EUR/USD hovers around 1.0700 amid subdued DXY, US GDP eyed

 EUR/USD is hovering around 1.0700 and is expected to establish above the same amid a broadly subdued US dollar index (DXY). EUR bulls are swiftly scaling higher after the less hawkish Fed minutes downed the US dollar. Focus on US GDP and PCE inflation. 

EUR/USD pares intraday gains around 1.0700 while stepping back from an immediate resistance line. In doing so, the major currency pair reverses the previous day’s pullback from the monthly high during Thursday’s Asian session.

Although a downward sloping trend line from Tuesday restricts the nearby EUR/USD upside around 1.0710, the quote’s ability to stay firmer past the 100-HMA and the 200-HMA keeps the buyers hopeful of overcoming the nearby hurdle.

Also favoring the upside bias is a one-week-old ascending trend line and the bullish MACD signals, not to forget firmer RSI (14).

Bolstered rate hike expectations by the European Central Bank (ECB) have underpinned the euro against the greenback. Inflation is affecting the real income of the households in the eurozone and the ECB has yet not paddled up its interest rates unlike the other Western leaders, which are featuring 50 basis points (bps) rate hikes. The eurozone inflation has reached 7.5% and the ECB needs to tighten its sleeves and announce quantitative restrictions.

Meanwhile, Dutch Central Bank head and ECB Governing Council member Klass Knot stated on Wednesday that inflation expectations will remain well-anchored at its upper limit and a rate hike by 50 bps is not off the table.

On the dollar front, the DXY is underperforming broadly despite the release of the extremely hawkish Federal Open Market Committee (FOMC) minutes. As per the minutes, all Fed policymakers were in favor of a jumbo rate hike announcement. Also, they believe that the benchmark rates should be sent close to the neutral rates quickly. Inflation will remain anchored at elevated levels and the labor market is extremely tight.

Going forward, investors will respond to the US Gross Domestic Product (GDP) and Personal Consumption Expenditure (PCE) numbers. The US GDP is seen unchanged at -1.4% on annual basis. Also, the US PCE is expected to remain stable at 7%.

📕 Comment on Gold on May 9, 2022:

 

📕 Comment on Gold on May 9, 2022:

 - On Friday, the US released Nonfarm payrolls data, this data was better than market expectations but only caused Gold to decline slightly to 1875. Gold then bounced up to close the daily candle equal to 1875.  The bullish candle is around 1882. This also makes the last candle close with a bearish candle, but retreated quite long.

 - My personal view at the beginning of this week's trading session is that Gold will continue to gain momentum.  The closest support area for this precious metal is around 1873-1877.  Here we can establish a long position with a safe target around 1883 -1888.

precious metal Gold bounced up to 1936.

 

Comment on Gold on 05/04/2022:

- In yesterday's trading session, after falling to the 1915 price zone, precious metal Gold bounced up to 1936. Yesterday's session closed with a rising green candle, but this increase was insignificant and according to Gold will continue to move sideways in the range of 1938-1915.

- My personal view in today's trading session is biased towards #sell. We can sell short at the upper edge of the 1930-1937 flat zone with a safe target around 1915-1920. Here we liquidate the order and wait for the signal. I will update later when there is a buying rhythm.

GBP/USD eyes break below 1.3100 and towards key support amid buoyant buck

 

• GBP/USD is trading with a downside bias as the euro underperforms and 21DMA continues to act as a ceiling.
• A break lower to test last week’s 1.3050 lows looks on the cards, with bears also eyeing 1.3000 annual lows.
• Following hawkish Fed commentary over the weekend and ahead of possibly more this week, USD risks are tilted higher.

In a relatively tame start to the week for currency markets, GBP/USD is trading with a downside bias and is currently threatening a downside break of the 1.3100 level. Sterling is likely weighed by underperformance in its cross-English Channel peer the euro, which is underperforming ahead of the resumption of Russo-Ukraine peace talks later in the session and amid further chatter about a possible EU embargo on Russian energy imports. Commentary from BoE policymakers on Monday did not stray into the territory of monetary policy and thus hasn’t impacted cable, which probed last Friday’s lows in the 1.3080s earlier in the session and is eyeing a break lower towards last week’s lows around 1.3050.

“Despite much focus on the heaviest cost of living rise since British records began (1950s), the market still prices the BoE Bank Rate at 2.20% at the December meeting later this year,” noted analysts at ING. “That pricing of the BoE cycle is likely keeping GBP relatively well bid, although we do think the risks are growing of Cable breaking down to the $1.25/28 area over coming months,” they warn. Amid a light UK data schedule this week, the risks posed to GBP from fears of a weakening UK economy likely won’t be the major market focus.

GBP/USD eyes break below 1.3100 and towards key support amid buoyant buck

• GBP/USD is trading with a downside bias as the euro underperforms and 21DMA continues to act as a ceiling.
• A break lower to test last week’s 1.3050 lows looks on the cards, with bears also eyeing 1.3000 annual lows.
• Following hawkish Fed commentary over the weekend and ahead of possibly more this week, USD risks are tilted higher.

In a relatively tame start to the week for currency markets, GBP/USD is trading with a downside bias and is currently threatening a downside break of the 1.3100 level. Sterling is likely weighed by underperformance in its cross-English Channel peer the euro, which is underperforming ahead of the resumption of Russo-Ukraine peace talks later in the session and amid further chatter about a possible EU embargo on Russian energy imports. Commentary from BoE policymakers on Monday did not stray into the territory of monetary policy and thus hasn’t impacted cable, which probed last Friday’s lows in the 1.3080s earlier in the session and is eyeing a break lower towards last week’s lows around 1.3050.

“Despite much focus on the heaviest cost of living rise since British records began (1950s), the market still prices the BoE Bank Rate at 2.20% at the December meeting later this year,” noted analysts at ING. “That pricing of the BoE cycle is likely keeping GBP relatively well bid, although we do think the risks are growing of Cable breaking down to the $1.25/28 area over coming months,” they warn. Amid a light UK data schedule this week, the risks posed to GBP from fears of a weakening UK economy likely won’t be the major market focus.

Rather, the outlook for Fed policy is likely to be a much more important topic. Already over the weekend, there has been fresh hawkish commentary. Fed’s John Williams warned that balance sheet reduction could start as soon as May and Fed’s Mary Daly said the case for a 50 bps rate hike in May has grown. Various Fed policymakers will be making public appearances and talking policy throughout the week and the minutes of the Fed’s most recent, hawkish meeting will be published on Wednesday.

Risks seem tilted towards the upside for the US dollar amid the risk of further hawkish Fed vibes. GBP/USD’s 21-Day Moving Average in the 1.3120s, which has been providing solid resistance over the past few weeks, looks likely to continue acting as a ceiling for the time being.

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Euro dips amid caution over Ukraine, Norwegian crown plunges

The euro edged lower on Thursday on caution about developments in Ukraine and limited progress in peace talks, while the Norwegian crown fell sharply after the central bank decided to buy foreign currency. Russian forces prepared for new attacks, Ukrainian President Volodymyr Zelenskiy said, while no quick resolution is expected from peace talks that will resume on Friday. The euro dropped 0.3% to $1.1118 after hitting its highest since March 1 at $1.1184. "The single currency is always around $1.11, with investors still cautious about future developments in Ukraine," Roberto Mialich, forex analyst at Unicredit (MI:CRDI), said. "The market wants to believe in a peace deal or at least in a truce in Ukraine. This is why rouble remains not far from its pre-war levels against the dollar, and the greenback is struggling to appreciate," he added.The dollar index, which tracks the U.S. currency against six peers, rose 0.2% to 98.074.

The rouble was down 3% versus the greenback at 78.55

Investors also focused on the next European Central Bank's moves after robust inflation data. ECB chief economist Philip Lane said on Thursday euro zone inflation was increasingly likely to stabilise around 2% but the ECB should be ready to change course if the outlook deteriorates due to Russia's war in Ukraine. [nL5N2VY2NL]

“Until the risk of an energy crisis and considerable economic effects resulting from the Ukraine war have been banished, the ECB is likely to hesitate to make a clear commitment,” Antje Praefcke, forex analyst at Commerzbank (DE:CBKG), said in a note to clients.

“And as a result, it will also be a while before the euro can appreciate on a sustainable basis,” she added.

Money markets are currently pricing in an around 85% chance of 20 basis points (bps) of ECB rate hikes by July 2022 and 60 bps by year-end. [IRPR]

The Norwegian crown plunged after oil prices dived and the central bank said it would buy foreign currency for its sovereign wealth fund in April.

Norges Bank plans to exchange 2 billion crowns ($231.9 million) per day into foreign currency, which will in turn be invested abroad by the wealth fund, already the world's largest with assets of $1.3 trillion.

The Norwegian currency fell 1.6% against the euro hitting its lowest level since March 18 of 9.7111, and 1.9% versus the dollar at 8.7255.

However, it is not far from its highest since October 2018 against the euro at 9.4424 and its highest since November 2021 versus the dollar at 8.5675, which it hit last week on the back of a rally in Brent crude oil futures.

"The central bank move might curb the currency, but we think the Norwegian crown still has room for further appreciation, thanks to expectations of more rises in energy prices," Unicredit's Mialich argued.

Other commodity currencies, such as the Australian and New Zealand dollar, dropped by around 0.5%.

The Swedish crown was slightly lower against the euro, just off its highest since January of 10.3059 hit on Wednesday as the central bank said it would have to tighten monetary policy this year.

Bitcoin was down 0.2% at $47,191, while Ether, the world's second-largest cryptocurrency, was up 0.45% at $3,402. 

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EUR/USD pares back from multi-week highs in 1.1160s, still well supported after hot EZ inflation readings

 

• EUR/USD has pulled back from earlier multi-week highs in the 1.1160s but remains well supported in the 1.1140 area.
• USD continues to suffer from broad weakness versus the majority of its G10 counterparts despite less optimistic Russo-Ukraine updates.
• Meanwhile, hot Eurozone inflation data has encouraged euro buying as US data comes into focus.

Though the pair has waned from its earlier multi-week highs in the 1.1160s after selling pressure ahead of the 50-Day Moving Average near 1.1180 emerged, EUR/USD continues to trade with healthy on-the-day gains of about 0.4% in the 1.1130s. The US dollar continues to suffer from broad weakness versus the majority of its G10 counterparts, even as recent tailwinds in the global equity space subside amid less optimistic headlines regarding Russo-Ukraine peace talks, lifting EUR/USD. Another factor likely encouraging euro buying against the buck is recent hot inflation readings coming out of the Eurozone which, as ECB President Christine Lagarde this morning remarked, support the ECB’s recent shift towards ending QE in Q3 and signaling rate hikes in Q4.

Ahead of the release of preliminary national German Consumer Price Inflation metrics for March at 1300BST, regional state CPI data releases earlier in the session saw sizeable MoM and YoY gains. Meanwhile, the preliminary estimate of Spanish headline HICP inflation in March hit a staggering 9.8%, well above the 8.1% expected. Upcoming German inflation figures are expected to be hot and thus may not provoke a market reaction, and EUR/USD focus will quickly shift to US data scheduled for release shortly after. US private payroll company ADP releases its estimate of US employment change in March at 1315BST and, though ADP’s metric has been a poor predictor of the official NFP in recent months, traders will nonetheless take note.

Shortly after at 1330BST, the final estimate of US GDP growth in Q4 2021 will be released and there will be remarks from Fed’s Thomas Barkin, Raphael Bostic and Esther George, all of whom support the Fed’s recent hawkish shift. Fed hawkishness/strong economic data is arguably well priced into USD at this point, and further profit-taking on US dollar longs coupled with inflationary Eurozone data may well mean EUR/USD remains supported above 1.1100 and eyes a move towards 1.1200.

 GBP/USD rebounds from near two-week low, flat-lined below 1.3100 amid risk-on mood

• GBP/USD witnessed some intraday selling on Tuesday amid renewed USD buying interest.
• Hawkish Fed expectations, rising US bond yields continued acting as a tailwind for the buck.
• A positive risk tone capped gains for the safe-haven USD and helped limit losses for the pair.

The GBP/USD pair quickly recovered a few pips from a near two-week low touched in the last hour and was last seen trading around the 1.3175-1.3180 region, nearly unchanged for the day.

The pair struggled to preserve its modest intraday gains to the 1.3115 region and turned lower for the fifth successive day on Tuesday amid the emergence of fresh US dollar buying. Rising bets for a 50 bps rate hike at the next two FOMC meetings turned out to be a key factor that continued acting as a tailwind for the buck.

The market expectations for a more aggressive policy response by the Fed to combat high inflation was reinforced by elevated US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond moved back above the 2.5% threshold, or back closer to a nearly three-year peak and underpinned the greenback.

The British pound was further pressured by the overnight dovish sounding remarks by the Bank of England Governor Andrew Bailey, saying that they are seeing evidence of an economic slowdown. Bailey stuck to the tone from this monthly policy decision, wherein officials softened their language on the need for further interest rate hikes.

This was seen as another factor that exerted additional pressure on the GBP/USD pair. That said, a generally positive risk tone, bolstered by hopes for progress in the Russia-Ukraine peace talks, capped the safe-haven USD and helped limit the downside for the GBP/USD pair. This, in turn, warrants some caution for bearish traders.

Hence, the market focus will remain glued to fresh developments surrounding the Russia-Ukraine saga. The incoming geopolitical headlines will influence the broader market risk sentiment. This, along with the US bond yields, will drive demand for the USD and produce some short-term trading opportunities around the GBP/USD pair.

Later during the early North American session, traders will take cues from the US economic docket - featuring the release of JOLTS Job Openings and the Conference Board's Consumer Confidence Index.

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USD/JPY to suffer a decline toward 121.00 but still targeting mid-120s – OCBC

 USD/JPY pushed through 122.00 on Thursday. Some retracement is seen today, though in the near-term, the focus will still be on USD/JPY upside as the pair pushes closer to mid-120s. 

Technical pull-backs on the cards

“Even as we are structurally positive on the USD/JPY towards the mid-120s, do not rule out technical pull-backs. The 121.00 locus may be the first support in that case.”

“For now, the BoJ and Fin Min have refrained from directly commenting on JPY weakness.”

AUD/USD to advance back toward 0.75 by year-end – ANZ

 After a tough start to the year, the AUD has rebounded convincingly to become one of the leaders in the G10. Economists at ANZ Bank expect the AUD/USD to move sideways in the near-term before staging a leg higher to the 0.75 level by year-end.

Challenging risk environment will keep rallies capped 

“The terms of trade improvement and a strong domestic economy are likely to keep the AUD well supported, though a challenging risk environment will keep rallies capped.”

“We believe the aussie will be mostly rangebound through the middle part of 2022 before a global growth recovery helps propel a move back to 0.75 by year-end.”

 GBP/USD struggles near two-day low, just above mid-1.3100s post

• A broad-based USD strength dragged GBP/USD lower for the second straight day on Thursday.
• The mixed UK PMI prints failed to impress bullish traders or provide any impetus to the major.
• The market focus remains glued to fresh developments surrounding the Russia-Ukraine saga.

The GBP/USD pair maintained its offered tone through the first half of the European session and had a rather muted reaction to mixed UK PMI prints. The pair was last seen trading just above mid-1.3100s, down nearly 0.35% for the day.

The pair extended the previous day's sharp retracement slide from the vicinity of the 1.3300 mark, or over two-week high and witnessed some follow-through selling for the second straight day on Thursday. The downtick was exclusively sponsored by a stronger US dollar, which continued drawing support from the Fed's hawkish outlook.

In fact, comments by influential FOMC members, including Fed Chair Jerome Powell, have been fueling speculation that the Fed would adopt a more aggressive policy response to combat high inflation. The markets were quick to react and started pricing in the possibility of a 50 bps rate hike at the upcoming meeting in May.

This was reinforced by elevated US Treasury bond yields, which were further underpinned by concerns that surging crude oil prices could put further upward pressure on already high consumer prices. Apart from this, the lack of progress in Russia-Ukraine peace negotiations further benefitted the safe-haven greenback.

On the other hand, the British pound was pressured by a dovish assessment of the Bank of England policy decision last week and its view around the need for future rate hikes. Bulls failed to gain any respite from an unexpected rise in the UK Services PMI, which was offset by a larger drop in the gauge for the manufacturing sector.

Market participants now look forward to the US economic docket, featuring the release of the fllash PMI prints, Durable Goods Orders and the usual Weekly Initial Jobless Claims. The focus, however, will remain on geopolitics amid expectations that US President Joe Biden will announce new sanctions targeting Russian politicians.

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After falling to 1970 precious metal Gold has shown signs of recovering back to around 2009, closing yesterday's session around 1996.After falling to 1970 precious metal Gold has shown signs of recovering back to around 2009, closing yesterday's session around 1996.

 📕 Comment on Gold on 11/03/2022:

 - After falling to 1970 precious metal Gold has shown signs of recovering back to around 2009, closing yesterday's session around 1996. This shows that the downward pressure of Gold shows signs of slowing down.  In addition to the current developments and news, there is still no sign of any signs of the war cooling down, de-escalating as the Russian army continues to move towards the capital Kyiv and open more.  attacks on major cities of Ukraine.  In my personal opinion, the possibility of Gold will still be pushed up in today's trading session.

 - On the h4 time frame we can see the closest support for this precious metal is around the 1973-1982 range.  Here, investors can establish a buy position with a safe target around the 2008-2015 threshold.

Dollar retreats as risk appetite returns; U.S. inflation dials back Fed view

 MEW YORK (Reuters) - The U.S. dollar dipped on Friday, giving back some of the strong gains from the previous day, as investors gauged the latest round of sanctions on Russia and U.S. inflation data was seen as unlikely to make the Federal Reserve overly aggressive at its next policy meeting.

The greenback on Thursday notched its biggest one-day percentage gain since Nov. 10 to reach 97.74, its highest since June 30, 2020. However, it gave back some gains after U.S. President Joe Biden hit Russia with a wave of sanctions following that country's invasion of Ukraine, but refrained from imposing sanctions on Russian President Vladimir Putin and disconnecting Russia from the SWIFT international banking system.

U.S. economic data showed consumer spending increased more than expected in January even as price pressures mounted, with annual inflation hitting rates last seen four decades ago, although the personal consumption expenditures price index increased 0.6% in January after rising 0.5% in December.

"The revisions to income and spending data shows the economy was very resilient to Omicron and to high oil prices. Hopefully, the situation with Russia is short-lived, but even if oil prices stay elevated, the economy should have enough fundamental strength to tolerate high energy prices," said Brian Jacobsen, senior investment strategist at Allspring Global Investments in Menomonee Falls, Wisconsin.

"The inflation numbers weren’t great, but at least the month-on-month inflation numbers aren’t moving higher," Jacobsen said. "That should take some wind out from under the wings of the most hawkish Fed members."

The dollar index fell 0.459%, with the euro up 0.59% to $1.1257. The euro fell to $1.105 on Thursday, its weakest against the greenback since June 1, 2020.

Even with Friday's pullback, the dollar was still on track for a third straight week of gains.

The increased risk appetite was evident in the U.S. stock market, with the S&P 500 up more than 2% after staging a late session rally on Thursday.

Before Thursday's jump -- which sent the dollar to its highest level since June 30, 2020 -- the greenback had been subdued in recent weeks, as rising tensions in Ukraine fueled expectations the Fed may be less aggressive in tightening policy as it attempts to rein in inflation.

Expectations for at least a 50-basis-point interest rate hike at its March meeting have fallen to 25% from around 34% a day ago, according to CME's FedWatch Tool.

In the central bank's latest monetary policy report to Congress, the Fed warned inflation could last longer than anticipated should labor shortages and fast-rising wages continue.

The European Union is planning a third round of sanctions against Moscow, an EU official said on Friday, minutes after Ukraine's president pleaded with the bloc for faster, more forceful steps to punish Russia for its invasion of his country.

Policymakers at the European Central Bank (ECB) said the situation in Ukraine could cause the ECB to slow its exit from stimulus measures.

Investors see only a 4% chance the ECB will boost its benchmark interest rate by 10 basis points at its March 10 policy meeting. [IRPR]

The Russian rouble strengthened 1.67% versus the greenback to 83.04 per dollar after hitting hit a record low of 89.986 the day before.

The Japanese yen weakened 0.09% versus the greenback at 115.65 per dollar, while Sterling was last trading at $1.34, up 0.19% on the day.

In cryptocurrencies, bitcoin last rose 1.4% to $38,937.21.

Ethereum last rose 2.58% to $2,703.53.

Series on Russia-Ukraine Tensions:

 On Wednesday, Prime Minister Fumio Kishida said Japan is imposing sanctions on Russia over its actions in Ukraine, and considers Moscow's moves an unacceptable violation of  with Ukraine's sovereignty and international law.

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 Japan's sanctions include banning the issuance of Russian bonds in Japan and freezing the assets of certain Russian individuals as well as restricting travel to Japan, Kishida said.

 Western nations on Tuesday imposed new sanctions on Russian banks and elites after Moscow sent troops into breakaway regions in eastern Ukraine

📕 Comment on Gold on February 16, 2022:

 - After touching the right analytical price zone of 1878 precious metals Gold dropped quite strongly to 1844, closing the day session with a bearish candle around 1853. This is also the closest support area for metals. gold and in my personal opinion the possibility of Gold recovering slightly in the early hours of this morning.

 - Looking at the H4 chart frame, we can see that Gold is currently leveling off at MA20 and in my opinion Gold can recover to 1858-1861 we can establish a buy position with this precious metal with the aim spend as above. After coming here, the possibility that Gold will experience downward pressure, I will update later.

📕Analysis on Gold on February 15, 2022:

- In yesterday's trading session, it was quite unfortunate that Gold had not touched the limit price range, the price only dropped to 1850 then bounced up to 1874 and closed the day session with a bullish candle around 1871. Gold's rebounding force This is something we can all see, but currently Gold is facing a resistance zone around 1876-1878. In my personal opinion, we will wait for Gold to correct so that we can establish a buy position in today's session. - The nearest support area for this precious metal is around 1858-1861. We can wait until Gold corrects to be able to establish a buy position with the target to break "old 1878 high.