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Forex News Timeline

Wednesday, June 16, 2021

The GBP/USD pair maintained its bid tone through the mid-European session and was last seen hovering near the top end of its daily trading range, comf

GBP/USD gained strong positive traction following the release of hotter-than-expected UK CPI.A subdued USD demand remained supportive of the intraday move up beyond the 1.4100 mark.Investors now seemed reluctant to place aggressive bets ahead of the key FOMC policy decision.The GBP/USD pair maintained its bid tone through the mid-European session and was last seen hovering near the top end of its daily trading range, comfortably above the 1.4100 mark. Following a brief consolidation through the early part of the trading action on Wednesday, the pair caught some fresh bids following the release of hotter-than-expected UK inflation figures. In fact, the headline UK CPI jumped above the Bank of England's target for the first time in almost two years and rose 2.1% in May. This marked a sharp acceleration from April's 1.5% and also surpassed consensus estimates pointing to a reading of 1.8%. This, along with a subdued US dollar demand, allowed the GBP/USD pair to build on the overnight bounce from the 1.4035-30 region, or one-month lows. The momentum pushed the pair beyond the 1.4100 mark, though a combination of factors held bulls from placing aggressive bets. Investors remain concerned about the EU-UK stand-off on the Northern Ireland protocol and the UK government's decision to delay the final stage of easing lockdown measures. Apart from this, nervousness ahead of the highly-anticipated FOMC policy decision acted as a headwind for the GBP/USD pair. Investors might have already started pricing in the prospects for an earlier stimulus withdrawal amid worries about rising inflationary pressure. Expectations for a less dovish Fed helped put a tentative floor under the greenback and kept a lid on any further gains for the major, at least for the time being. This makes it prudent to wait for some strong follow-through buying before confirming that the recent pullback from the vicinity of mid-1.4200s, or the highest level since April 2018 has run its course. That said, any subsequent positive move is more likely to confront a stiff resistance and remains capped just ahead of the 1.4200 mark, warranting some caution before positioning for any further appreciating move. Technical levels to watch  

The Fed announces its decision and also publishes its quarterly forecasts for growth, inflation, employment and interest rates on Wednesday, June 16 a

The Fed announces its decision and also publishes its quarterly forecasts for growth, inflation, employment and interest rates on Wednesday, June 16 at 18:00 GMT. As we get closer to the release time, here are the expectations as forecast by the economists and researchers of 11 major banks, regarding the upcoming announcement. Markets are treading water in a typical pre-Federal Reserve session, with answers awaited on the timing of tapering bond-buying and raising rates.   CE “We don’t expect any major policy changes, but some of the optimism evident in April’s statement may have to be toned down. Chair Jerome Powell will probably play down any changes and emphasise that rate hikes are still years away, but he may face a trickier balancing act in discussing the Fed’s asset purchases. We expect the Fed to make a more formal announcement of future tapering in a few months’ time – perhaps by dropping a heavy hint at Jackson Hole before an official change of guidance at the September FOMC meeting. That would probably be consistent with purchases then being reduced gradually from the start of next year.” TDS “The tone will probably be slightly less dovish than in April. We expect the chair to say that the committee has started discussing a progress-dependent tapering plan while also emphasizing that action will require much more progress. Median projections for core inflation in 2022/2023 will probably rise slightly, consistent with a sizable revision to 2021 being viewed as ‘largely reflecting transitory factors.’ The median dot will probably show a rate hike by end-23. A less dovish Fed tone next week would help to stabilize the USD in the very short run.” ING “The Fed is expected to leave policy unchanged and again play down taper talk. Nonetheless, markets will be looking for hints on whether the Fed is starting to acknowledge that inflation may not be as transitory as thought. A technical adjustment to address the rapid build-up in excess liquidity is certainly possible, but dollar downside risks remain.” NBF “After a sleepy meeting in April, June’s FOMC decision should be a relatively more eventful affair. While we don’t expect any changes to the Fed’s policy tools (Fed funds target or QE), we might see the Fed start to ‘talk about talking about’ tapering QE at some point this year. An eventual move on its bond-buying won’t come until the Fed’s “substantial further progress” goal in labour markets has been met, but the outlook looks to have improved enough in recent months that they should feel comfortable at least discussing an eventual taper. The meeting will also feature a fresh Summary of Economic Projections which is likely to show the median dot moving to show a higher policy rate by the end of 2023. Recall in March’s SEPs that 11 of 18 FOMC participants weren’t projecting any rate hikes until at least 2024. Additionally, with inflation prints coming in hotter than expected, we’re likely to see PCE estimates revised higher too, though they’ll likely still be dismissed as transitory. In the subsequent press conference, we expect a heavy focus to be on the Fed’s bond-buying as well as the ‘transitory’ nature of observed inflation prints.” Rabobank “Given recent data, the economic projections of FOMC participants are likely to see an upward revision for PCE inflation in 2021 and the dot plot may be getting closer to a rate hike before the end of 2023. The Fed is pushing back verbally against fears that high inflation is permanent and should underline this in its inflation projections for 2022 and 2023. The discussion about tapering the asset purchase program is likely to start at this meeting, so it will be interesting to hear what Powell has to say about this topic at the post-meeting press conference. The practical problem for the FOMC is to assess whether ‘substantial progress’ has been made regarding unemployment and inflation while the data remain heavily distorted at least until early September. The unemployment forecast for 2021 may give us a clue about the Fed’s numerical threshold for tapering. An early warning signal for tapering will inevitably be given in a situation with data clouded by the temporary labor shortage.” Nordea “The updated dot plot may hint of one hike in 2023 as very few members of the FOMC will have to change their mind in a positive direction for that to happen. The Fed will have to address the ongoing surge in the ON RRP facility The NY Desk is likely to suggest a few technical changes to the policy framework to ensure continued smooth operations. The interest on excess reserves will likely be hiked by 5 bps. The counterparty caps will likely be widened further in the ON RRP facility as the market will continue to be flooded with liquidity during June and July.” CIBC “It’s too soon for the Fed to issue a formal warning about tapering, but there might be signals, if only when the minutes of this meeting come out, that the central bank was talking about tapering. Watch for the dot plots to shift the first hike into 2023 from 2024, as it won’t take a lot of votes to move that needle.” Danske Bank “We doubt that the upcoming Fed meeting will be a significant one. In particular, we are looking for changes in the communication on QE. We think the Fed will repeat that bond-buying will continue at the current pace ‘until substantial further progress has been made’ but that Fed Chair Powell will acknowledge that tapering discussions have moved closer at the press conference. We expect the Fed to signal one rate hike in 2023 (from zero currently).” BBH “We expect a hawkish hold stemming from a shift in the Dot Plots, upgraded economic forecasts, and potential tapering talk. With risks to US yields weighted to the upside, the dollar is likely to benefit from any bond market repricing of the Fed and inflation outlooks.” ANZ “Economic data highlight that the US economy is growing at a rapid clip. Robust demand and a number of supply bottlenecks have driven core inflation to a three-decade high. The FOMC is set to significantly upgrade its inflation forecast for 2021, but keep the out years unchanged. This would signify a view that the current phase of intense price pressures is temporary. We don’t expect a change to forward guidance on rates or asset purchases. There is a chance the median FOMC member pencils in a rate hike for 2023, but we are mindful that many officials still want to see actual progress on maximum employment before committing to an increase.”    Goldman Sachs “It’s too early for the Federal Open Market Committee to begin the "taper clock" in their preview. We do not expect Chair Powell to deliver the first hint at tapering in June. Powell likely agrees with Governor Brainard and President Williams that the labor market has not yet come far enough. We continue to expect the first hint in August or September.”  

EUR/USD sticks to the rangebound theme for yet another session above the 1.2100 mark on Wednesday. Further upside has so far met a decent hurdle at th

EUR/USD trades within a narrow range above 1.2100 ahead of the Fed.There is a minor support at the Fibo level near 1.2060.EUR/USD sticks to the rangebound theme for yet another session above the 1.2100 mark on Wednesday. Further upside has so far met a decent hurdle at the 1.2150 zone, coincident with the 10-day SMA. The resumption of the downtrend remains likely if spot does not clear this area in the near term. In that case, a break below recent lows in the 1.2100/1.2090 band could pave the way for extra losses in the short-term horizon, with the minor support at 1.2064 (Fibo level). So far, the 50-day SMA just above 1.2100 also reinforces this support zone. A move above the weekly highs around 1.2220 should expose monthly peaks near 1.2270 (May 25). Above this region, the pair should resume the upside bias and target the 1.2300 yardstick. On the broader view, the constructive stance on EUR/USD is forecast to remain intact as long as it trades above the 200-day SMA, today at 1.1991. EUR/USD daily chart  

Gold (XAU/USD) is set to remain overall bullish while above $1808.60 despite current correction lower, Axel Rudolph, Senior FICC Technical Analyst at

Gold (XAU/USD) is set to remain overall bullish while above $1808.60 despite current correction lower, Axel Rudolph, Senior FICC Technical Analyst at Commerzbank, reports. See – Gold Price Analysis: XAU/USD to end the year at $1800, potential for a nosedive to $1500 by end-2022 – OCBC Bullish bias while above the 2019-2021 uptrend line at $1729.48 “Minor support comes in between the 200 and 55-day moving averages at $1838.97/$1831.52 with further minor support sitting between the mid-December and January lows as well as the late February high at $1821.80/$1810.48. Either of these we expect to hold. Only a slip through the next lower $1808.60 mid-May low would neutralize our forecast.”  “Longer-term, we target the $1959/65 November 2020 high and the 2021 high. These guard the 1989/78.6% retracement and the $2072 2020 peak.” “Key support is the $1729.48 2091-2021 uptrend line. While above there we will retain our longer-term upside bias.”  

DXY extends the erratic performance in the upper end of the weekly range around the mid-90.00s. Price action in the dollar stays muted ahead of the ke

DXY keeps the consolidative mood around the 90.50/60 area.Next resistance comes in at 90.67, monthly peaks.DXY extends the erratic performance in the upper end of the weekly range around the mid-90.00s. Price action in the dollar stays muted ahead of the key FOMC gathering due later in the NA session. Bullish attempts need to clear tops in the 90.65/70 zone to allow for the continuation of the uptrend in the short-term horizon. On the flip side, the loss of the 90.00 level should open the door to a re-test of the May’s low around 89.50. In the meantime, and looking at the broader scenario, while below the 200-day SMA, today at 91.52 the outlook for the buck is forecast to remain negative. DXY daily chart  

EUR/JPY looks offered and sheds some ground following two consecutive daily upticks on Wednesday. If the selling pressure kicks in, then the cross cou

EUR/JPY fades two daily advances in a row but stays above 133.00.Next on the upside emerges the YTD top just past 134.00.EUR/JPY looks offered and sheds some ground following two consecutive daily upticks on Wednesday. If the selling pressure kicks in, then the cross could attempt a deeper pullback to, initially, the monthly lows near 132.60 (June 11). Further south comes in the 132.04/131.84 band, where coincides the 50-day SMA and the short-term support line. If the recovery regains serious traction, then the cross could attempt a move to the YTD peak beyond 134.00 the figure ahead of the September/October 2017 highs in the 134.40/50. In the broader picture, while above the 200-day SMA at 127.53 the broader outlook for the cross should remain constructive. EUR/JPY daily chart  

After closing the first two days of the week in the positive territory and gaining more than 2% in that period, crude oil prices continued to push hig

WTI goes into consolidation after the latest rally.API data showed from the US showed a large decline in crude oil stocks.Focus shifts to EIA's weekly Crude Oil Stocks Change data.After closing the first two days of the week in the positive territory and gaining more than 2% in that period, crude oil prices continued to push higher on Wednesday. The barrel of West Texas Intermediate (WTI) touched its highest level since October 2018 at $72.80 and seems to have gone into a consolidation phase. As of writing, WTI was losing 0.3% on the day at $72.20. Eyes on EIA report In addition to improving energy demand outlook with major economies continuing to ease coronavirus-related restrictions, the large decline in US crude oil stocks provided a boost to WTI. The American Petroleum Institute (API) reported on Tuesday that oil inventories in the US declined by 8.5 million barrels in the week ending June 11. Later in the session, the US Energy Information Administration's (EIA) weekly Crude Oil Stocks Change data will be looked upon for fresh impetus. On the other hand, Iran and the US are expected to continue talks on the 2015 nuclear accord in Vienna on Saturday, which could have significant implications on the global oil supply and impact oil prices. Technical levels to watch for  

United States MBA Mortgage Applications: 4.2% (June 11) vs -3.1%

The AUD/USD pair closed in the negative territory on Tuesday and fluctuated in a tight range during the Asian trading hours on Wednesday before gainin

AUD/USD is staging a rebound following Tuesday's decline.US Dollar Index stays relatively calm around 90.50.FOMC will announce policy decisions and release updates Summary of Economic Projections.The AUD/USD pair closed in the negative territory on Tuesday and fluctuated in a tight range during the Asian trading hours on Wednesday before gaining traction. As of writing, the pair was up 0.3% on the day at 0.7707. The latest rebound witnessed in AUD/USD seems to be a technical correction amid a lack of significant fundamental drivers. Earlier in the day, the data from Australia showed that the Westpac Leading Index declined to -0.06 in May from 0.19% in April but this print failed to trigger a noticeable market reaction. DXY stays in consolidation ahead of FOMC Meanwhile, the US Dollar Index, which touched its highest level in a month at 90.67 on Tuesday, continues to move sideways around 90.50.  Later in the session, the FOMC will announce its policy decision and publish the Monetary Policy Statement alongside the updated Summary of Economic Projections. The dot plot showed in March that four policymakers are expecting a rate hike in 2022 and a hawkish shift in participants' outlook could help the greenback gather strength and vice versa. Previewing this event, "the Federal Reserve is set to release updated forecasts, which are set to trigger the initial market reaction, potentially one that is dollar positive," said FXStreet analyst Yohay Elam. "Fed Chair Powell could dampen such gains with caution, especially if rejects any early withdrawal of stimulus."Federal Reserve Preview: First up, then down? Playbook for trading the Fed.Technical levels to watch for  

Senior Economist at UOB Group Julia Goh and Economist Loke Siew Ting assess the latest investments figures in Malaysia. Key Quotes “Malaysia’s total a

Senior Economist at UOB Group Julia Goh and Economist Loke Siew Ting assess the latest investments figures in Malaysia. Key Quotes “Malaysia’s total approved investments shot up 95.6% y/y to MYR80.6bn in 1Q21 (1Q20: -27.6% y/y to MYR41.2bn) despite the lingering COVID-19 pandemic challenges. The manufacturing sector continued to attract the highest level of investments (MYR58.8bn or 72.9% of total approved investments), followed by services (MYR15.6bn or 19.4%) and primary sector (MYR6.2bn or 7.7%).” “The rebound in foreign direct investment (FDI) approvals was evident given higher foreign investment approvals of MYR54.9bn (or 68.1% of total) against MYR25.7bn (31.9%) of domestic investment approvals in 1Q21. Bulk of FDI was channelled into the manufacturing sector, accounting for MYR52.3bn or 95.2% of total FDI approvals. Among the leading sources of FDI in the manufacturing sector were Singapore, South Korea, the Netherlands, Taiwan, China, USA, Switzerland, Denmark, Germany, and Hong Kong.” “The recovery in investment approvals will help stimulate private investments and expand productive capacity in sectors that continue to see robust growth and demand. As at Mar 2021, there are MYR54.4bn of proposed investments that may actualise this year. However, this is subject to the course of the pandemic, vaccination rates, containment measures, and global macro conditions. We expect total investment approvals to trend up to MYR185.0bn in 2021 (from MYR167.4bn in 2020).”

Gold lacked any firm directional bias and remained confined in a narrow trading band through the first half of the European session on Wednesday. Inve

Gold was seen oscillating in a narrow trading band through the first half of the European session.Expectations for less dovish Fed – amid rising inflationary pressure – so far, has capped the upside.A subdued USD demand, a downtick in the US bond yields, softer risk tone extended some support.Gold Weekly Forecast: XAU/USD tests key trend line ahead of FOMC meetingGold lacked any firm directional bias and remained confined in a narrow trading band through the first half of the European session on Wednesday. Investors now seemed reluctant to place any aggressive bets, rather preferred to wait on the sidelines ahead of the highly-anticipated FOMC monetary policy decision. Investors might have started pricing in the prospects for an earlier stimulus withdrawal amid worries about rising inflationary pressure. This, in turn, was seen as a key factor that capped the upside for the non-yielding yellow metal. That said, a combination of factors acted as a tailwind for gold and helped limit any losses, at least for the time being. Nervousness ahead of the key event risk was evident from a modest pullback in the equity markets. The prevalent cautious mood was seen as a key factor that extended some support to traditional safe-haven assets, including gold. Adding to this, a subdued US dollar demand – amid a modest downtick in the US Treasury bond yields – further held traders from placing fresh bearish bets around the dollar-denominated commodity. Nevertheless, the key focus will remain on the latest monetary policy update by the Fed, due later during the US session. Investors will be closely watching for clues about a possible change in the policy outlook and if members have already started the discussion to taper monthly bond purchases. Apart from this, fresh economic projections and Fed Chair Jerome Powell's tone at the post-meeting press conference will play a key role in influencing the near-term USD price dynamics. This would eventually help investors to determine the next leg of a directional move for gold. Gold technical outlook Looking at the technical picture, the recent break below a short-term ascending trend-line – extending from YTD lows – might have shifted the bias in favour of bearish traders. However, the emergence of some dip-buying ahead of the very important 200-day SMA support warrants some caution. Hence, it will be prudent to wait for some strong follow-through selling below the $1,845-40 area, or monthly swing lows before positioning for any further near-term depreciating move.

Germany 10-y Bond Auction: -0.19% vs previous -0.09%

The shared currency alternates gains with losses and motivates EUR/USD to gyrate around the 1.2130 region on Wednesday. EUR/USD looks to the Fed EUR/U

EUR/USD trades within a tight range near 1.2130.German yields climb to the -0.23% area on Wednesday.All the attention stays on the FOMC meeting later in the session.The shared currency alternates gains with losses and motivates EUR/USD to gyrate around the 1.2130 region on Wednesday. EUR/USD looks to the Fed EUR/USD now looks offered around 1.2130, always against the backdrop of the generalized consolidation in the global markets, as investors get ready for the FOMC event later in the NA session. In the meantime, the pair pays little attention to the recovery in yields of the German 10-year reference to the -0.23% area following a drop to the vicinity of -0.30% in past sessions. Investors’ sentiment and price action around spot remains largely dependent on whatever happens at the FOMC event later on Wednesday. Nothing scheduled data wise in Euroland, although the most salient event will be the FOMC gathering. Additional data in the US will come from the housing sector and the weekly report by the EIA. What to look for around EUR EUR/USD manages to bounce of recent lows in the sub-1.2100 area, although it is forecast to remain somewhat vigilant ahead of the Fed event later this week and while market participants keep digesting the latest US inflation figures. In the meantime, support from the European currency comes in the form of auspicious results from fundamentals in the bloc coupled with higher morale, prospects of a strong rebound in the economic activity and the investors’ appetite for riskier assets.Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the vaccine rollout. Probable political effervescence around the EU Recovery Fund. German elections. Investors’ shift to European equities. EUR/USD levels to watch So far, spot is losing 0.02% at 1.2123 and a breakdown of 1.2092 (monthly low Jun.11) would target 1.2064 (23.6% Fibo retracement of the November-January rally) en route to 1.2051 (weekly low May 13). On the flip side, the next hurdle lines up at 1.2266 (monthly high May 25) followed by 1.2300 (round level) and finally 1.2349 (2021 high Jan.6).    

USD/CAD has continued higher after its recent break above 1.2145. Analysts at Credit Suisse look for a slightly deeper correction going into the FOMC,

USD/CAD has continued higher after its recent break above 1.2145. Analysts at Credit Suisse look for a slightly deeper correction going into the FOMC, with resistance at 1.2203/05, then 1.2253/70, where the pair is set to find a solid cap. USD/CAD to turn bearish again after hitting 1.2270 “We look for a break above 1.2203/05 and a move to 1.2253/70, which includes the important 55-day average, the 38.2% retracement of the fall from April and the ‘measured base objective’. We would look for a cap here post the FOMC and then for the medium-term downtrend to reassert itself.”  “Near term support moves to 1.2129/27. In contrast, a break below 1.2058/56 would quickly turn our bias back lower and negate the base, with a direct close below 1.2012/00 reasserting the broader downtrend.”  “A weekly close below 1.2060/48 would also still confirm a multi-year ‘double top’ to dramatically reinforce our medium term bearish outlook, with the next level at 1.1916.”   

The European Central Bank (ECB) Vice President, Luis de Guindos, crossed the wires in the last hour, saying that it is important to withdraw stimulus

The European Central Bank (ECB) Vice President, Luis de Guindos, crossed the wires in the last hour, saying that it is important to withdraw stimulus gradually. Additional Quotes: There is light at the end of the tunnel. The policy should normalize gradually, with prudence. The comments did little to influence the shared currency or provide any meaningful impetus to the EUR/USD pair as the market focus remains on the FOMC policy decision later this Wednesday.

The GBP/JPY cross retreated around 30-35 pips from daily tops and was last seen trading with only modest gains, just above the key 155.00 psychologica

A combination of factors failed to assist GBP/JPY to capitalize on its intraday positive move.The prevalent cautious mood benefitted the safe-haven JPY and capped any meaningful gains.Stronger UK inflation figures extended some support to the GBP and helped limit the downside.The GBP/JPY cross retreated around 30-35 pips from daily tops and was last seen trading with only modest gains, just above the key 155.00 psychological mark. The cross struggled to capitalize on its intraday positive move, instead met with some fresh supply near the 155.35-40 region amid a modest pickup in demand for the Japanese yen. Nervousness ahead of the highly-anticipated FOMC policy decision was evident from a softer tone around the equity markets. This, in turn, benefitted traditional safe-haven currency and was seen as a key factor that capped the upside for the GBP/JPY cross. On the other hand, the British pound was supported by a subdued US dollar demand and hotter-than-expected UK inflation figures. The UK Office for National Statistics (ONS) reported this Wednesday that the headline UK CPI held steady at 0.6% MoM in May and accelerated 2.1% on a yearly basis from 1.5% YoY previous. Excluding volatile food and energy items, the Core CPI rose 2.0% YoY during the reported month against 1.5% anticipated. The supporting factor, to a larger extent, was offset by concerns about the EU-UK stand-off on the Northern Ireland protocol. This, along with the UK government's decision to delay the final stage of easing lockdown measures, continued acting as a headwind for the sterling. Nevertheless, the GBP/JPY cross, so far, has held within the previous day's broader trading range as investors await fresh catalyst before placing directional bets. Technical levels to watch  

Gold has retreated toward $1,850. According to strategists at Credit Suisse, XAU/USD’s weakness continues to ideally hold its 200-day average at $1840

Gold has retreated toward $1,850. According to strategists at Credit Suisse, XAU/USD’s weakness continues to ideally hold its 200-day average at $1840. See – Gold Price Analysis: XAU/USD to end the year at $1800, potential for a nosedive to $1500 by end-2022 – OCBC Gold to advance towards the $1941/66 neighborhood “Gold approaches the FOMC still above its 200-day average, now at $1840. We stay biased higher and look for this to continue to hold for a move to resistance seen at the high for the year, November 2020 high and potential trend resistance at $1941/66.”  “Whilst we would expect $1943/66 to cap again for now to maintain the broader consolidation range, an eventual break should open the door to a move back to the $2075 record high.” “A close below $1840 though would mark a near-term top to reinforce a broader sideways trend with support seen next at $1809/05 and then more importantly at $1765/55.”  

In the first half of 2021, the world economy seems to have rebounded to above its pre-pandemic peak, transitioning from the recovery phase to the star

In the first half of 2021, the world economy seems to have rebounded to above its pre-pandemic peak, transitioning from the recovery phase to the start of a new economic expansion. Europe is poised to outperform – according to economists at Charles Schwab – as the new economic cycle has seen stock market leadership pass from the US to Europe. Peak or Pause? “European countries are only now starting to ease their restrictions on economic activity just as Europe’s largest-ever stimulus plan is about to be deployed. This suggests eurozone growth still has some way to go before peaking, and that eurozone stocks likely can still deliver further gains after outperforming in the first half of the year.”  “Continued solid growth combined with signs that inflationary pressure may be transitory could ease concerns that central banks will tighten policy prematurely, a fear that weighed on emerging market stocks in the first half of the year.” “Eurozone economies have performed strongly, even though vaccination programs lagged those in the US. Ending restrictive lockdowns, ramped-up bond-buying by the European Central Bank, and the nearing rollout of Europe’s largest-ever stimulus plan should aid growth heading into the second half of 2021. This could mean the peak in eurozone economic momentum may not come until later this year, unlike other major economies such as the US, where growth may have peaked in the second quarter of this year, or China where it apparently peaked in the fourth quarter of last year.” “Among the risks to economic expansion is the prevalence of COVID-19 variants, and potential for antibodies to wane over time, which could lead to waves of infection in the late fall/winter.”  

European Monetary Union Labor Cost below forecasts (3.3%) in 1Q: Actual (1.5%)

The upward bias in USD/CNH could push it to another test of 6.4400 in the next weeks, commented FX Strategists at UOB Group. Key Quotes 24-hour view:

The upward bias in USD/CNH could push it to another test of 6.4400 in the next weeks, commented FX Strategists at UOB Group. Key Quotes 24-hour view: “We expected USD to ‘consolidate and trade between 6.4000 and 6.4200’ yesterday. While our view for consolidation was not wrong, USD traded within a much narrower range than expected (6.4005/6.4100). The 95 pips range is the smallest 1-day range in about 9 months. The muted price actions offer no fresh clues and USD could continue to consolidate, albeit likely within a broader range of 6.3970/6.4170.” Next 1-3 weeks: “Our narrative from yesterday (15 Jun, spot at 6.4090) still stands. As highlighted, USD “is expected to trade with an upward bias towards 6.4400. The upward bias is deemed intact as long as USD does not move below 6.3900 (‘strong support’ level was at 6.3830 yesterday).”    

The USD/CAD pair bounced around 15-20 pips from the early European session lows and was last seen hovering near the top end of its daily trading range

Expectations for a less dovish Fed acted as a tailwind for the USD and extended some support to USD/CAD.The ongoing bullish run in oil prices underpinned the loonie and kept a lid on any meaningful gains for the pair.Market participants look forward to Canadian consumer inflation figures for some impetus ahead of the FOMC.The USD/CAD pair bounced around 15-20 pips from the early European session lows and was last seen hovering near the top end of its daily trading range, just below the 1.2200 mark. A modest downtick in the US Treasury bond yields kept the US dollar bulls on the defensive through the first half of the trading action on Wednesday. However, expectations for a less dovish Fed helped put a tentative floor under the greenback and extended some support to the USD/CAD pair. Investors now seem to have started pricing in the prospects for an earlier stimulus withdrawal amid worries about rising inflationary pressure. The concerns were further fueled by Tuesday's US Producer Price Index, which rose 0.8% MoM in May and accelerated 6.6% on a yearly basis. Meanwhile, the supporting factor, to some extent, was offset by the prevalent strong bullish sentiment surrounding crude oil prices, which tend to underpin the commodity-linked loonie. This, in turn, seemed to be the only factor that might cap any meaningful upside for the USD/CAD pair. Investors might also prefer to wait on the sidelines ahead of the highly-anticipated FOMC policy decision, due later during the US session. This will play a key role in influencing the USD price dynamics in the near-term and provide a fresh directional impetus to the USD/CAD pair. Heading into the key event risk, traders will confront the release of the latest Canadian consumer inflation figures. This, along with crude oil prices, will be looked upon for some meaningful trading opportunities during the early North American session. Technical levels to watch  

Going forward, inflation and interest rates are most likely to slowly rise. Analysts at Natixis see that in the future, bonds will be dominated by equ

Going forward, inflation and interest rates are most likely to slowly rise. Analysts at Natixis see that in the future, bonds will be dominated by equities as a financial asset, which was not the case from 1980 to 2020. This suggests a major change to the structure of portfolios awaits. A shift in portfolios from bonds into equities “From 1980 to 2020, bond returns were quite high, between 7% and 8%, thanks to declining long-term interest rates. The excess return on equities was only 4% to 6%, with a much higher equity risk.” “In the future, bonds will be dominated by equities as bond returns will become very low due to the gradual rise in long-term interest rates, with the risk/return relationship becoming highly negative for bonds.”  

EUR/USD is seen at risk to a test of its 55-day average at 1.2080 – potentially price/retracement support at 1.2053/51 – but with this ideally holding

EUR/USD is seen at risk to a test of its 55-day average at 1.2080 – potentially price/retracement support at 1.2053/51 – but with this ideally holding, economists at Credit Suisse report. Support from the 55-day average at 1.2080 to try and hold  “The immediate risk stays seen mildly lower going into the Fed for a test of the rising 55-day average, now at 1.2080. With the mid-May low and 38.2% retracement of the rally from late March not far below at 1.2053/51 our bias remains to then look for a floor here post the Fed. A break though would expose the 200 - day average and May low at 1.1996/86.”  “Failure to hold the 1.1996/86 support on a closing basis would reinforce the broader sideways range that has been in place all year, opening the door to further weakness to 1.1942 next, then 1.1928/18.”  “Above 1.2144/54 is needed to ease the immediate downside bias for a move back to 1.2196.”  “Beyond 1.2218/19 remains needed to reassert the uptrend for a move back to the 1.2255/67 highs /downtrend from January. This remains seen as the barrier to a move to the top of the year’s range at 1.2319/50.”  

United Kingdom DCLG House Price Index (YoY) came in at 8.9%, below expectations (9.5%) in April

German IFO institute cut the country’s 2021 GDP growth forecast to 3.3% from 3.7% previous due to supply bottlenecks, the latest report showed on Wedn

German IFO institute cut the country’s 2021 GDP growth forecast to 3.3% from 3.7% previous due to supply bottlenecks, the latest report showed on Wednesday. Additional takeaways German inflation to jump to 2.6% in 2021 but ease to 1.9% in 2022. Lifts 2022 GDP growth forecast to 4.3% from 3.2%. German current account surplus to shrink from 7% in 2020 to 5.8% in 2021 and 4.9% in 2022. Read: EUR/USD Forecast: Will Powell propel the pair higher? The bullish case for the euro on Fed Day 

Silver price (XAG/USD) is snapping a three-day downtrend, rebounding towards the $28 mark, as the attention turns towards the FOMC monetary policy dec

Silver rebounds to test 21-DMA after a three-day losing streak.XAG/USD wavers within a symmetrical triangle on the 1D chart. Risks remain skewed to the upside amid bullish RSI. Silver price (XAG/USD) is snapping a three-day downtrend, rebounding towards the $28 mark, as the attention turns towards the FOMC monetary policy decision. The Fed is likely to points to tapering plans in the coming month, which could lift the US dollar’s demand at silver’s expense. However, the technical setup on the daily chart is constructing a brighter outlook for the white metal in the near term. Silver price is on track to recapture the $28 threshold, although it needs a sustained break above the 21-Daily Moving Average (DMA) at $27.81 to extend the recovery momentum. If the $28 round number is cracked, silver bulls will then yearn for acceptance above the falling trendline resistance at $28.23. A symmetrical triangle breakout will get validated on a daily closing above the latter. The Relative Strength Index (RSI) is edging higher above the midline, allowing room for more upside. Silver Price Chart: Daily chart Alternatively, silver bears will resume the bearish momentum on rejection at the 21-DMA barrier. Tuesday’s low at $27.39 could offer some support to the buyers, below which the rising trendline support at $27.20 could be put at risk. All in all, silver price is likely to maintain its price action within a $1 range, with eyes on the FOMC verdict. A breakout from the said range in either direction could trigger sharp moves in silver. Silver Additional levels  

The USD/JPY pair broke down of its consolidative trading range and dropped below the key 110.00 psychological mark during the early European session.

A combination of factors prompted some selling around USD/JPY on Wednesday.A cautious mood benefitted the safe-haven JPY amid a subdued USD price action.The downside seems cushioned as the focus remains on the FOMC policy decision.The USD/JPY pair broke down of its consolidative trading range and dropped below the key 110.00 psychological mark during the early European session. Having stalled its recent positive move near a descending trend-line resistance, the USD/JPY pair edged lower on Wednesday and moved away from over one-week tops touched in the previous day. The downtick was sponsored by a combination of factors, though the downside seems limited ahead of the highly-anticipated FOMC policy decision. Investors turned cautious heading into the key event risk, which was evident from a softer tone around the equity markets. This, in turn, benefitted the safe-haven Japanese yen and exerted some pressure on the USD/JPY pair. Bearish traders further took cues from a downtick in the US Treasury bond yields, which kept the US dollar bulls on the defensive. That said, expectations for a less dovish Fed might help put a tentative floor under the greenback and extend some support to the USD/JPY pair. Investors might have started pricing in the prospects for an earlier stimulus withdrawal amid worries about rising inflationary pressure, further fueled by Tuesday's hotter-than-expected US Producer Price Index. Hence, market participants will look for clues about a possible change in the policy outlook and if members have started the discussion to taper the current $120 billion in monthly bond purchases. This will play a key role in influencing the near-term USD price dynamics and assist traders to determine the next leg of a directional move for the USD/JPY pair. In the meantime, the broader market risk sentiment, along with the US bond yields might provide some impetus and allow traders to grab some short-term opportunities around the USD/JPY pair. Technical levels to watch  

The US Dollar Index (DXY), which tracks the greenback vs. a bundle of its main competitors, extends the consolidation mood around the 90.50 zone. US D

DXY extends the side-lined mood around the mid-90.00s.Investors’ focus remains on inflation, yields, tapering talk.The FOMC is largely expected to keep the dovish message on Wednesday.The US Dollar Index (DXY), which tracks the greenback vs. a bundle of its main competitors, extends the consolidation mood around the 90.50 zone. US Dollar Index focused on the Fed The price action around the index stays choppy so far this week, always navigating the mid-90.00s amidst steady yields and rising cautiousness ahead of the key FOMC event later on Wednesday. On the latter, while any move on rates is ruled out, investors will closely follow any hint at the timing of a modification of the bond purchase programme as well as the updated dots plot. Furthermore, the Committee is seen sticking to the “transient” story when comes to higher inflation, although it is forecast to deliver an upbeat assessment on the prospects for the economy. In the docket, and other than the Fed meeting, we will see Housing Starts and Building Permits for the month of May followed by Export/Import Prices and the API’s report on crude oil supplies. What to look for around USD The index keeps the side-lined theme unchanged around 90.50 so far this week pari passu with the vigilant tone ahead of the FOMC event. Higher inflation figures in May failed to ignite a serious bullish attempt in the buck while they also forced yields to recede to multi-month lows well below 1.50%. The outlook for the currency still remains on the negative side and this view is supported by the perseverant mega-dovish stance from the Federal Reserve (until “substantial further progress” in inflation and employment is made) in place for the time being and rising optimism on a strong global economic recovery, which is seen underpinning the risk complex.Key events in the US this week: Housing Starts, Building Permits, FOMC event (Wednesday) – Initial Claims, Philly Fed Index (Thursday).Eminent issues on the back boiler: Biden’s plans to support infrastructure and families, worth nearly $6 trillion. US-China trade conflict under the Biden’s administration. Tapering speculation vs. economic recovery. US real interest rates vs. Europe. Could US fiscal stimulus lead to overheating? US Dollar Index relevant levels Now, the index is losing 0.07% at 90.44 and faces the next contention at 89.53 (monthly low May 25) followed by 89.20 (2021 low Jan.6) and then 88.94 (monthly low March 2018). On the other hand, a breakout of 90.62 (weekly high Jun.4) would open the door to 90.90 (weekly high May 13) and finally 91.05 (100-day SMA).  

“Inflation trends and associated risks around interest rates and exchange rates may have direct sovereign credit implications,” Fitch Ratings said in

“Inflation trends and associated risks around interest rates and exchange rates may have direct sovereign credit implications,” Fitch Ratings said in its latest report titled ‘Inflation Impact On Sovereigns Depends On Real Interest Rates.” Key takeaways “Inflation impact on sovereigns depends on real interest rates.” “US inflation and bond yields will rise in the medium term. “ “Forecast US inflation to be 2.5% at end-2023 and 10-year treasuries to yield 2.3%.” “Expect global yields to follow US yields higher though Japan has shown low yields can persist on country-specific factors for an extended period.”

Economists at DBS Bank note that CAD weakness above 1.21 per USD gains traction. USD/CAD is set to challenge the 1.22 level above which lies the 1.225

Economists at DBS Bank note that CAD weakness above 1.21 per USD gains traction. USD/CAD is set to challenge the 1.22 level above which lies the 1.2250 50-day moving average. Falling lumber prices weigh on the loonie “The Bank of Canada, at its meeting last Thursday, did not exhibit any urgency to follow through on April’s decision to taper bond purchases. CAD is also weighed by lumber prices which have sunk more than 40% over the past month to below USD1,000 per thousand board feet for the first time since 30 March.”  “Having traded above its 20-day moving average around 1.2090, USD/CAD could next test its 1.22 high seen a month ago towards its next major resistance around 1.2250 or its 50-day moving average.”  

The EUR/GBP cross came under some renewed selling pressure on Wednesday and extended the previous day's rejection slide from a downward sloping trend-

EUR/GBP witnessed some fresh selling on Wednesday and erased the previous day’s gains.The formation of a descending triangle supports prospects for further near-term weakness.A sustained break below the 0.8560 horizontal support will reaffirm the bearish outlook.The EUR/GBP cross came under some renewed selling pressure on Wednesday and extended the previous day's rejection slide from a downward sloping trend-line resistance. The downward trajectory dragged the cross the 0.8585-80 region, or fresh daily lows during the early European session. The next relevant support is pegged near the 0.8560 horizontal zone tested earlier this month. This, along with the mentioned trend-line, constitutes the formation of a descending triangle on the daily chart. A convincing break below will set the stage for a further near-term downfall. Meanwhile, technical indicators on the daily chart are holding in the negative territory and support prospects for an eventual bearish breakdown. That said, it will still be prudent to wait for some follow-through selling below the triangle support before placing aggressive bearish bets. The EUR/GBP cross might then accelerate the fall towards challenging the key 0.8500 psychological mark. The downward trajectory could further get extended towards 14-month lows, around the 0.8470 region touched in April. On the flip side, the 0.8600-0.8610 region now seems to act as immediate resistance. This is followed by the descending trendline hurdle, around the 0.8630 region, which if cleared decisively will negate the bearish outlook and prompt some near-term short-covering move. The subsequent positive move has the potential to lift the EUR/GBP cross beyond an intermediate resistance near the 0.8670 area and allow bulls to aim back to reclaim the 0.8700 round-figure mark. EUR/GBP daily chart Technical levels to watch  

Economists at Credit Suisse do not expect any significant policy changes from the SNB meeting. As they do not believe that the SNB is currently active

Economists at Credit Suisse do not expect any significant policy changes from the SNB meeting. As they do not believe that the SNB is currently active in the FX markets and given the dovish ECB’s monetary policy stance, the EUR/CHF pair is expected to decline further towards the 1.0800 level. SNB will most likely affirm its current stance “We do not expect any major changes to the current SNB’s stance at tomorrow’s meeting. Most likely, the SNB will leave its main policy rate unchanged and will keep its FX language intact as well. We note, though, that the recent increase in sight deposits has almost come to a halt. This would suggest that the central bank has stopped intervening for the time being. However, we would not rule out renewed intervention should the franc appreciate significantly and in a speedy fashion.” “We expect the ECB to change its definition of price stability to 2% headline inflation, with a symmetrical intolerance for sustained deviations higher or lower. Given that core inflation has been stuck stubbornly at 1% for the best part of a decade, the ECB’s ongoing challenge will be to deliver sustainably higher inflation. That will require continued asset purchases beyond the end of the pandemic.”  “We continue to believe that the divergent monetary policy stance between the Eurozone and Switzerland should weigh on EUR/CHF. Consequently, we believe that EUR/CHF will continue to grind lower towards our 1.0800 target.”  

Economists at Credit Suisse expect the Norges Bank to validate markets’ expectations of a Q421 hike and to signal higher risks of an earlier hike too,

Economists at Credit Suisse expect the Norges Bank to validate markets’ expectations of a Q421 hike and to signal higher risks of an earlier hike too, as soon as at the 23 Sep meeting. With policy expectations largely stable amid stronger than expected data, a hawkish outcome can renew market appetite for EUR/NOK downside, in line with a 9.80 target. Rising stakes for higher rates “We think the bar for Norges Bank projections to meet expectations of a December hike is not high, in the light of the much stronger than expected growth and employment developments. Markets however are most likely to focus on the possibility of a September tightening and of more than one hike by year end. With less than 2 hikes priced in this year, we think that a depo rate path suggesting as an example a 50% probability of a Sep hike would be taken in stride by rates markets, with positive implications for NOK.” “We’ve been constructive on NOK for most of the year, with a 9.80 EUR/NOK target since early April. Ahead of this week’s meeting, we favour holding on to the position, as we see potential for EUR/NOK downside to resume if the Norges Bank were indeed to deliver the hawkish outcome that we anticipate. A dovish outcome from the FOMC would also likely prove supportive for the trade. If instead the Norges Bank were to refrain from acknowledging the possibility of a Sep hike, in all likelihood the position will expire worthless.”   

Copper (LME) extends its consolidation/setback as it failed to remain above $10000. The metal is set to suffer further weakness towards the $9237/8873

Copper (LME) extends its consolidation/setback as it failed to remain above $10000. The metal is set to suffer further weakness towards the $9237/8873 neighborhood, the Credit Suisse analyst team reports. Copper to alleviate downside pressure above $10120 “Copper has dropped below support at $9719/9614, which has clearly weakened the short-term outlook. We see scope for further near-term weakness to the key 50% and 61.8% retracement levels of the whole February/May upmove at $9237/8873 respectively, but we look for a fresh floor here for an eventual resumption of the core bull trend.”  “Above $10120 is needed to ease the immediate downside bias and above the $10748 high for a resumption of the core uptrend to the psychological $11000 mark, which we would expect to cap the market, at least temporarily. A direct break can see next projection resistance at $11210, then $11440.” “Below $9614 would indicate the market is moving into a longer-term ranging environment, before the core bull trend eventually resumes again, with support seen next at the March low at $8570.”  

The dollar/euro exchange rate has two key determinants. The long-term dynamics is the one related to the US external deficit and accumulation of exter

The dollar/euro exchange rate has two key determinants. The long-term dynamics is the one related to the US external deficit and accumulation of external debt; the short-term dynamics is the one related to the cyclical gap between monetary policies. The first points to a depreciation of the dollar, the second points to a resilient dollar in 2022, as analysts at Natixis note. Factoring in the long-term and short-term dynamics of the EUR/USD  “We currently have the following configuration: A rapid deterioration in US foreign trade due to the strong stimulation of domestic demand through expansionary fiscal and monetary policies. A faster return to full employment than in the eurozone. The cyclical recovery is taking place faster in the United States than in the euro zone following the COVID-19 crisis: this means that the US will return to full employment faster than the eurozone. We should therefore expect the expansionary monetary policies to end earlier in the US than in the eurozone.”  “If tapering takes place from spring 2022 in the United States and from the end of 2022 in the eurozone, there will be a gap between the two countries' monetary policies during 2022, with a more expansionary monetary policy in the eurozone. We should therefore expect: A long-term trend depreciation of the dollar; Interrupted in 2022 by the monetary policy gap between the US and the eurozone, as monetary policy will temporarily be more expansionary in the eurozone.”  

Following the release of the May activity numbers, China’s National Bureau of Statistics (NBS) released a statement, via Reuters, expressing their ass

Following the release of the May activity numbers, China’s National Bureau of Statistics (NBS) released a statement, via Reuters, expressing their assessment of the economy. There are still unstable., uncertain factors in global economic recovery and COVID-19 control. Foundation for domestic economic recovery is not yet consolidated. more to come ....

China’s May Retail Sales YoY, the number arrived at +12.4% vs. +13.6% expected and +17.7% last, with Industrial Production YoY at +8.8% and +9.0% expe

China’s May Retail Sales YoY, the number arrived at +12.4% vs. +13.6% expected and +17.7% last, with Industrial Production YoY at +8.8% and +9.0% expected and +9.8% last.  Meanwhile, Fixed Asset Investment YoY stood at +15.4% vs. +16.9% expected and +19.9% last.    more to come ...

China Fixed Asset Investment (YTD) (YoY) registered at 15.4%, below expectations (16.9%) in May

China Industrial Production (YoY) came in at 8.8% below forecasts (9%) in May

China Retail Sales (YoY) below forecasts (13.6%) in May: Actual (12.4%)

Europe is the preferred global equity market for the Credit Suisse analyst team, which also continues to pick up momentum. The Euro Stoxx 50 is approa

Europe is the preferred global equity market for the Credit Suisse analyst team, which also continues to pick up momentum. The Euro Stoxx 50 is approaching its next objective at 4176, where a temporary pause is certainly possible. Above in due course can expose the psychologically important 4300 mark, before 4500/73, the all-time highs. See: S&P 500 Index resumes its bull trend targeting the 4350 mark – Credit Suisse Uptrend starts to gain momentum “The Euro Stoxx 50 uptrend is gaining momentum and the market is approaching our next objective at 4176, the November 2007 low. Whilst a pause from here should be allowed for, above in due course can then expose the next psychologically important 4300 mark, before 4500/73, the all-time highs.” “Immediate support rises to 4070, with support from the 63-day average, currently at 3991 expected to provide a solid floor. Below would most likely lead to a test of the recent May range low at 3858, which is not our base case.” “Europe continues to show signs of improvement relative to MSCI World but although we see scope for a deeper correction higher within the long-term multi-year relative downtrend over the next 3-6 months, there is a risk in the near term we may yet see further sideways ranging.”  

The NZD/USD pair maintained its bid tone through the early European session and was last seen hovering near the top end of its daily trading range, ju

A subdued USD demand prompted some short-covering move around NZD/USD on Wednesday.Expectations for a less dovish Fed might act as a tailwind for the buck and cap gains for the pair.Investors now look forward to the much-awaited FOMC decision for a fresh directional impetus.The NZD/USD pair maintained its bid tone through the early European session and was last seen hovering near the top end of its daily trading range, just below mid-0.7100s. Having found some support near the 0.7100 mark, the NZD/USD pair regained positive traction on Wednesday and has now reversed the previous day's negative move to two-month lows. The uptick lacked any obvious fundamental catalyst and could be solely attributed to some short-covering move amid a subdued US dollar demand. A generally softer tone surrounding the US Treasury bond yields failed to assist the greenback to capitalize on the previous day's positive move to one-month tops. That said, expectations of a slightly less dovish Fed might help put a tentative floor under the greenback and cap any further gains for the NZD/USD pair. Investors might have started pricing in the prospects for an earlier stimulus withdrawal amid worries about rising inflationary pressure. The concerns were further fueled by Tuesday's hotter-than-expected US Producer Price Index. Hence, the key focus will remain on the highly-anticipated FOMC decision, due later during the US session. Investors will be closely watching for clues about a possible change in the policy outlook and if members have started the discussion to taper the current $120 billion in monthly bond purchases. This will play a key role in driving the USD in the near-term and provide a fresh directional impetus to the NZD/USD pair. Heading into the key event risk, investors seemed reluctant to take excessive risk. This was evident from a cautious mood around the equity markets, which should further collaborate to cap gains for the perceived riskier kiwi. Hence, it will be prudent to wait for some strong follow-through buying before placing fresh bullish bets. Technical levels to watch  

The Egyptian pound has appreciated significantly since the devaluation in 2016 and there are signs that the strength of the currency is weighing on th

The Egyptian pound has appreciated significantly since the devaluation in 2016 and there are signs that the strength of the currency is weighing on the country’s external competitiveness. Economists at Capital Economics forecast a gradual depreciation from around 15.6/$ now to 17/$ by the end of next year. But there is a risk that policymakers have not learned from their past mistakes and support an overvalued exchange rate for too long, leading to a sharper adjustment further down the line. Pound to weaken over the coming years “Our base case is that policymakers will allow the currency to weaken given the concerns about overvaluation and pressure from the IMF. The central bank is also likely to cut interest rates, which would support the recovery but reduce the pound’s attractiveness.” “Our forecast is for the pound to weaken by 7% from its current level to 17/$ by the end of next year and fall further to 18/$ by the end of 2023, which is a larger fall than most analysts currently expect.” “For one thing, Egypt’s heavy reliance on portfolio and other investment inflows to fund the current account deficit leaves the currency vulnerable to a tightening of external financing conditions. The currency could come under pressure in the event of a major deterioration in global risk appetite.” “Policymakers at the CBE may not have learned from their past mistakes and will hold onto the pound for too long. And the longer that policymakers keep a tight grip on the currency, the more likely it is that Egypt’s external competitiveness will deteriorate, weighing on exports and sucking in imports. All else equal, this would cause the current account deficit to widen further and, eventually, a much sharper adjustment in the currency would be necessary.”  

USD/CHF is recovering from the 0.8931/11 support zone. The pair is set to face initial resistance at 0.9030 ahead of the 0.9054/69 neighborhood, Axel

USD/CHF is recovering from the 0.8931/11 support zone. The pair is set to face initial resistance at 0.9030 ahead of the 0.9054/69 neighborhood, Axel Rudolph, Senior FICC Technical Analyst at Commerzbank, reports. USD/CHF has come close to the downside target at 0.8911 “USD/CHF remains above support at 0.8931/11 which consists of the late December, mid-January, May and current June lows as well as the 78.6% Fibonacci retracement of the 2021 advance.” “Initial resistance at the 0.9030 late May high is still in focus. While the next higher current June high and 200-day moving average at 0.9054/69 cap, downside pressure should retain the upper hand. Further up sits the May 12 high at 0.9094 and meanders the 55-day moving average at 0.9091.”  “The 0.8911 level is regarded as the last defence for the 0.8872 mid-February low and the 0.8759 January low.”  

The S&P 500 posted a weekly close above its prior range top at 4238 on Friday. With short-term momentum picking up again, analysts at Credit Suisse lo

The S&P 500 posted a weekly close above its prior range top at 4238 on Friday. With short-term momentum picking up again, analysts at Credit Suisse look for a renewed trending phase up to 4350, where the index is expected to see another temporary pause. OnBalanceVolume has picked up impressively, giving further confidence for a new bull leg “Near-term momentum has already turned higher a while ago, whilst breadth and especially volume measures are improving sharply and we therefore maintain our view of looking for a resumption of the core bull trend.”  “We look for a move to trend resistance from February at 4317, then our 4350 next core objective. With the upper end of what we see as the ‘typical’ extreme also seen here at 4353 (15% above the 200-day average) we would look for a fresh phase of consolidation here. Big picture though, above in due course can see resistance next at 4436.” “Support moves to 4220 initially, with 4170/68 now ideally holding. Below would mark a minor top but with fresh support then expected at the 63-day average at 4130.” “The prior poor OnBalanceVolume picture was a significant factor in our successful call in late April to look for a consolidation phase from our 4200 Q2 objective. This though is now improving and in an impressive way and we see no reason not to look for a move to new highs to reinforce the core price bull trend.”  

Gold price (XAU/USD) fell for the third day in a row on Tuesday and tested the $1850 psychological support before recovering slightly to near the $186

Gold price (XAU/USD) fell for the third day in a row on Tuesday and tested the $1850 psychological support before recovering slightly to near the $1860 region. As FXStreet’s Dhwani Mehta notes, the yellow metal has charted a bear pennant ahead of the FOMC event. It’s a bearish continuation pattern and therefore, risks remain tilted to the downside. See – Gold Price Analysis: XAU/USD to end the year at $1800, potential for a nosedive to $1500 by end-2022 – OCBC Bulls attempting last dance ahead of Jerome Powell? “Heading into the FOMC showdown, gold price is attempting a minor pullback, as the US dollar has stalled its advance, turning on the sidelines. Amid pre-Fed caution trading, gold is likely to keep its downside consolidative mode intact, although a brief rebound cannot be ruled amid repositioning.” “Gold’s next directional move remains in the hands of Fed Chair Jerome Powell and his outlook on the economy, which will influence the American central bank’s next policy action. Patchy US labor market recovery could likely challenge Fed’s tapering expectations.”  “A sustained break below the rising trendline support at $1854 will validate the downside breakout, opening floors the 200-Daily Moving Average (DMA) at $1840. Next on the sellers’ radars will be the May 14 low of $1820.” “Acceptance above the falling trendline resistance at $1866 will invalidate the bearish formation.” “If the FOMC disappoints the hawks, gold price could rebound towards the previous daily support now resistance at $1879. Ahead of that barrier, the $1870 static resistance and bearish 21-Simple Moving Average (SMA) on the four-hour chart could challenge the bullish commitments.”  

The GBP/USD pair refreshed daily tops in reaction to mostly upbeat UK macro data, with bulls now awaiting a sustained move beyond the 1.4100 mark. The

GBP/USD gained positive traction on Wednesday and moved further away from one-month lows.A subdued USD demand and hotter-than-expected UK CPI figures provided a modest lift to the pair.Brexit/COVID-19 woes kept a lid on any further gains ahead of the highly-anticipated FOMC decision.The GBP/USD pair refreshed daily tops in reaction to mostly upbeat UK macro data, with bulls now awaiting a sustained move beyond the 1.4100 mark. The pair built on the previous day's goodish rebound from the 1.4035-30 region, or one-month lows and gained some positive traction through the first half of the trading action on Wednesday. A subdued US dollar demand was seen as a key factor that extended some support to the GBP/USD pair, which got an additional boost following the release of hotter-than-expected UK inflation figures. According to the data published by the UK Office for National Statistics (ONS), the headline UK CPI held steady at 0.6% MoM in May and accelerated 2.1% on a yearly basis from 1.5% YoY registered in the previous month. Excluding volatile food and energy items, the Core CPI rose 2.0% YoY during the reported month versus consensus estimates for a reading of 1.5% and 1.3% recorded in April. Barring the immediate reaction, the GBP/USD pair, so far, lacked any strong follow-through buying. Concerns about the EU-UK stand-off on the Northern Ireland protocol and the UK government's decision to delay the final stage of easing lockdown measures acted as a headwind for the British pound. Investors also seemed reluctant to place any aggressive bets ahead of the key FOMC decision. The latest monetary policy update by the Fed will be closely scrutinized for clues about a possible change in the policy outlook and if members have started the discussion to taper the current $120 billion in monthly bond purchases. This will play a key role in influencing the greenback in the near-term and provide a fresh directional impetus to the GBP/USD pair. Technical levels to watch  

Palladium (XPD/USD) remains sidelined, around $2,762, following the early Asian session drop from $2,772.25 on Wednesday. In doing so, the precious me

Palladium fades bounce off weekly bottom, remains subdued of late.Risk appetite dwindles amid China headlines, ahead of the FOMC.Fed expected to keep monetary policy unchanged, dot-plot, Powell’s speech eyed.Palladium (XPD/USD) remains sidelined, around $2,762, following the early Asian session drop from $2,772.25 on Wednesday. In doing so, the precious metal reverses the previous day’s recovery moves from a weekly low while printing 0.13% intraday loss by the press time of the pre-European session. The commodity prices recently eased on the alleged order from China to limit overseas commodity exposure. Earlier in the day, the market’s cautious sentiment ahead of the US Federal Open Market Committee (FOMC) meeting joined fears of escalating Sino-American tussles weighed on the Palladium prices. However, fears of Fed’s surprises and a lack of major catalysts elsewhere keep the quote’s downside limited. China’s Industrial Production and Retail Sales for May can offer immediate direction to the bright metal. Industrial Production is expected to ease from 9.8% to 9.0% YoY whereas Retail Sales growth could drop to 13.6% versus 17.7% previous readouts. Although downbeat forecasts for China may keep sellers hopeful, Palladium traders should pay attention to today’s Fed dot-plot and Chairman Jerome Powell’s speech for clearer direction. While the Fed isn’t expected to alter the current monetary policy, hints of tapering and/or more FOMC members’ support for a rate hike in 2023 could strengthen the US dollar and weigh on the Palladium prices. Read: Fed Interest Rate Decision Preview: Chair Powell will determine market response Technical analysis Palladium prices hold lower ground following a downside break of an ascending support line from March 29. However, a two-month-old horizontal area surrounding $2,727-26 becomes the key for short-term traders. Meanwhile, corrective pullback beyond the previous support, around $2,803 needs to cross the five-week-long resistance line near $2,810 to confirm recovery moves.  

United Kingdom Core Consumer Price Index (YoY) registered at 2% above expectations (1.5%) in May

In opinion of FX Strategists at UOB Group, USD/JPY faces further gains once 110.35 is cleared. Key Quotes 24-hour view: “We highlighted yesterday that

In opinion of FX Strategists at UOB Group, USD/JPY faces further gains once 110.35 is cleared. Key Quotes 24-hour view: “We highlighted yesterday that USD is likely to ‘advance further even though overbought conditions suggest that it is unlikely to challenge the major resistance at 110.35’. Our expectation did not quite materialize as USD traded in a quiet manner and within a narrow range of 20 pips (109.96/110.16). Despite the quiet price actions, we still see chance for USD to edge higher. However, any advance is still unlikely to challenge the major resistance at 110.35. Support is at 109.95 followed by 109.80.” Next 1-3 weeks: “Our update from yesterday (15 Jun, spot at 110.05) still stands. As highlighted, risk is beginning to shift to the upside but USD has to close above the major resistance at 110.35 before a sustained advance can be expected. The next resistance is at 110.60 followed by 110.95. On the downside, a breach of 109.60 (‘strong support’ level was at 109.40 yesterday) would indicate that the upside risk has dissipated.”

United Kingdom PPI Core Output (YoY) n.s.a came in at 2.7%, below expectations (2.9%) in May

United Kingdom PPI Core Output (MoM) n.s.a above expectations (0.2%) in May: Actual (0.4%)

UK CPI rises by 2.1% YoY in May vs. +1.8% expected.Monthly UK CPI arrives at +0.6% in May vs. +0.3% expected.GBP/USD rises by a few pips to test 1.4100 on upbeat UK CPIs.The UK Consumer Prices Index (CPI) 12-month rate came in at +2.1% in May when compared to +1.5% booked in April while beating expectations of a +1.8% print, the UK Office for National Statistics (ONS) reported on Wednesday.  Meanwhile, the core inflation gauge (excluding volatile food and energy items) rose by 2.0% YoY last month versus +1.5% registered in April, matching the consensus forecast of +1.5%. The monthly figures showed that the UK consumer prices arrived at +0.6% in May vs. +0.3% expectations and +0.6% prior. Main points (via ONS): “Rising prices for clothing, motor fuel, recreational goods (particularly games and recording media), and meals and drinks consumed out resulted in the largest upward contributions to the change in the CPIH 12-month inflation rate between April and May 2021.” “These were partially offset by a large downward contribution from food and non-alcoholic beverages, where prices fell this year but rose a year ago, particularly for bread and cereals.” FX implications: In an initial reaction to the upbeat UK CPI numbers, the GBP/USD pair popped a few pips to test the 1.4100 level. The spot was last seen trading at 1.4095, higher by  0.13% on the day.

United Kingdom Retail Price Index (MoM) in line with forecasts (0.3%) in May

United Kingdom Consumer Price Index (MoM) came in at 0.6%, above forecasts (0.3%) in May

United Kingdom Retail Price Index (YoY) meets expectations (3.3%) in May

United Kingdom Producer Price Index - Output (YoY) n.s.a registered at 4.6% above expectations (4.5%) in May

United Kingdom Consumer Price Index (YoY) above expectations (1.8%) in May: Actual (2.1%)

United Kingdom Producer Price Index - Output (MoM) n.s.a registered at 0.5% above expectations (0.4%) in May

United Kingdom Producer Price Index - Input (YoY) n.s.a registered at 10.7% above expectations (10.6%) in May

United Kingdom Producer Price Index - Input (MoM) n.s.a in line with expectations (1.1%) in May

The Federal Reserve is set to release updated forecasts, which are set to trigger the initial market reaction, potentially one that is dollar positive

The Federal Reserve is set to release updated forecasts, which are set to trigger the initial market reaction, potentially one that is dollar positive. However, in the view of FXStreet’s Analyst Yohay Elam, Fed Chair Powell could dampen such gains with caution, especially if rejects any early withdrawal of stimulus.  Fed Chair Powell will likely shoot down any talk of tapering the bank's bond buys “Any increase in the camp supporting an early rate hike could trigger a knee-jerk reaction In favor of the dollar. Another potential boost for the currency could come if one of the members dissents against the decision. However, a dissent seems off the cards, especially as Kaplan is not a voting member.” “Apart from playing down inflation and sticking to the ‘transitory’ script, reporters are set to ask Powell about tapering bond-buys. If he flat out rejects that with something along the lines of ‘it is premature to have a discussion about tapering,’ the greenback could suffer. Moreover, if Powell dodges questions about the proper time for such a debate, it could suffer another blow. How far could the greenback fall? It will probably just undo the gains recorded in the initial reaction.” “More dovish outcomes could include a downgrade of employment expectations, a move that could weigh on the greenback from the outset, especially if accompanied with little movement in interest rate forecasts. Another, less likely, dollar-adverse scenario is one in which Powell vows more action if the government does not provide additional stimulus.” “The most hawkish outcome would be if Powell says that the Fed is set to discuss tapering soon or the extremely bullish scenario in which he says the bank has had its first such debate now. In this case, which is among the least likely, the greenback could extend its gains.”  

According to preliminary readings for natural gas futures markets from CME Group, open interest went up by around 15.4K contracts on Tuesday, extendin

According to preliminary readings for natural gas futures markets from CME Group, open interest went up by around 15.4K contracts on Tuesday, extending the uptrend for yet another session. In the same direction, volume reversed the previous pullback and increased by around 132.6K contracts. Natural Gas recedes from. 2021 highs After reaching new YTD peaks near $3.37 per MMBtu on Tuesday, prices of the natural gas closed the session with decent losses in tandem with rising open interest and volume. That said, there is scope for extra losses in the very near term to, initially, the $3.15 area.

Having dropped to the fresh low since April 23, copper prices remain subdued around $4.33, down 0.08% intraday, ahead of Wednesday’s European session.

Copper bears take a breather around seven-week low, sidelined of late.Clear break of $4.45 support convergence, bearish MACD favor sellers.$4.30 can probe bears aiming for 100-day SMA, mid-March top. Having dropped to the fresh low since April 23, copper prices remain subdued around $4.33, down 0.08% intraday, ahead of Wednesday’s European session. The red metal marked the heaviest slump since October 2020 the previous day after breaking the key $4.45 support convergence, now resistance, comprising 50-day SMA and an upward sloping trend line from February 02. As MACD signals back the support break, copper becomes vulnerable to extend the south-run towards the $4.20-18 area including 100-day SMA and March 15 top. It’s worth noting that the $4.30 threshold and April 20 top near $4.29 may offer immediate support to the commodity. On the contrary, corrective pullback needs to cross the $4.45 key hurdle, previous support, to recall the buyers. Also acting as the upside barrier is a downward sloping trend line from May 10, around $4.56. Overall, copper bears keep the reins as bearish MACD signals back the key support break. Price of copper: Daily chart Trend: Bearish

AUD/USD has likely shifted the view to the downside and could drop to the 0.7645 level in the next week, suggested FX Strategists at UOB Group. Key Qu

AUD/USD has likely shifted the view to the downside and could drop to the 0.7645 level in the next week, suggested FX Strategists at UOB Group. Key Quotes 24-hour view: “We expected AUD to ‘trade within a 0.7690/0.7730 range’ yesterday. However, it dropped to 0.7675 before closing on a soft note at 0.7687. Downward momentum has improved, albeit not by much. There is scope for AUD to test the 0.7665 support but a sustained decline below this level is unlikely (next support is at 0.7645). Resistance is at 0.7705 followed by 0.7720.” Next 1-3 weeks: “On Monday (14 Jun, spot at 0.7705), we highlighted that while downward momentum has improved, AUD ‘has to close below 0.7680 before a move to 0.7645 can be expected’. AUD dropped to 0.7675 yesterday before closing at 0.7687 (-0.32%). While we prefer a weaker daily closing, the price actions suggest that the risk for AUD has shifted to the downside towards 0.7645. The downside risk remains intact as long as AUD does not move above 0.7750 (‘strong resistance’ level previously at 0.7765).”

Here is what you need to know on Wednesday, June 16: Markets are treading water in a typical pre-Federal Reserve session, with answers awaited on the

Here is what you need to know on Wednesday, June 16: Markets are treading water in a typical pre-Federal Reserve session, with answers awaited on the timing of tapering bond-buying and raising rates. Chinese figures, the Biden-Putin summit, and the occasional leap in a small cryptocurrency play second fiddle to the long wait for Fed Chair Powell.  The Fed is set to leave its interest rate unchanged and publish updated forecasts for growth, employment, inflation, and interest rates. Investors are eyeing any hints that the Fed is set to taper down the pace of its monthly bond-buys, currently at $120 billion/month.  Jerome Powell, Chair of the Federal Reserve, characterized rising prices as "transitory," yet the recent increases could trigger a change of heart. Comments about robust growth and bumpy labor figures will also be eyed. The bank's interest rate "dot-plot" could show that additional members support raising rates sooner rather than later. Powell will hold a press conference.  Federal Reserve Preview: First up, then down? Playbook for trading the Fed Fed Interest Rate Decision Preview: Chair Powell will determine market responseStability: Ahead of the event, markets have been stable, with S&P 500 futures mostly unchanged. EUR/USD is hovering above 1.21 after European Central Bank officials insist on refraining from slowing the pace of its bond buys.Data: US Retail Sales missed estimates with a drop of 1.3% in May, but on top of an upward revision for April. Producer prices beat estimates on the headline but met the consensus when it come to core data.  US Data: Trio of figures are insufficient to trigger Fed tapering, dollar to sufferGBP/USD is changing hands under 1.41 after plunging on Tuesday. The UK delayed its reopening to July 19 and Brexit issues have yet to be resolved. On the other hand, Britain's Unemployment Rate surprisingly dropped to 4.7%. Inflation figures for May are due out on Wednesday, with an increase from 1.5% to 1.8% is on the cards.Summit: President Joe Biden concludes his European tour in Geneva, meeting Russian President Vladimir Putin. Tensions between both countries are set to surface and may cause concerns. Markets are more interested in negotiations between Biden's Democrats and Republicans back in Washington. The latest reports suggest progress on bipartisan talks on an infrastructure bill. Copper prices have retreated after new reports of Chinese curbs. China publishes industrial output and retail sales figures later in the day. However, WTI Crude Oil has extended its gains, changing hands above $72.  Gold has retreated toward $1,850. Cryptocurrencies: Bitcoin has been battling the $40,000 level while Ethereum is on the back foot, changing hands at around $2,500. Shiba Inu stands out with a leap of over 20% early on Wednesday.  Like this article? Help us with some feedback by answering this survey:Rate this content (function() { var qs,js,q,s,d=document, gi=d.getElementById, ce=d.createElement, gt=d.getElementsByTagName, id="typef_orm_share", b="https://embed.typeform.com/"; if(!gi.call(d,id)){ js=ce.call(d,"script"); js.id=id; js.src=b+"embed.js"; q=gt.call(d,"script")[0]; q.parentNode.insertBefore(js,q) } })()

CME Group’s flash data for crude oil futures markets noted open interest rose for the first time after six consecutive daily pullbacks on Tuesday, now

CME Group’s flash data for crude oil futures markets noted open interest rose for the first time after six consecutive daily pullbacks on Tuesday, now by around 31.8K contracts. Volume followed suit and went up by around 123.9K contracts. WTI now targets the 2018 highs above $76.00 The rally in WTI remains everything but abated. Tuesday’s push higher to new YTD highs beyond the $72.00 mark per barrel was supported by rising open interest and volume, leaving the prospects for further upside well on the cards. Against this, the next target of note now emerges at the 2018 high near $77.00.

The downward momentum in GBP/USD has improved in past sessions, noted FX Strategists at UOB Group. Key Quotes 24-hoour view: “Our expectation for GBP

The downward momentum in GBP/USD has improved in past sessions, noted FX Strategists at UOB Group. Key Quotes 24-hoour view: “Our expectation for GBP to ‘consolidate and trade between 1.4080 and 1.4140’ yesterday was incorrect as it plummeted to 1.4035 before snapping back up. While the outlook is mixed after the rapid swings, the underlying tone appears to be weak. From here, barring a break of 1.4125 (minor resistance is at 1.4100), there is scope for GBP to retest the 1.4035 support. The next support at 1.4000 is unlikely to come into the picture.” Next 1-3 weeks: “Two days ago (14 Jun, spot at 1.4115), we highlighted that shorter-term momentum has improved but GBP ‘has to close below 1.4080 before a move to 1.4050 can be expected’. We did not anticipate the sudden sharp drop in GBP yesterday and the subsequent strong rebound from a low of 1.4035. While GBP closed at 1.4085, downward momentum has improved further and the risk has shifted to the downside. However, the next major support at 1.4005 may not come into the picture so soon. On the upside, a break of 1.4150 would indicate that GBP is not ready to move to 1.4005.”

China will release national reserves of copper, aluminum and zinc in the near term, Reuters reports, citing the country’s National Reserve Administrat

China will release national reserves of copper, aluminum and zinc in the near term, Reuters reports, citing the country’s National Reserve Administration. Separately, media reports also cited that China is said to expand oversight of domestic firms' commodities trading in overseas markets,

Traders scaled back their open interest positions in gold futures markets for the third consecutive session on Tuesday, this time by just 846 contract

Traders scaled back their open interest positions in gold futures markets for the third consecutive session on Tuesday, this time by just 846 contracts considering advanced figures from CME Group. In the same line, volume shrank by around 92.5K contracts, reversing the previous build. Gold remains supported near $1,850Gold prices extended the leg lower on Tuesday. The downtick, however, was accompanied by declining open interest and volume, indicative that further retracements are not favoured and opening the door at the same time to a potential rebound in the very near term.

FX Strategists at UOB Group noted EUR/USD could still drop to the mid-1.2000s in the next weeks. Key Quotes 24-hour view: “EUR traded between 1.2099 a

FX Strategists at UOB Group noted EUR/USD could still drop to the mid-1.2000s in the next weeks. Key Quotes 24-hour view: “EUR traded between 1.2099 and 1.2148 yesterday, slightly wider than our expected range of 1.2100/1.2145 before closing little changed at 1.2124 (+0.05%). Momentum indicators are still mostly neutral and EUR could continue to trade sideways. Expected range for today, 1.2095/1.2150.” Next 1-3 weeks: “Two days ago (14 Jun, spot at 1.2110), we highlighted that improvement in downward momentum could lead to EUR to ‘trade with a downward bias towards 1.2050’. Since then, EUR has been unable to make any headway on the downside as it traded in a quiet manner the past couple of days. While momentum is beginning to wane, there is still chance for EUR to decline to 1.2050. Only a break of 1.2180 (no change in ‘strong resistance’ level) would indicate that the downside risk has dissipated.”

USD/INR stretches the previous day’s profit-booking moves from the monthly top to 73.30, down 0.07% intraday, amid the initial Indian session trading

USD/INR extends previous day’s pullback from monthly top, refreshes intraday low.Further losses envisioned as overbought RSI backs U-turn from bearish pattern’s resistance line.200-SMA offers extra support before the key 73.10 level.USD/INR stretches the previous day’s profit-booking moves from the monthly top to 73.30, down 0.07% intraday, amid the initial Indian session trading on Wednesday. In doing so, the Indian rupee (INR) pair steps back from an upper line of a short-term rising wedge bearish chart pattern amid overbought RSI conditions. Hence, the quote’s further consolidation of weekly gains can’t be ruled out. However, USD/INR bears won’t be until the quote stays beyond 73.10, comprising the support line of the stated bearish formation. It’s worth noting that the 200-SMA level of 73.14 may offer an intermediate halt during the anticipated fall. In a case where the USD/INR bears keep reins below 73.10, the 73.00 round figure may act as a validation point for the pair’s southward trajectory towards May’s low near 72.30. Meanwhile, recovery moves will be capped by the wedge’s resistance line near 73.40 before directing USD/INR bulls to the mid-May tops near 73.70. USD/INR four-hour chart Trend: Further weakness expected  

EUR/USD retreats above 1.2100, marking the first daily loss in three, heading into Wednesday’s European session. That said, the currency pair struggle

EUR/USD fades bounce off intraday low, snaps two-day uptrend.Sluggish markets prevail ahead of the key FOMC, West versus China, covid adds filters to the moves.Treasury yields, DXY print mild gains following mixed US data.ECB’s De Guindos, US housing data will offer intermediate clues, Fed’s dot-plot, Powell’s speech will be eyed amid status-quo expectations.EUR/USD retreats above 1.2100, marking the first daily loss in three, heading into Wednesday’s European session. That said, the currency pair struggles to keep the bounce off the intraday low at around 1.2120 by the press time. Anxious markets ahead of the US Federal Open Market Committee (FOMC) meeting could be termed as the key catalyst for the pair’s latest inaction. Even so, firming inflation expectations put a bid under the US dollar and keep sellers hopeful. Tuesday’s US Retail Sales and Producer Price Index (PPI) for May could be traced as the latest catalyst backing the reflation fears. While Retail Sales dropped -1.3% versus -0.8% expected the PPI rose more than 6.3% forecast to 6.6% YoY. That said, the key signals for US inflation, namely the Consumer Expectations survey by the New York Fed and the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) both stay firmer of late. Additionally, China’s largest military exercise near Taiwan and dislike for the North Atlantic Treaty Organization’s (NATO) criticism over Human Rights issues joins push for detailed investigations for covid origins to exert an extra burden on the EUR/USD prices. It’s worth mentioning that no change in Germany’s Harmonized Index of Consumer Price (HICP) for May, at 2.4% YoY and 0.3% MoM, portrays the regional currency’s weakness and keeps the pair sellers hopeful. Amid these plays, the US 10-year Treasury yields and the Dollar Index (DXY) remain mildly positive but the stock futures lack momentum by the press time. Moving on, comments from the ECB Vice President Luis De Guindos may and US Housing Starts, as well as Building Permits, for May could offer intermediate moves to the EUR/USD prices, mostly downside, ahead of the Fed’s announcements. Talking about the Fed, the US central bank isn’t expected to alter current monetary policy and hence the quarterly economic outlook and Chairman Jerome Powell’s speech will be the key events. While an increase in numbers of the FOMC members backing the rate hike in 2023 will be a bearish hint, Powell may try to defend the easy money policies and can battle the pair sellers. However, any mention of tapering should trigger a risk-off mood and will be considered negative for the EUR/USD. Read: Fed Interest Rate Decision Preview: Chair Powell will determine market response Technical analysis EUR/USD fades bounce off the 1.2100 threshold below the previous support line from May 05, which in turn joins sluggish MACD signals to repeat Tuesday’s pullback from the support-turned-resistance line near 1.2145. Meanwhile, the May 13 bottom of 1.2051 and the 1.2000 psychological magnet, quickly followed by the previous month’s low close to 1.1985, will offer a bumpy ride to the pair bears after 1.2095 immediate support.  

The cost of living in the UK as represented by the Consumer Price Index (CPI) for May month is due early on Wednesday at 06:00 GMT. Given the recent e

The UK CPIs Overview The cost of living in the UK as represented by the Consumer Price Index (CPI) for May month is due early on Wednesday at 06:00 GMT. Given the recent escalation in the price data during the last three months, coupled with the Bank of England’s (BOE) emphasis on CPI to dial back the bond purchase and reflation fears in the US, today’s data will be watched closely by the GBP/USD traders. It should, however, be noted that the presence of the US Federal Open Market Committee (FOMC) meeting dims the importance of the event a bit. The headline CPI inflation is expected to rise from 1.4% previous readouts to 1.8% on an annual basis while the Core CPI, which excludes volatile food and energy items, is likely to improve to 1.5% from 1.3% prior. Talking about the monthly figures, the CPI could cut in half from the 0.6% prior to 0.3% during May. In this regard, analysts at TD Securities said, We look for UK inflation to edge a bit higher in May, with core CPI pushing up to 1.5% y/y (market forecast 1.5%), and headline CPI up to 1.7% y/y (expected 1.8%). The big picture is what we still don't expect to see the same kind of pick-up in core CPI that we've seen in the US as the UK Covid restrictions continue to ease. Price patterns have been quite different in Europe compared to what we saw in the US, and without the same substantial price falls in the Covid-hit sectors, we don't see any good reason for prices to surge now either. Deviation impact on GBP/USD Readers can find FXStreet's proprietary deviation impact map of the event below. As observed, the initial market reaction is likely to remain confined between 15 and 80 pips in deviations up to 2 to -3. The same suggests the importance of the key inflation data for GBP/USD pair traders. How could it affect GBP/USD? GBP/USD remains tight-lipped around the monthly low below 1.4100, seesaws near 1.4080 by the press time of pre-London open. Behind the moves could be the mixed sentiment concerning the UK’s unlock and fears of further delay in covid vaccinations to the British population below 18 years. Also contributing to the lackluster moves are Brexit woes and the market’s cautious mood ahead of the US Federal Reserve (Fed) monetary policy meeting. As the BOE policymakers keep citing increasing odds of the tapering, recently done by Governor Andrew Bailey, firmer CPI readings could help the GBP/USD prices to extend the corrective pullback from a one-month low. However, looming concerns over the UK’s unlock and Brexit joins the pre-Fed trading lull to restrict the cable pair’s reaction to the key inflation measure. Technically, GBP/USD remains pressured towards a two-month-old support line around 1.4075 but the further downside will be questioned by the 50-day EMA level of 1.4042 and the 1.4000 threshold. Meanwhile, recovery moves need to cross the monthly resistance line near 1.4160 to convince the pair buyers. Key notes GBP/USD retreats towards monthly bottom below 1.4100, focus UK CPI, Jerome Powell GBP/USD Forecast: Pound trading heavily on Brexit jitters About the UK CPIs The Consumer Price Index released by the Office for National Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchasing power of GBP is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as positive (or bullish) for the GBP, while a low reading is seen as negative (or Bearish).

NZD/USD remains well bid near the intraday top of 0.7140, up 0.23% on a day, during early Wednesday. The kiwi pair dropped to the fresh low since Apri

NZD/USD stays on the front foot around intraday top.Momentum rebound favors bulls to cross immediate resistance line inside falling wedge bullish pattern.Key SMA confluence adds filters to the corrective pullback.NZD/USD remains well bid near the intraday top of 0.7140, up 0.23% on a day, during early Wednesday. The kiwi pair dropped to the fresh low since April 14 the previous day before bouncing off 0.7105. The corrective pullback battles a one-week-old resistance line near the lower end of the three-week-long falling wedge bullish formation. As the upward sloping Momentum line backs recent recovery, the quote is likely to cross the immediate hurdle around 0.7140, which in turn could escalate the run-up towards 0.7165. However, any further upside will be tested by the stated wedge’s resistance line close to 0.7200, quickly followed by a convergence of 100 and 200-SMAs surrounding 0.7210-15. On the flip side, descending support line from May 21, forming part of the falling wedge, could test the pullback moves close to the 0.7100 threshold. In a case where the NZD/USD bears keep controls past 0.7100, the early April highs near 0.7070 should return to the chart. NZD/USD four-hour chart Trend: Further recovery expected  

In order to rein in the country’s rampant housing market, the Reserve Bank of New Zealand (RBNZ) has added a debt-to-income instrument to its toolkit,

In order to rein in the country’s rampant housing market, the Reserve Bank of New Zealand (RBNZ) has added a debt-to-income instrument to its toolkit, the central bank Governor Adrian Orr said in a statement Wednesday in Wellington.  Key quotes “We consider that a DTI limit would be a complementary tool to mortgage Loan-to-Value Ratio restrictions as they address different dimensions of housing-related risk; DTIs reduce the likelihood of mortgage defaults while LVRs largely reduce losses to banks if borrowers default.” “Although we do not have a remit to target house prices directly, our financial policy tools can help to ensure prices do not deviate too far from sustainable levels.” “The minister agreed to add debt serviceability restrictions to the RBNZ’s toolkit on the condition that any implementation is designed to avoid impact, as much as possible, to first-home buyers.” “The bank’s analysis had demonstrated that any such restrictions “would impact investors most powerfully.”

The EUR/GBP cross-currency pair edges lower on Wednesday in the Asian session. The pair makes a consolidated move with negative bias. At the time of w

EUR/GBP remains muted in the Asian session.Bulls remain pressurized near the 0.8620 mark.Neutral MACD warns against aggressive bids.The EUR/GBP cross-currency pair edges lower on Wednesday in the Asian session. The pair makes a consolidated move with negative bias. At the time of writing, EUR/GBP trades at 0.8607, down 0.05% for the day. EUR/GBP 4-hour chart On the 4-hour chart, the EUR/GBP cross has been forming the lower low formations from the highs of 0.8671. The descending trendline from the mentioned level acts as a barrier to the price. A break below the 0.8606 mark could bring more selling opportunities for EUR/GBP bears. The immediate support emerges at the 0.8595 horizontal support level. The Moving Average Convergence Divergence (MACD) indicator trades above the midline, with a bearish crossover. Any downtick in the MACD would amplify the selling pressure towards the 0.8580 horizontal support level.  The next area of support could be located near the June 11 low in the vicinity of the 0.8565 area. Alternatively, if price sustains above the session's high at 0.8611, then it could attempt to test the bearish sloping line at the 0.8620 mark. Next, EUR/GBP bulls would flex their muscle at the 0.8635 and the 0.8650 horizontal support levels. EUR/GBP additional levels
 

With the Australian-Sino relations on tenterhooks, the OZ Trade Minister Dan Tehan said that his government is legally preparing itself before asking

With the Australian-Sino relations on tenterhooks, the OZ Trade Minister Dan Tehan said that his government is legally preparing itself before asking the World Trade Organization (WTO) to resolve its wine-tariff trade dispute with Beijing, per South China Morning Post (SCMP). Key takeaways The WTO action was “under active consideration” and Australia would be “making a decision very shortly.” “You’ve got to make sure that you’ve got the very best legal argument and the very best legal case to do that, so we want to make sure we’ve done everything we can to show the strength of our case.” It’s worth noting that China in March imposed tariffs of up to 218% on Australian wine for five years, formalizing curbs that had been in place for months amid an increasingly fraught relationship with Canberra.

The AUD/USD pair treads water in the midweek’s Asian session. The pair moves in a very close trading range consisting of 10-pips. The sentiment worsen

AUD/USD posts little gains in the Asian session.Steady US dollar exerts pressure on the pair.AUD remains vulnerable to market volatility and falling commodity prices.The AUD/USD pair treads water in the midweek’s Asian session. The pair moves in a very close trading range consisting of 10-pips. The sentiment worsened as for the first time, it closed below 0.7700 since the previous five-six sessions. At the time of writing, AUD/USD trades at 0.7689, up 0.05% for the day. The US dollar remains steady following the mixed US economic data. The Retail Sales fell 1.3% in May, much below the market expectations at a 0.8% drop. The NAHB Housing Market Index eased to 81 in June, below the market consensus at 83. The Producer  Price Index rose 0.8% in May, beating the market expectations at 0.6%. Next, the New York Empire State Manufacturing Index fell to 17.4 in June, much lower than the market forecast at 23. On the other hand, the Australian dollar is weighed down amid escalating trade tensions with China.  In the latest development, Australian Trade Minister Dan Tehan said that his government is fortifying its legal arguments before moving to the WTO for a resolution on its wine-tariff trade dispute with China. The copper prices fell to seven weeks low, as China decided to curb any further rise in commodity prices. China is the biggest consumer of copper and iron ore. Any delink in the prices could negatively affect the antipodean. As for now, investors are gearing up for the Fed Rate Decision and the FOMC Economic Projections. 
Other readings are China’s Industrial Production Data and Retail Sales data. The current USD valuations seem to discount the Fed Rate Decision as it is highly anticipated that the central bank will continue with its current monetary policy stance.  The major focus will be on the future inflation and growth projections that could guide the next action on tapering and roll out of the ultra accommodative monetary policy. AUD/USD additional levels
 

Australia Westpac Leading Index (MoM) declined to -0.06% in May from previous 0.2%

"Will the FOMC confirm talks about tapering are starting? Will they adjust the IOER? Will the median dot move to price in a rate hike in 2023? How hig

"Will the FOMC confirm talks about tapering are starting? Will they adjust the IOER? Will the median dot move to price in a rate hike in 2023? How high will growth forecasts go? There's a chance the FOMC may not provide any meaningful clarity, but we can't see them being too hawkish yet"  "The yen has been dismal this year and hasn't even got any benefit from the most recent fall in US yields. But as USD/JPY poke sits nose above 110 again, we're back in the selling zone"   more to come ...

S&P 500 Futures wobble inside a 4,235-40 range following a U-turn from the all-time high. That said, the risk barometer follows US Treasury yields to

S&P 500 Futures remain indecisive after a pullback from record top.US Treasury yields stay pressured for second consecutive day.Cautious sentiment ahead of FOMC keeps traders at bay as US data backs reflation fears.S&P 500 Futures wobble inside a 4,235-40 range following a U-turn from the all-time high. That said, the risk barometer follows US Treasury yields to portray sluggish markets ahead of the key US Federal Open Market Committee (FOMC) meeting. US 10-year Treasury yield seesaws around 1.49% after snapping a two-day uptrend on Tuesday. US inflation expectations could be cited as the key cause of the market’s anxiety as early signals from the New York Fed and St. Louis Fed stay firmer following the US data, which in turn probes the Fed policymakers’ rejection of reflation fears. A mixed play of May’s US Retail Sales and Producer Price Index (PPI) could be traced as the latest catalyst backing the reflation fears. While Retail Sales dropped -1.3% versus -0.8% expected the PPI rose more than 6.3% forecast to 6.6% YoY. Other than the US data and pre-Fed caution, escalating tension between the Western friends and China joins fears of the Delta variant of the covid to probe the bulls. Furthermore, oil’s rally to over two-year highs and chip shortage are some of the extra burdens on the market sentiment. It’s worth noting that Wall Street benchmarks turned red following the downbeat US Treasury yields and weaker Retail Sales print the previous day. Read: Wall Street Close: FOMC fears, sluggish data keep bears hopeful Moving on, inflation numbers from the UK and Canada will join China’s Retail Sales and Industrial Production to entertain investors. Though, nothing will be more important than the Fed’s quarterly economic outlook, dot-plot and Chairman Jerome Powell’s speech. While bulls will search for the extension of the easy money and no mentions of tapering, sellers seem bracing for a surprise. Read: Federal Reserve Preview: First up, then down? Playbook for trading the Fed

EUR/USD is riding the trendline support towards the 61.8% Fibonacci retracement level of the prior bearish impulse. The crosses are also poised for up

EUR/USD is on the verge of a restest of critical resistance. The confluence of the 61.8% Fibo with prior lows is compelling. EUR/USD is riding the trendline support towards the 61.8% Fibonacci retracement level of the prior bearish impulse.  The crosses are also poised for upside continuations in EUR/JPY for instance were bulls need a clean break of 133.50: EUR/JPY Price Analysis: Bulls seek break and restest of 133.50 EUR/USD daily chart As illustrated, the price is supported by a dynamic trend line support with sights on the 21-day moving average and the prior lows that meet the 61.8% Fibonacci retracement level.  The US dollar will be in focus over the next few sessions due to the Federal Reserve: US Dollar Index Price Analysis: DXY looks set for a bumpy road to 91.00 on FOMC day Traders will be hoping for a catalyst to shake forex out of its lull and spur volatility one way or the other.         

US dollar index (DXY) keeps the previous day’s recovery moves in a choppy range around 90.50-60, recently up 0.03% to an intraday high of 90.56, amid

DXY stays near monthly top, picks up bids of late.Five-week-old resistance line probes bulls inside monthly rising channel.Weekly ascending trend line adds to the bullish bias despite sluggish MACD signals.US dollar index (DXY) keeps the previous day’s recovery moves in a choppy range around 90.50-60, recently up 0.03% to an intraday high of 90.56, amid Wednesday’s Asian session. Although a descending trend line from May 07 joins subdued MACD to test the greenback bulls, short-term rising support line and upward sloping trend channel favor DXY optimists. That said, the stated resistance line around 90.61 offers an intermediate stop during the run-up targeting the channel’s upper line close to 90.75. Also acting as a nearby hurdle is the 61.8% Fibonacci retracement of May’s downside near 90.70. It should, however, be noted that the quote’s successful rise past-90.75 will run for the 91.00 round figure before challenging the previous month’s high of 91.43. Meanwhile, pullback moves will be challenged by 90.48 support confluence including the adjacent support line from June 11 and 50% Fibonacci retracement level. In a case where the quote drops below 90.48, the 90.00 psychological magnet and the aforementioned channel’s support line near 89.90 will be the key to watch. Overall, the pre-Fed trading lull could keep the US dollar index directed to the north. However, Jerome Powell & Company is known for surprises and could disappoint bulls. Hence, DXY traders should remain cautious heading into the key event of the week. Read: Federal Reserve Preview: First up, then down? Playbook for trading the Fed DXY four-hour chart Trend: Bullish  

In recent trade today, the People’s Bank of China (PBOC) set the yuan (CNY) reference rate at 6.4078 vs the prior 6.4070. About the fix China maintain

In recent trade today, the People’s Bank of China (PBOC) set the yuan (CNY) reference rate at 6.4078 vs the prior 6.4070. About the fix China maintains strict control of the yuan’s rate on the mainland. The onshore yuan (CNY) differs from the offshore one (CNH) in trading restrictions, this last one is not as tightly controlled. Each morning, the People’s Bank of China (PBOC) sets a so-called daily midpoint fix, based on the yuan’s previous day closing level and quotations taken from the inter-bank dealer.  

GBP/USD refreshes intraday low to 1.4077 within a choppy range below 1.4100 during Wednesday’s Asian session. The cable pair dropped to the lowest in

GBP/USD remains sidelined around the monthly bottom despite refreshing intraday low.Brexit woes continue as EU citizens face no right to remain in the UK, Ireland expects Britain to ease its stance.UK Ministers to be advised against mass vaccinations for under-18s.Mounting inflation pressure can firm up BOE’s tapering talks, Fed’s economic forecasts, dot plot and Powell eyed as well.GBP/USD refreshes intraday low to 1.4077 within a choppy range below 1.4100 during Wednesday’s Asian session. The cable pair dropped to the lowest in a month the previous day before bouncing off 1.4034. However, chatters surrounding UK’s covid conditions and Brexit woes join the pre-data/event cautious sentiment to weigh on the quote of late. As per The Telegraph, “Experts on the country's Joint Committee on Vaccination and Immunisation (JCVI) are understood to be preparing an interim statement for release as soon as the end of the week following a meeting yesterday.” The news poses extra challenges for the UK’s covid conditions as it battles the Delta variant spread that recently pushed back unlock deadline by four weeks. On the other hand, the UK Mirror quotes Think tank UK In A Changing Europe while saying, “Hundreds of thousands of EU citizens entitled to settle in the UK may miss the post-Brexit deadline to apply and be left in legal limbo.” This suggests a looming Brexit risk and fresh tussles even when the key issues like Northern Ireland (NI) protocol are unsolved. Recently, Reuters came out with the news, quoting Ireland’s Foreign Minister Simon Coveney, while mentioning that Ireland expects that Britain's approach to Brexit talks with the European Union is likely to change and improve following pressure exerted by international partners at the Group of Seven (G7) summit at the weekend. It’s worth noting that the UK’s upbeat employment report couldn’t recall GBP/USD buyers on Wednesday as US figures concerning Retail Sales and Producer Price Index (PPI) kept reflation risk on the table. Also exerting downside pressure on the pair could be the market’s cautious sentiment ahead of the key UK inflation figures and the US Federal Open Market Committee (FOMC) meeting. Read: Federal Reserve Preview: First up, then down? Playbook for trading the Fed That said, US stock futures and the Treasury yields look for fresh clues by the press time. Moving on, the expected increase in the UK Consumer Price Index, from 1.5% to 1.8% YoY, could help the Bank of England (BOE) policymakers to retain their bullish bias, which in turn may trigger the GBP/USD pair’s bounce from the short-term key support line. However, pre-Fed trading lull may restrict the traders’ to the data. Technical analysis GBP/USD remains pressured towards a two-month-old support line around 1.4075 but the further downside will be questioned by the 50-day EMA level of 1.4042 and the 1.4000 threshold. Meanwhile, recovery moves need to cross the monthly resistance line near 1.4160 to convince the pair buyers.  

The AUD/NZD price edges lower on Wednesday morning in the Asian session. The cross-currency pair extends the previous session’s decline and holds onto

AUD/NZD remains muted in the Asian session.The cross is under pressure after touching the high of 1.0816.Momentum oscillator tilts in favor of bears.The AUD/NZD price edges lower on Wednesday morning in the Asian session. The cross-currency pair extends the previous session’s decline and holds onto the losses. At the time of writing, AUD/NZD trades at 1.0788, down 0.06% for the day. AUD/NZD daily chart On the daily chart, the pair has been consolidating near the 1.0800 mark. The descending trendline from the high of 1.0927 acts as a barrier for the bulls. If price breaks the intraday low, then it could instil more selling opportunities in the pair with the first target in place at the 50-day Simple Moving Average (SMA) at 1.0760. The next on the bear's radar would be the 1.0740 horizontal support level. The Relative Strength Index (RSI) trades below 50, which signifies the downside momentum in the pair. In doing so, the price action would be seen approaching the 1.0725 horizontal support level. Alternatively, if price moves higher, then AUD/NZD could retest the high of June 11 in the vicinity of the 1.0820 area. This would also coincide with the bearish sloping line. Above this area, the bulls would attempt to recoup the levels last seen in April. The pair would seek the high of April 19 at 1.0851. Next, the market participants will move forward to capture the 1.0875 horizontal resistance level. AUD/NZD additional levels  

Australia Westpac Leading Index (MoM) dipped from previous 0.2% to -0.1% in May

The following series of charts illustrates the bullish bias from a top-down perspective. EUR/JPY daily chart EUR/JPY 4-hour chart The 4-hour chart sho

EUR/JPY bulls taking up the lead in quiet Asian session.133.50 is critical resistance, that if broken, opens the risk of a fast 15 pips pop to test 4-hour highs. The following series of charts illustrates the bullish bias from a top-down perspective. EUR/JPY daily chart EUR/JPY 4-hour chart   The 4-hour chart shows that the price is forming an awkward reverse head and shoulders with a bullish tendency. The price would be expected to fill in the daily wick and retest the old 4-hour highs and daily resistance.  In doing so, this would leave a W-formation on the 4-hour chart. Should the neckline hold on a retest, then there would be prospects for a break of daily resistance. EUR/JPY 1-hour chart Meanwhile, the cross has been a slow burner overnight but is coiled at potentially on the verge of a bullish breakout from the the 21-EMA to at least meet near to the 4-hour highs in the 133.60s. The 15-min price action is already making headway from bullish structural support.   

One-month risk reversal for the EUR/USD, a gauge of calls to puts, dropped the most since March 04 by the end of Tuesday’s North American trading sess

One-month risk reversal for the EUR/USD, a gauge of calls to puts, dropped the most since March 04 by the end of Tuesday’s North American trading session. It’s worth mentioning that the options market catalyst drops for the third consecutive day with the latest update. Although the pre-Fed mood restricts immediate EUR/USD moves, recently strong data and inflation expectations justify the bearish bias of options market traders. Read: Federal Reserve Preview: First up, then down? Playbook for trading the Fed Risk reversals flash the -0.150 daily level, favoring EUR/USD bear by the press time, according to data provided by Reuters. The negative reading indicates call options are drawing a lesser premium (option price) than put or bearish bets. Technically, bounced off the 1.2100 threshold but fails to keep the recovery moves, which in turn joins sluggish MACD signals to repeat Tuesday’s pullback from the support-turned-resistance line from May 05, near 1.2145. That said, the currency pair trades around 1.2123 by the press time of early Wednesday. Read: EUR/USD Price Analysis: Corrective pullback fades below previous support, 200-SMA

USD/CAD retreats to 1.2180 during Wednesday’s Asian session, following a run-up to weekly top the previous day. In doing so, the Loonie pair steps bac

USD/CAD eases from short-term key resistance amid subdued markets.Strong RSI, sustained trading beyond 200-SMA and monthly support line back buyers.USD/CAD retreats to 1.2180 during Wednesday’s Asian session, following a run-up to weekly top the previous day. In doing so, the Loonie pair steps back from the confirmation point of a bullish chart formation, rounding bottom, amid firmer RSI. Other than the chart pattern and RSI, the pair’s successful break above 200-SMA and an ascending support line from June 01 also keep buyers hopeful. However, a clear upside break of 1.2205 becomes necessary for the pair to aim for the theoretical target near the 1.2400 threshold. During the anticipated run-up, late April lows surrounding 1.2265-70 and the previous month’s high close to 1.2350-55 can offer intermediate halts. Alternatively, the 200-SMA level of 1.2119 and the stated support line near 1.2100 could keep short-term USD/CAD sellers at bay. Though, a sustained trading below 1.2100 may not refrain from challenging the 1.2000 psychological magnet. USD/CAD four-hour chart Trend: Further upside expected  

The AUD/JPY cross-currency pair seesaws in the Asian trading session on Wednesday. The cross confides in a very narrow trading band. At the time of wr

AUD/JPY trades cautiously in the Asian session.AUD remains grounded on upbeat economic data.Yen gains on its safe-haven appeal.The AUD/JPY cross-currency pair seesaws in the Asian trading session on Wednesday. The cross confides in a very narrow trading band. At the time of writing, AUD/JPY trades at 84.61, up 0.01% for the day. The upbeat economic data continued to position the AUD relatively in a better position. As the global economic outlook improves investors rush towards the riskier asset. The Reserve Bank of Australia (RBA) Minutes of the Meeting suggest that the central bank is committed to boosting the economy by keeping the finance costs very low. The policymakers reaffirmed their decision not to alter its monetary policy until a sustainable inflation target is achieved within the 2% to 3% of its target range. On the economic side, the House Price Index rose 5.4% QoQ in March, just a tad below the market expectations at 5.5%. The steepest increase in housing prices since the fourth quarter of 2009. The rising housing prices pose a threat to price stability and inflation fears, which kept the gains limited for AUD. In addition to that, the rising political tension between Australia and China also negatively impacted the performance of the Aussie dollar. On the other hand, the Japanese yen found some ground as market volatility is high ahead of the Fed rate decision, Investors seek safer investing bets in times of uncertainty. Meanwhile,  Japan’s trade deficit narrowed to Ұ 187.1b in May from Ұ856.7b. The exports grew 49.6% as compared to imports which rose at a softer 27.9%. The yen gains little traction as a reaction to the data. AUD/JPY additional levels  

US inflation expectations remain in the recovery mode, stronger for the short and medium-term, global markets brace for the Federal Open Market Commit

US inflation expectations remain in the recovery mode, stronger for the short and medium-term, global markets brace for the Federal Open Market Committee (FOMC) meeting results, up for publishing amid late Wednesday. Be it Consumer Expectations survey by the New York Fed or per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, early signals suggest the price pressure mounts over the Fed. New York Fed Survey of Consumer Expectations for one year jumped to the record high in May, around 4.0%, whereas the poll results of three-year ahead expected inflation rate jumped to the late 2013 levels while flashing 3.6% mark. On the other hand, FRED data portray an extended recovery of the inflation gauge for 10 years to 2.38% at the latest. In doing so, the 10-year breakeven inflation rate refreshes the weekly high after dropping to the lowest in two months on Friday, when posting a 2.32% level. These inflation figures join the latest strong US data to argue Fed Chairman Jerome Powell & Company as they term it “transitory”. As a result, market sentiment remains sluggish ahead of the key event. Read: Federal Reserve Preview: First up, then down? Playbook for trading the Fed

GBP/JPY extends Tuesday’s U-turn from a short-term key support line to 155.00 amid a sluggish Asian session on Wednesday. The cross-currency pair pull

GBP/JPY picks up bids following the bounce off monthly support.Sustained trading above 200-SMA, upbeat Momentum strengthen bullish bias.Bears await a clear break of 153.55 for fresh entry.GBP/JPY extends Tuesday’s U-turn from a short-term key support line to 155.00 amid a sluggish Asian session on Wednesday. The cross-currency pair pulled back from a downward sloping trend line from May 27 before marking the latest recovery moves. Given the pair’s successful trading above 200-SMA and upbeat Momentum, not to forget the ability to stay beyond a multi-day-old support line, GBP/JPY is up for another fight with the 155.35 resistance line. However, a clear break of the same will need to cross May’s top of 156.07 to aim for the year 2018 high surrounding 156.65. Meanwhile, a downside break of the stated support line, around 154.65, may bounce off the 200-SMA level near 154.15. Even if the quote drops below 154.15, the 154.00 threshold and lows marked during May 10-11 close to 153.60-55 could test GBP/JPY bears. GBP/JPY four-hour chart Trend: Bullish  

Japan Merchandise Trade Balance Total below expectations (¥-91.2B) in May: Actual (¥-187.1B)

Japan Adjusted Merchandise Trade Balance below forecasts (¥180B) in May: Actual (¥43.1B)

Japan Machinery Orders (YoY) below forecasts (8%) in April: Actual (6.5%)

Japan Exports (YoY) registered at 49.6%, below expectations (51.3%) in May

Japan Imports (YoY) came in at 27.9%, above forecasts (26.6%) in May

Japan Machinery Orders (MoM) below expectations (2.7%) in April: Actual (0.6%)

As global markets brace for the US Federal Open Market Committee (FOMC) meeting on early Wednesday, Bloomberg came out with the analytical piece sugge

As global markets brace for the US Federal Open Market Committee (FOMC) meeting on early Wednesday, Bloomberg came out with the analytical piece suggesting a build of strong forex reserves by Asia’s emerging economies. “Central bank holdings of foreign currencies in the region’s fast-growing emerging economies hit $5.82 trillion as of May, their highest since August 2014. When China’s cash pile is stripped out, emerging Asian central banks’ reserves stood at an all-time high of $2.6 trillion,” said the piece. Bloomberg also adds, “While the Fed is expected to maintain a dovish outlook when it meets this week, economists say the accelerating US recovery means the bank will need to signal a policy turn sooner than anticipated. Central banks in South Korea and New Zealand already have said their improving economies may eventually justify higher interest rates.” The piece quotes Tuuli McCully, head of Asia-Pacific economics at Scotiabank as saying, “Any hint of a Fed shift on tapering will quickly test defenses including current-account surpluses and foreign-exchange holdings.” While noting the conditions, DBS Bank’s Economist Radhika Rao said, per Bloomberg, “Compared to 2013, regional countries, particularly the most affected, are in a less vulnerable position.” Market implications The analytical piece suggests a less vulnerable condition for the Asian economies should the Fed adheres to tapering, which in turn could help the key currencies to hold grounds versus the US dollar.

EURNZD is consolidating the bullish close from Tuesday's business in quiet pre-Federal Reserve announcement market conditions. With that being said, t

EUR/NZD sits in the bullish territory ahead of the Fed.The bulls need to break hourly highs for a continuation to the upside. EURNZD is consolidating the bullish close from Tuesday's business in quiet pre-Federal Reserve announcement market conditions.  With that being said, there are prospects of a bullish continuation according to the market structure as follows:  Daily chart The daily close was bullish and an upside extension is on the cards so long as the price can hold in the region of May wicks.  Failing that, a Fibonacci retracement to the 50% mark of the daily bullish impulse meets the prior highs as a confluence target to the downside.  Hourly chart Supported by the 10-EMA, the bulls need to get above the latest hourly highs for the prospects of an upside continuation to unfold.   15-min chart It's a slow burn out there ahead of the Fed but the 15-min chart is poised for a bullish break and through resistance from the 10-EMA.

Silver portrays a corrective pullback from a one-week low around $27.70, up 0.12% intraday, amid the initial Asian session trading on Wednesday. In do

Silver consolidates losses from eight-day low, picks up bids of late.Sluggish markets trigger corrective pullback amid a lack of major catalysts.Fed Chair Powell pressured to accept reflation fears, dot-plot also eyed.Silver portrays a corrective pullback from a one-week low around $27.70, up 0.12% intraday, amid the initial Asian session trading on Wednesday. In doing so, the white metal snaps a three-day downtrend as markets brace for the US Federal Open Market Committee (FOMC) meeting. A contrasting play of the US Retail Sales and Producer Price Index for May offered the latest contribution to the market’s indecision over the Fed’s next moves amid reflation fears. While Retail Sales dropped 1.3% versus -0.8% expected, PPI rose more than 6.3% forecast to 6.6% YoY. The Fed policymakers have been terming the escalation in the price pressure as temporary, mainly due to the covid-led supply crunch, but the latest US economics keep suggesting otherwise, making today’s case of FOMC interesting. Ahead of the meeting, Westpac said, “First up, after the meeting, the Committee's quarterly forecasts will be provided, guiding on their central expectations for the coming three years. Second, Chair Powell’s press conference will give a good guide on the degree of confidence the Committee has in their central projection for both inflation and the labor market -- the FOMC's two core concerns. Third, for these two aspects of the economy, an assessment of the risks will be provided. This will help guide on how great an impact key risks are likely to have on the outlook for policy, should they eventuate.” Read: Fed Interest Rate Decision Preview: Chair Powell will determine market response It’s worth noting that the recently rising tensions between the Western friends led by the US and China join the fears of the Delta variant of the coronavirus (COVID-19) to weigh on the silver prices. Amid these plays, the US 10-year Treasury yields dropped for the first time in three days whereas the Wall Street benchmarks also closed mildly offered by the end of Tuesday’s North American Trading session. Looking forward, silver sellers may take clues from China’s Retail Sales and Industrial Production for May, due to its industrial usage, but major attention will be given to today’s Fed release. Technical analysis A daily closing below an upward sloping trend line from April 29, around $27.45, becomes necessary for the silver bears to keep reins. Otherwise, the $28.00 and monthly resistance line near $28.30 will regain the market’s attention.  

EUR/USD remains on the back foot, receding taking rounds to 1.2120-25, amid a sluggish Asian session trading on Wednesday. The currency major pair rec

EUR/USD wobbles in a choppy range below short-term key hurdles.Sellers to keep reins as unless prices cross three-week-old resistance line.Easing bullish bias of MACD adds to the downside signals.EUR/USD remains on the back foot, receding taking rounds to 1.2120-25, amid a sluggish Asian session trading on Wednesday. The currency major pair recently bounced off the 1.2100 threshold but fails to keep the recovery moves, which in turn joins sluggish MACD signals to repeat Tuesday’s pullback from the support-turned-resistance line from May 05, near 1.2145. Also likely to challenge the quote’s recovery moves is the confluence of a 200-SMA and weekly resistance line around 1.2150. It’s worth noting that the EUR/USD bulls are less likely to get convinced until witnessing a clear upside break of a falling trend line from May 25, surrounding the 1.2200 round figure. Meanwhile, EUR/USD sellers can aim for the latest low near 1.2095 during further weakness. However, May 13 bottom of 1.2051 and the 1.2000 psychological magnet, quickly followed by the previous month’s low close to 1.1985, will offer a bumpy ride for the pair bears after 1.2095. EUR/USD four-hour chart Trend: Further weakness expected  

The GBP/USD pair started the session on Wednesday on a lower note. The pair recovered from the low of 1.4034 on Tuesday to close near the 1.4080 mark,

GBP/USD remains muted in the Asian session.Bears seek more opportunities if price decisively breaks 1.4080.Momentum oscillator hints at downside momentum.The GBP/USD pair started the session on Wednesday on a lower note. The pair recovered from the low of 1.4034 on Tuesday to close near the 1.4080 mark, where it waivers now. GBP/USD daily chart On the daily chart, the GBP/USD pair has been pressurized near the 1.4225 mark, with the formation of multiple tops in the region. The pair closed below the 1.4100 key psychological mark for the first time since May 17. The ascending trendline from the low of 1.3801 acts as a wall of defense for the bulls. If price breaks the bullish sloping line, then it could retest May 14 low at 1.4036. Next, GBP/USD would navigate toward the 50-day Simple Moving Average (SMA) at 1.4000. The receding Moving Average Convergence Divergence (MACD) indicator suggests that the downside momentum will continue till the 1.3970 horizontal resistance level. Alternatively, if price moves and sustains above the session’s high, then GBP/USD would try to occupy the previous day's high in the vicinity of the 1.4130 area. The next area of resistance could be found at May 26 high at 1.4175 followed by the high made on May 28 at 1.4210. GBP/USD additional levels  

The precious metals sector struggled overnight as investors position for a possible shift in monetary policy from the Fed. Gold prices were down some

Gold is supported ahead of what is expected to be a busy day for markets.The Fed is on tap and it matters a great deal for the precious metal. Gold Weekly Forecast: XAU/USD tests key trend line ahead of FOMC meetingThe precious metals sector struggled overnight as investors position for a possible shift in monetary policy from the Fed. Gold prices were down some 0.4% in the final part of the North American day as the US dollar firmed ahead of the outcome of the Fed’s two-day meeting on Wednesday.  XAU/USD was trading between a range of $1,851.66 and $1,869.20. At the time of writing, the price is flat and establishing with a technical bias to the upside.  The price has otherwise been crimped by a stronger US dollar and higher yields on US Treasuries. The US 10 year yield was 0.5bps higher at 1.49% while DXY ranged between 90.3/67, poised for a downside correction according to the W-formation on the daily chart: Meanwhile, data on Tuesday was fuelling the bid for the greenback while otherwise, the markets had been pricing for a dovish Fed for longer considering the communication to date by Fed officials. ''While the market isn’t expecting the Fed to start tapering its bond purchases at this meeting, it will be looking at the dot plot for any signals it may be thinking about raising interest rates in 2023 amid higher inflation and stronger economic growth,'' analysts at ANZ bank said. Members have insisted that rising inflationary pressures are transitory and ultra-easy monetary settings will stay in place for some time. The Fed’s Chair, Powell, is expected to say that the most likely course is that inflation decelerates over the coming months, settling back at more normal levels later this year. On the other hand, if there are upward revisions for PCE inflation in 2021 then this could be feeding through to a more sustained rise in inflation over the medium term. This would be more hawkish than what the markets are priced for and most probably weigh on precious metals.  Gold price analysis Technically, the M-formation on the daily chart is compelling. Bulls can target a retracement to at least the 38.2% Fibo at 1,867 although the structure aligns better with the 61.8% Fibo at 1,880, in line with the 10-day EMA. The higher low on the 4-hour chart should also be encouraging for the bulls. 

NZD/USD stays sidelined around 0.7120, recently easing, as bears take a breather around a two-month low during the early Asian session on Wednesday. T

NZD/USD struggles to defend 0.7100 amid a corrective pullback.Market sentiment remains sluggish ahead of the FOMC.NZ GDT Price Index dropped, RBNZ adds house price control as a policy tool.Aussie, China data can entertain intraday traders but cautious mood can keep pressing Kiwi ahead of the Fed’s verdict.NZD/USD stays sidelined around 0.7120, recently easing, as bears take a breather around a two-month low during the early Asian session on Wednesday. The kiwi pair portrayed the double whammy of mildly bid US dollar and downbeat data at home to refresh the multi-day low. However, the pre-Fed caution seems to probe the quote’s latest moves. US dollar index (DXY) jumped to the fresh high since May 14 before easing to 90.52 by the end of Tuesday’s North American session. In doing so, the greenback gauge versus the six major currencies prints mild gains, benefiting from the market’s rush to risk safety ahead of the Federal Open Market Committee (FOMC) meeting. A mixed play of May’s US Retail Sales and Producer Price Index (PPI) could be traced as the latest catalyst backing the reflation fears. While Retail Sales dropped -1.3% versus -0.8% expected the PPI rose more than 6.3% forecast to 6.6% YoY. Also contributing to the NZD/USD weakness could be New Zealand’s (NZ) downbeat GDT Price Index, -1.3% versus -0.1% expected and -0.9% prior. It’s worth noting that Whole Milk Powder (WMP) also registered a fall of 1.8% during the last 15 days’ tally. Also, downbeat prints of NZ Current Account-GDP ratio and Current Account Balance for Q1 2021 kept the pair sellers hopeful of late. Amid these plays, US stocks posted mild losses and the Treasury yields also snapped a two-day uptrend amid cautious sentiment. Additionally, escalating tension between the Western economies and China also weighs on the NZD/USD prices as Beijing is Auckland’s largest customer. Furthermore, chatters that the RBNZ adds house price control measures to its tool, hesitantly though, exert additional downside pressure on the Kiwi pair. Moving on, China’s Retail Sales and Industrial Production, preceded by second-tier data from Australia, can offer intermediate moves to the NZD/USD pair amid a likely sluggish day heading into the Fed’s meeting. “We expect the Fed’s near-term inflation profile and dot plot will be revised up. However, the Fed is seeking a full recovery in jobs and we therefore expect Chairman Powell will continue to argue that the rise in inflation is transitory and that the Fed is well equipped to respond to higher inflation if necessary. The market will also be sensitive to any advancement in the Fed’s thoughts around tapering,” said analysts at the Australia and New Zealand Banking Group (ANZ). Read: Fed Interest Rate Decision Preview: Chair Powell will determine market response Technical analysis NZD/USD remains vulnerable to the further downside amid sustained trading below 100-day SMA, around 0.7180. That said, lows marked during January and early May highlight the 0.7100 threshold as the nearby key support ahead of the 200-day SMA surrounding 0.7040.  

New Zealand Current Account (QoQ) below forecasts ($-2.23B) in 1Q: Actual ($-2.895B)

New Zealand Current Account (QoQ) came in at $-2.9B, below expectations ($-2.23B) in 1Q

New Zealand Current Account (QoQ) below forecasts ($-2.23B) in 1Q: Actual ($-7.242B)

New Zealand Current Account - GDP Ratio came in at -2.2%, below expectations (-2.1%) in 1Q

The Telegraph came out with the headlines suggesting further hardships for UK Chancellor Rishi Sunak in keeping the Tories’ triple-lock pension pledge

The Telegraph came out with the headlines suggesting further hardships for UK Chancellor Rishi Sunak in keeping the Tories’ triple-lock pension pledge. The analytical piece highlights the recent jump in wage data posing an extra £4 billion burden onto the British government’s strings if they are to keep their pension pledge. The reason could be traced to UK PM Boris Johnson-led government’s vow to offer the annual rise in pensions by the highest out of average earnings growth, inflation or 2.5%. On a different page, The Telegraph quotes the UK’s joint committee on vaccination and immunization while citing fears of further delay into the vaccinations of under 18s. Market reaction… GBP/USD pays a little heed to the news suggesting further hardships, wavers around 1.4080 by the press time, as markets await the US Federal Open Market Committee (FOMC) meeting results. Read: GBP/USD Price Analysis: Bulls target breakout to old hourly support

The buying pressure in the US dollar keeps USD/JPY above the 110.00 mark on Wednesday in the initial Asian trading session. The pair retreats from the

USD/JPY consolidates gains on Wednesday in the Asian session.A slight pullback in US Treasury yields pauses gains in the US dollar.Yen remains sidelined as market volatility heightens ahead of FOMC.The buying pressure in the US dollar keeps USD/JPY above the 110.00 mark on Wednesday in the initial Asian trading session. The pair retreats from the earlier high of 110.13, however remain elevated. At the time of writing, USD/JPY trades at 110.06, down 0.01% so far. The US Dollar Index (DXY), which measures the performance of the US dollar against the basket of six majors currencies, edged up above 90.60 post robust US economic data. The US 10-year benchmark yields also rose 1.50% on Tuesday after a recent slump towards 1.42%. Investors remain cautious ahead of the FOMC outcome as the rising pressure could alter the Fed monetary policy stance. Although the Fed continued to downplay the pricing pressure as transitory, the recent data showed that prices continued to soar. The Consumer Price Index (CPI) rose to 13-year highs and the Producer Purchase Index (PPI) gained 0.8%. The Retails sales disappointed the market as the readings fell to 1.3% in May, much below the market expectations of 0.8%. The US dollar halts the gains as a reaction to the data. On the other hand, the Japanese yen struggles with the submissive economic outlook. The extension of the  COVID-19 state of emergency in Tokyo and nine other provinces until June 19 cites the failure of the country to contain the pandemic as it lags behind the developed nations. As for now, traders are bracing up for the release of the Fed Interest Rate Decision and FOMC Economic Projections. The other important readings include Trade data, Housing Starts, and Building Permits for May. Market participants expect the Fed to maintain its status-quo on the interest rate. The Fed’s forward guidance on inflation and growth holds the market attention as they could highlight the future course of action. USD/JPY additional levels
 
 

US shares ended Tuesday’s North American session on a negative note, though mildly offered, as fears of the Fed’s action join downbeat US data. Also c

US equities posted mild losses amid downbeat market sentiment ahead of the key day.US Retail Sales eased, PPI grew more than expected in May, suggesting price pressure.Treasury yields paused two-day uptrend, WTI jumped to the highest since 2019 but gold eased.Oil stocks benefited while retails and technology scripts eased.US shares ended Tuesday’s North American session on a negative note, though mildly offered, as fears of the Fed’s action join downbeat US data. Also contributing to Wall Street’s losses, marginally, could be the rally in oil prices. The recent US economics conveyed weaker-than-expected Retail Sales for May, -1.3% versus -0.8% expected. However, the US Producer Price Index (PPI) rose more than 6.3% forecast to 6.6% YoY. With an absence of a major spoiler for the reflation fears, market players remained cautious and stepped back on the equities amid pre-Fed worries. Additionally, oil prices jumped to the highest since 2019, WTI above $72.00, amid hopes of energy demand battling supply crunch. The latest industry data for the weekly inventories marked higher-than-previous depletion. Amid these plays, all three Wall Street benchmarks closed negative with the Nasdaq posting the highest losses of 0.71% or 101.29 points to 14,072.89. Dow Jones Industrial Average (DJI) came in second, also snapping a three-day uptrend, with -0.27% or 94.42 points of downside to 34,299.33. Further, S&P 500 dropped 8.56 points or 0.20% to 4,246.59. It’s worth noting that the US 10-year Treasury yields retreated while marking the first negative daily closing around 1.487% by the end of Tuesday’s North American session. Energy stocks benefited from the oil price rally whereas tech shares eased on reflation concerns and downbeat data. Looking forward, market players may witness a choppy start to Wednesday ahead of the Federal Open Market Committee (FOMC) announcement. However, wild moves around the release can’t be ruled. Read: Federal Reserve Preview: First up, then down? Playbook for trading the Fed

As WTI jumps to the highest since 2019, above $72.00, the Financial Times (FT) conveyed top commodity forecasters’ expectations from the oil prices. T

As WTI jumps to the highest since 2019, above $72.00, the Financial Times (FT) conveyed top commodity forecasters’ expectations from the oil prices. The reporter reached to executives from Vitol, Glencore and Trafigura and Goldman Sachs while writing on Tuesday, “$100 crude was a real possibility, with prices already reaching their highest level in two years.” “The prediction comes at a time when concern about inflation is rising and many commodities, such as copper, have already reached record highs, boosted by supply shortfalls as the economic recovery gathers pace,” added FT. While describing the broad energy price moves, the FT said, “Oil has not traded above $100 a barrel since 2014, when a surge in supplies from the US shale sector brought the last so-called supercycle to an end. At the start of this century, oil prices rallied from near $10 a barrel to reach above $100 in 2008, boosted by growing Chinese demand. Prices, while volatile, averaged around $100 a barrel for the next six years.” Elsewhere, the Associated Press (AP) came out with the headlines suggesting that the US Federal judge blocks President Joe Biden's administration's suspension of new oil and gas leases on federal land and water. Read: WTI prints fresh cycle highs through $72

AUD/USD wobbles around 0.7680-90, off a weekly low, as it begins the key Wednesday comprising the US Federal Open Market Committee (FOMC) meeting. Oth

AUD/USD consolidates recent losses from the lowest since June 04.US Treasury yields paused two-day uptrend, Wall Street posted mild losses.US PPI, Retail Sales came in mixed but signal escalating price pressure.Fed eyed, Aussie/China data may offer intermediate clues.AUD/USD wobbles around 0.7680-90, off a weekly low, as it begins the key Wednesday comprising the US Federal Open Market Committee (FOMC) meeting. Other than the pre-Fed caution, mixed data from the US and a light news feed also contribute to the pair’s latest sluggish performance. All eyes on Fed… With the US macros keep reflation fears on the table, market players firm up their calls for the Federal Reserve (Fed) officials to accept the price pressure woes as more than temporary and revise up the dot-plot, not to forget expecting hints of tapering. However, Chairman Jerome Powell & Company is known for smart play and hence everybody is keenly awaiting the key announcements, up for publishing in the US session. That said, the recent US economics conveyed weaker-than-expected Retail Sales for May, -1.3% versus -0.8% expected. However, the US Producer Price Index (PPI) rose more than 6.3% forecast to 6.6% YoY. On the other hand, Australia’s Q1 House Price Index crossed 3.6% previous readouts to 7.5% YoY but the QoQ readings eased to 5.4% versus 5.5% market consensus and 3.0% prior. It’s worth noting that the RBA minutes and fears of the escalating West versus China tussle also contributed to the AUD/USD weakness. The RBA minutes stepped back from highlighting the July meeting for the hints of monetary policy adjustments while also saying, “It would be premature to bring QE to an end.” China conveyed its dislike for the North Atlantic Treaty Organization (NATO) group whereas the US ship heads to the South China water. Amid these plays, the US 10-year Treasury yields marked 1.2 basis points (bps) of a downside to 1.49%, the first in three days while the US equity benchmarks closed mildly offered by the end of Tuesday’s North American session. Looking forward, nothing matters more than the Fed and hence the pre-FOMC trading lull could keep AUD/USD chained. However, Australia’s Westpac Leading Index and China’s Industrial Production, as well as Retail Sales, may offer intermediate moves to the pair traders. Read: Fed Interest Rate Decision Preview: Chair Powell will determine market response Technical analysis AUD/USD extends Friday’s breakdown of 100-day SMA, near 0.7725, towards an ascending support line from April 01, around 0.7660. A bearish crossover between 50-day SMA and 21-day SMA joins downbeat oscillators to keep sellers hopeful.  

United States API Weekly Crude Oil Stock down to -8.537M in June 11 from previous -2.108M

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