dollar technical analysis:​

We're finally seeing the resurgence of the US dollar we've been waiting for, which reclaimed its throne as the strongest forex major on Wednesday. Trend support from the December low held perfectly for its third retest with today's bullish hammer. Wednesday's trade opened near the low of the day and closed near its high. Trading volume was the highest in nine days, and it was the strongest daily performance in a month. The daily close above 105 was the cherry on the cake and has earned the USD a place in my 'buy the dip' watchlist.


Take note of likely resistance around the 105.14 high-volume node and 102 handle. The 1-hour RSI (2) is also overbought, with prices just beneath resistance. But it seems more likely to break above it than not, which makes dips beneath it favourable for bullish setups.

Economic events (times in AEST)​

• 09:50 – Japan’s foreigner bond, stock purchases
• 10:00 – SNB board member Jordan speaks
• 11:00 – NZ budget balance
• 11:30 – Australian building approvals, Capex
• 12:00 – NZ annual budget release
• 17:00 – Spanish CPI
• 19:00 – European sentiment indicator
• 22:30 – US Q1 GDP, PCE prices Q1, jobless claims
• 22:30 – Canada average weekly earnings

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge


The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.