Silver Price Analysis: XAG/USD consolidates near $22.00, within weekly ranges as traders eye US CPI

Silver is trading near $22.00 per troy ounce, well within this week’s ranges.

XAG/USD has traded subdued so far this week, much as with other asset classes, ahead of US CPI on Friday.

Spot silver (XAG/USD) prices continue to trade within recent intra-day ranges amid a subdued tone to broader macro trading conditions. XAG/USD is currently trading near the $22.00 per troy ounce level, well within the $21.80-$22.50ish ranges that have prevailed over the past five sessions. The precious metal continues to fund support ahead of its 21-Day Moving Average around the $21.80 level.

Silver’s directionless feel reflects the price action being seen in other major asset classes (like US equities, US bond yields and the US dollar), which are all also locked within recent intra-day ranges amid a lack of notable fundamental catalysts, as traders keep their powder dry ahead of this Friday’s US Consumer Price Inflation (CPI) data.

While the upcoming CPI report is just one of many reports that the looks at to gauge US inflationary pressures, it is certainly one of the more important ones, with traders set to pay particularly keen attention to measures of core price pressures. Any signs of a further slowing in the MoM and YoY rates of core inflation would contribute to the growing sense that US inflation has now peaked.

Furthermore, this would come as a welcome development for the Fed, which may be able to slow the pace of monetary tightening from September following widely flagged consecutive 50 bps rate hikes in June (next week) and July. This would probably weigh on both the US dollar and US yields, which would come as a boost to precious metals like silver. In this bullish scenario, a test of and potential break above recent highs in the $22.50 area would be on the cards, with bulls eyeing a move towards $23.00 in the short term.

WANT TO DIRECT TALK OUR MARKET EXPERT CONTACT MONEY LIFE RESEARCH

Nasdaq futures jump 2% after Meta earnings beat

Nasdaq 100 futures jumped more than 2% on Thursday as Meta Platforms shares soared after a stronger-than-expected profit, taking some pressure off growth and technology stocks that have been battered recently.

The Facebook-parent rose 17.7% in early New York trading after the social-networking site also eked out user growth.

Other megcap stocks such as Apple Inc (NASDAQ:AAPL), Microsoft Corp (NASDAQ:MSFT), Amazon.com Inc (NASDAQ:AMZN) and Tesla (NASDAQ:TSLA) Inc rose between 1.7% and 3.4%.

The Nasdaq Composite index is on course to post losses of over 10% in April, as investors dumped high-growth stocks on fears that rising interest rates will threaten future earnings and after Netflix Inc (NASDAQ:NFLX) posted a shocking subscriber loss.

Apple, the world's most valuable company, and e-commerce giant Amazon are set to report earnings after markets close on Thursday.

Qualcomm (NASDAQ:QCOM) Inc jumped 8.4% after the chipmaker forecast third-quarter revenue above analyst expectations.

At 05:05 a.m. ET, Dow e-minis were up 390 points, or 1.17%, S&P 500 e-minis were up 76.75 points, or 1.84%, and Nasdaq 100 e-minis were up 328.25 points, or 2.52%.

WANT TO DIRECT TALK OUR MARKET EXPERT CONTACT MONEY LIFE RESEARCH

 Dow Futures Fall 120 Pts; Earnings in Focus as Week Closes

U.S. stocks are seen opening marginally lower Friday, continuing the previous session’s selloff on fears of sharp monetary policy tightening while quarterly corporate earnings continue to emerge.

At 7 AM ET (1100 GMT), the Dow Futures contract was down 120 points, or 0.4%, S&P 500 Futures traded 14 points, or 0.3%, lower and Nasdaq 100 Futures dropped 36 points, or 0.3%.

The three main Wall Street indices closed substantially lower Thursday after Federal Reserve Chairman Jerome Powell offered up his most aggressive approach to taming inflation to date, largely cementing a 50-basis-point rate hike at the central bank’s May meeting.

The blue-chip Dow Jones Industrial Average closed more than 300 points, or 1.1%, lower, the broad-based S&P 500 fell 1.5% and the tech-heavy Nasdaq Composite suffered the most, dropping 2.1%.

Looking at the week as a whole, the Dow is on course to register a gain of 1%, which would break a three-week losing streak, the S&P 500 is largely flat, and the Nasdaq Composite is down 1.3%, which would be its third consecutive losing week.

Away from future Fed moves, investors are also focusing on the new earnings season. So far, with a few notable exceptions, Netflix (NASDAQ:NFLX) springs to mind, big companies have been relatively positive on the outlook for the current quarter and the remainder of the year.

More results are due Friday, with the focus on the likes of wireless carrier Verizon Communications (NYSE:VZ), credit card company American Express (NYSE:AXP) and manufacturing conglomerate Honeywell (NASDAQ:HON).

After the close Thursday, social media platform Snap (NYSE:SNAP) warned that the high inflation could hit revenue growth even as it forecast second-quarter daily active users at between 343 million and 345 million, above Wall Street estimates of 340 million.

Clothes retailer Gap (NYSE:GPS) cut its forecast for quarterly sales, citing execution challenges at its Old Navy brand, adding the head of this brand, Nancy Green, was leaving the company.

The economic data slate centers around the release of business activity data for April, with the manufacturing PMI seen falling back slightly from the previous month’s 58.8, and the Markit composite PMI dropping from March’s 57.7.

The equivalent data saw a two-speed Eurozone, with the bloc's dominant services sector seeing a sharp increase in activity as consumers shrugged off soaring prices, while manufacturers struggled on the back of supply chain disruptions.

Oil prices weakened Friday, weighed by prospects of interest rate hikes and slowing global growth, while China, the world’s largest crude importer, continued to struggle with a COVID-19 outbreak.

The week ends with the release of U.S. oil rig numbers from Baker Hughes and CFTC speculative positioning data. 

By 7 AM ET, U.S. crude futures traded 1.5% lower at $102.21 a barrel, while the Brent contract fell 1.4% to $106.82. Both benchmarks are on course for weekly losses of over 4%.

Get best trading education and strategies with us
VISIT NOW: MONEY LIFE RESEARCH

USD/CAD holds comfortably above 1.2600 mark amid broad-based USD strength

• USD/CAD gained some positive traction on Monday, though lacked follow-through buying.
• Retreating crude oil prices undermined the loonie and extended support amid a stronger USD.
• The Fed’s hawkish outlook, elevated US bond yields, the risk-off mood all benefitted the buck.

The USD/CAD pair maintained its bid tone heading into the North American session and was last seen trading just a few pips below the daily high, around the 1.2630-1.2625 region.

A combination of factors assisted the USD/CAD pair to build on last week's goodish rebound from the 1.2520 area and gain traction for the third successive day on Monday. A modest pullback in crude oil prices weighed on the commodity-linked loonie and extended support to spot prices amid sustained US dollar buying interest.

Crude oil pulled back from the three-week high after data out of China pointed to economic weakness and fueled worries over slowing demand amid COVID-19 curbs. That said, concerns over tight global supply and a potential European Union (EU) embargo on Russian gas, helped limit the downside for the black liquid, at least for now.

On the other hand, the USD stood tall near the two-year high and continued drawing support from expectations for a more aggressive policy tightening by the Fed. Investors seem convinced that the Fed would hike rates at a faster pace to curb soaring inflation. This, along with elevated US Treasury bond yields, underpinned the buck.

Against the backdrop of the Fed's hawkish outlook, concerns that the worsening Ukraine crisis would put upward pressure on already high inflation pushed the US bond yields to a fresh multi-year peak. Apart from this, the risk-off mood - as depicted by a weaker tone around the equity markets - further benefitted the safe-haven greenback.

That said, relatively thin liquidity conditions on the back of a holiday in Europe held back bulls from placing aggressive bets. The USD/CAD pair, so far, has been struggling to find acceptance above the very important 200-day SMA, which, in turn, warrants some caution before positioning for any further near-term appreciating move.

There isn't any major market-moving economic data due for release on Monday, either from the US or Canada. Hence, the US bond yields, along with the broader market risk sentiment, will play a key role in influencing the USD demand. Traders will further take cues from oil price dynamics to grab some short-term opportunities.

Want more news and analysis with us
VISIT NOW: MONEY LIFE RESEARCH

Oil prices edge higher with falling supplies in focus

Oil prices edged higher on Wednesday after Moscow said that peace talks with Ukraine had hit a dead end, fuelling supply worries, while weak economic data from China and Japan kept a lid on gains.

Brent crude rose by 48 cents, or 0.5%, to $105.12 a barrel by 0808 GMT while U.S. West Texas Intermediate (WTI) crude futures gained 28 cents, or 0.3%, to $100.88. Both benchmarks had surged by more than 6% on Tuesday.

"The downside for oil prices is limited," said OANDA senior market analyst Jeffrey Halley, citing the Russian comments on peace talks and U.S. President Joe Biden accusing Russia of genocide. These "are reinforcing that the Ukraine-Russia situation will not be de-escalating any time soon".

Russian President Vladimir Putin on Tuesday blamed Ukraine for derailing peace talks and said Moscow would not let up on what it calls a "special operation" to disarm its neighbour.

Crude futures are also drawing support from Russian oil and gas condensate production falling to below 10 million barrels per day (bpd) on Monday, its lowest since July 2020.

The International Energy Agency (IEA) on Tuesday said it expected Russian oil output losses to average 1.5 million bpd in April, with losses growing to close to 3 million bpd from May.

Western sanctions against Russia and logistical constraints have hampered trade, people familiar with the data said on Tuesday.

OPEC has warned that it would be impossible to replace potential supply losses from Russia and signalled that it would not pump more crude.

Reports this week of partial easing of some of China's tight COVID-19 lockdown measures also underpinned oil prices.

Price gains, however, were kept in check by weak data from China and Japan.

China's crude oil imports slipped 14% from a year earlier, extending a two-month slide, as strict coronavirus restrictions hit demand in the world's top crude importer.

Japan reported its biggest monthly fall in core machinery orders in nearly two years, dragged down by a steep drop in demand from IT and other service companies.

The Organization of the Petroleum Exporting Countries (OPEC) on Tuesday cut its forecast for 2022 global oil demand growth, citing the impact of Russia's invasion of Ukraine, rising inflation as crude prices soar and the resurgence of the Omicron coronavirus variant in China.

OPEC now expects global demand to grow by 3.67 million bpd in 2022, down 480,000 bpd from its previous forecast.

Want more updates and analysis

JOIN NOW: MONEY LIFE RESEARCH

 Euro gains respite from Macron's French election lead

The euro looked set to snap a seven-day losing streak versus the dollar on Monday, as the single currency rallied after French leader Emmanuel Macron beat far right challenger Marine Le Pen in the country's first round of presidential voting.

Investor concerns about the future direction of the euro zone's second-biggest economy have weighed on the euro and added to worries over the economic costs of war in Ukraine.

Meanwhile, the dollar has been pushed higher by rising U.S. yields and expectations the Federal Reserve will act quickly to stem inflation. One of the big fallers has been the Japanese yen, which fell to a fresh seven-year low versus the dollar.

Macron will face Le Pen in what promises to be a tightly fought French presidential election runoff on April 24.

Nonetheless, Macron's lead in the first round provided some respite for the euro - lifting it by as much as three quarters of a percent in Asian trading hours to $1.0955. It was last up 0.3% at $1.09080.

Currency analysts said the contest remained on a knife-edge with negative implications for the euro.

"The narrower than expected victory for President Macron will keep alive fears that there is an outside chance that Le Pen can become president," analysts at MUFG said in a note.

"The first-round results and the opinion polls pointing towards a close result in the second round will remain a modest weight on the euro in the coming weeks."

The dollar index - which tracks the greenback against a basket of six peers - was broadly flat on the day, just shy of the 100 mark hit last week for the first time in nearly two years.

As the dollar has gained ground, investors have seen little reason to exit bets against the yen while the Bank of Japan holds yields near zero.

The yen fell as much as 1% on the day to 125.55 yen per dollar, its lowest level since 2015.

"There's nothing there to frighten people out of dollar/yen positions," said National Australia Bank (OTC:NABZY)'s head of foreign exchange Ray Attrill. "So onwards and upwards for dollar/yen."

Sterling was broadly flat versus the dollar at $1.30380.

The Russian rouble weakened in jittery trade, reversing some of the previous week's gains, after the central bank decided to relax temporary capital control measures.

Get best news and Analysis with us
Visit now: MONEY LIFE RESEARCH