Daily Analysis Report 27 June ‘2022

Daily Analysis Report 27 June ‘2022

Daily Analysis Report 27 June ‘2022

EUR/USD

 

The euro exhibits a modest increase, forming a faint “bullish” momentum after the previous trading week, testing 1.0560 for a breakout, and awaiting additional movement catalysts. Trading attention is focused on the possibility of different monetary policy tightening by the world’s top financial authorities, particularly the US Federal Reserve and the European Central Bank (ECB). With some initial success, the US Fed is now rushing through the second increase in interest rates against the backdrop of a substantial rise in inflation. The European regulator, meanwhile, is only getting ready to begin a cycle of tightening monetary policy with the July meeting, and initially, the ECB is likely to behave wildly.

 

Investors will pay close attention to Isabel Schnabel, a spokeswoman of the European Central Bank, and Christine Lagarde, its president, as they speak today. A monthly report from the Bundesbank will also be released that day.

 

GBP/USD

 

Due to contradicting macroeconomic data from the US and the UK and vague predictions for how the global economy will evolve, the pound has been fluctuating throughout the week and is currently consolidating near 1.2300. Analysts worry that the economy may enter a recession due to a dramatic rise in interest rates in the US. Similar trends are seen in the UK, where the Bank of England is maintaining its tight monetary policy despite record-high inflation rates. The macroeconomic numbers released on Friday further strained the British pound’s position.

 

June saw a decrease in GfK Consumer Confidence from -40.0 to -41.0 points. Retail Sales fell by 0.5 percent in May after increasing by 0.4 percent the previous month, falling short of analysts’ expectations of a 0.7 percent reduction. In annual terms, sales dynamics improved from -5.7 percent to -4.7 percent, while expectations had been for a 4.5 percent decline.

 

NZD/USD

 

The New Zealand dollar is rising somewhat and developing a relatively confident “bullish” signal established last Thursday. NZD/USD is attempting to stabilize above 0.6300 and is being helped by releasing unimpressive US macroeconomic numbers. Despite experts’ expectations for the index to remain constant, the Michigan Consumer Sentiment Index ended the previous week from 50.2 points to a new record low of 50.0 points. Investors anticipate the release of May data on the dynamics of durable goods orders today. Forecasts predict a significant drop from 0.5 percent to 0.1 percent, partly attributable to a substantial slowdown in vehicle purchases. A revised report on the US GDP’s dynamics for the first quarter of 2022 will be released on Wednesday. The indicator is anticipated to stay constant at the -1.5% level.

 

USD/JPY

 

The value of the American dollar decreases somewhat, trying to break through at 134.70. US macroeconomic indicators that are not the most confident, while Japanese publications frequently prove to be upbeat, put some pressure on the positions of the US currency. The University of Michigan Consumer Confidence Index hit a new record low last Friday, falling from 50.2 points to 50.0 points. Japan, in turn, released data on the dynamics of consumer prices for May, showing that the CPI increased by 2.5 percent as opposed to the 2.9 percent analysts had predicted. Contrary to predictions of a slowing to 0.4 percent, inflation rose by 0.8 percent in May when food and energy prices were excluded. This suggests that the Bank of Japan will continue to maintain its current policy.

 

Investors are again paying close attention to data from Japan at the start of the week. The Coincident Index in April stayed around 96.8 points, while the Leading Economic Index for the same period increased from 100.8 to 102.9 points, in line with expectations.

 

XAU/USD

 

The price of gold is increasing, trying to break through the level of 1835.00. On Monday, XAU/USD opened with a slight upward gap, showing the somewhat uneasy mood of investors attempting to keep their money in a “safe” asset. News concerning a potential restriction on buying precious metals also lends strength to the instrument. The chiefs of the G7 countries decided to impose a gold embargo on the Russian Federation during their recent summit in the Bavarian Alps, which the US Treasury is expected to announce tomorrow formally. The instrument continues to be negatively impacted by the actions of top global regulators. The European Central Bank (ECB) is scheduled to release the

The US Federal Reserve is one of the first institutions to experience the adverse effects of tight monetary policy due to the severe slowdown in the US economy. Analysts worry about a full-fledged recession even while the inflation rate may continue to be close to record highs. Similar to how earlier officials believed the rise in consumer prices to be a fad, the Fed now views the dangers of stagflation as modest.

Daily Analysis Report 24 June ‘2022

Daily Analysis Report 24 June '2022

Daily Analysis Report 24 June '2022

EUR/USD

After experiencing a rather significant decrease the day before, the European currency is now growing moderately. While the underlying outlook for the market changes marginally, investors are reducing some of their already initiated short bets to get ready for the weekend. Macroeconomic data showed a fall in the S&P Global Manufacturing PMI for June from 54.6 to 52.0 points the day prior, worse than the market’s projection of 53.9 points, and a correction in the Services PMI from 56.1 to 52.8 points compared to the forecast of 55.5 points. The manufacturing PMI in Germany decreased from 54.8 to 52.0 points, while the services PMI fell from 55.0 to 52.4 points.

The region’s persistently rising inflation is noticed against the backdrop of the negative dynamics, and the European Central Bank (ECB) will only begin a cycle of interest rate increases in July. Analysts worry that the regulator has lost valuable time and will try to catch up with price inflation by sharply raising rates by 75 basis points, following the US Federal Reserve.

GBP/USD

The British pound is stabilizing near 1.2270 while moving in several ways. The GBP/USD currency pair is poised to close the week with a small gain, but the instrument’s long-term prospects are incredibly unclear. Although yesterday’s macroeconomic numbers in the UK were better than anticipated, there was no discernible improvement in the value of the national currency. Contrary to expectations, the S&P Global Services PMI in June stayed at 53.4 points, while the Manufacturing PMI dropped from 54.6 to 53.4 points while expectations were expecting a drop to 53.7 points.

Investors are currently concentrating on the May statistics for Retail Sales dynamics: every month, the indicator decreased by 0.5 percent, which was better than initial market estimates of 0.7 percent, while on an annualized basis, the negative dynamics increased from -4.5 percent to -4.7 percent. Huw Pill and Jonathan Haskel, two representatives of the Bank of England, are anticipated to speak during the day.

AUD/USD

Recovering from the losses of the previous two “bearish” sessions, the Australian dollar exhibits corrective growth. With assistance from strengthening corrective moods in the US dollar, the instrument is once again testing the level of 0.6900 in preparation for a breakthrough. Investors are scrambling to lock in profits and responding to the release of US macroeconomic numbers that are pretty subpar. The US Services sector’s business activity index fell from 53.4 to 51.6 points, contrary to experts’ expectations for an increase to 53.5 points, according to data provided the day before by S&P Global. The Manufacturing PMI dropped dramatically from 57.0 to 52.4 points, which was also significantly worse than the market had anticipated.

While the estimate was for a level of 53.7 points, the Composite PMI in June corrected from 53.6 to 51.2 points. Jerome Powell, the chairman of the US Federal Reserve, spoke before the US Senate yesterday, adding to the pressure on the markets by highlighting the dangers of rising inflationary pressure in the nation while also acknowledging the possibility of a recession as a result of the regulator’s “hawkish” stance. The Fed also plans to tighten monetary policy further to bring the consumer price index back to its desired goal of 2%.

USD/JPY

The US dollar is falling as Wednesday’s “bearish” market momentum continues. The instrument is checking for a breakdown at 134.80, following the release of relatively flimsy macroeconomic numbers from the US the day before. The report showed that economic activity in the Manufacturing and Services sector declined in June, substantially worse than analysts had anticipated. Initial Jobless Claims for the June 17 showed a slight reduction from 231K to 229K, which was just slightly more than the projected 227K.

Investors are focusing on information from Japan right now. The National Consumer Price Index increased by 2.5 percent in May, matching the data from the previous month, despite analysts’ expectations for faster acceleration to 2.9 percent. The market anticipated growth of only 0.4 percent, but the CPI excluding Food and Energy grew by 0.8 percent.

XAU/USD

Gold prices are stabilizing following an attempt to decline the day before, which caused XAU/USD to update regional lows from June 16. Due to technical reasons, the instrument is currently trading at 1825.00. The US Federal Reserve Chairman’s address, in which he acknowledged the risks of a recession for the American economy but reiterated the regulator’s commitment to stick with its hiking interest rates until inflationary pressure stabilizes, put additional pressure on the asset. The official also highlighted stagflation, a recently hotly debated subject in the market.

Although he believes such hazards shouldn’t be ignored, they are currently difficult to identify and can vary significantly depending on the calculation models. In turn, yesterday’s dismal macroeconomic data on June’s US business activity helped bolster the price of gold. Accurate data turned out to be substantially worse than analysts had predicted, raising the possibility of slowing the nation’s economic growth.

Daily Analysis Report 20 June ‘2022

Daily Analysis Report 20 June '2022

Daily Analysis Report 20 June '2022

EUR/USD

The euro is gaining ground versus the US dollar, recovering from Friday’s loss. Even though the critical requirements for this arose on June 16, when the instrument displayed the most active increase in recent weeks, the euro failed to conclude the week in the “green” zone. Investors’ expectations of the European Central Bank starting an interest rate tightening cycle are supporting EUR/USD quotes (ECB). Last week, the regulator convened an emergency meeting to explore how to reduce the risks of a potential increase in borrowing costs for the bloc’s most vulnerable economies.

The European Central Bank (ECB) intends to hike interest rates at its July meeting. Meanwhile, the US Federal Reserve is tightening its “hawkish” attitude, correcting the rate by 75 basis points for the first time since 1994 last week, in response to earlier frightening inflation statistics that rose again in May following a minor correction in April. Representatives from the American regulator and US Treasury Secretary Janet Yellen have expressed pessimism, prompting traders to avoid taking excessive risks.

GBP/USD

The British pound is weakening versus the US dollar, having recovered from a severe drop last Friday. GBP/USD is waiting for new drivers to arrive on the market before attempting 1.2250 for a breakout. The Bank of England’s interest rate meeting provided moderate support for quotations last week. The bank became the first big bank to be “hawkish” since the commencement of the coronavirus epidemic when it raised its interest rate by 25 basis points to 1.25 percent, marking the fifth straight hike since December 2021. At the same time, the UK’s inflationary risks remain high, and economic growth is fast declining, threatening a full-fledged recession.

According to current projections, UK GDP would decrease by 0.3 percent in Q2 2022, which is not much less than in May. Investors are anticipating the release of May consumer price dynamics numbers in the UK on Wednesday. According to current predictions, inflation is expected to fall from 2.5 percent to 1.9 percent but accelerate year over year from 9 percent to a new high of 9.1 percent.

AUD/USD

The AUD/USD currency pair steadily rose after a steep drop on Friday. The trading instrument is currently testing the level of 0.6960 for a breakout; nevertheless, analysts’ concerns about a worldwide economic downturn hampered further upward dynamics of the asset. Several global financial regulators, including the US Federal Reserve and the Bank of England, raised interest rates last week, with the US Federal Reserve setting a new high of 75 basis points since 1994. Central banks are rushing to curb increasing consumer prices, compromising the prospects for economic growth, while external forces alter little.

The Australian dollar strengthened on Thursday as a favorable report on the country’s labor situation was released. The Employment Change increased by 60.6K in May, after growing by only 4.4K the month before, despite economists expecting only a 25K increase. At the same time, the unemployment rate stayed unchanged at 3.9 percent, despite predictions of a drop to 3.8 percent. On Tuesday, investors await the release of the Reserve Bank of Australia’s meeting minutes and the speech of its governor, Philip Lowe, who may shed light on the possibilities for additional monetary policy tightening.

USD/JPY

The US dollar stabilizes between record highs and the 135.00 mark, displaying multidirectional trading behavior. Last week’s attempt by the Japanese currency to show corrective growth failed, and the dollar managed to reclaim all of the positions it had lost in the previous two days on the last trading day. The Bank of Japan maintains its ultra-loose monetary policy, keeping the interest rate at –0.10 percent and the yield on 10-year bonds around 0%, but expanding the program to buy an unlimited number of them at 0.25 percent. Only one of the board members voted to begin tightening monetary policy, and the outcome was practically unanimous. The regulator sticks to the prior recommendations, attempting to keep inflation continuously over 2%. Now that all of the conditions are in place, the financial authorities want to finish the war against deflation, even if it means sacrificing the national currency.

XAU/USD

Gold prices are slightly higher at the start of the week, following a fall last Friday, when the instrument retreated from its local highs of June 13. The conclusions of meetings of the world’s leading central banks, particularly the US Federal Reserve, which opted to raise the rate by 75 basis points all at once, put downward pressure on the market. The Bank of England and the Swiss National Bank both announced interest rate hikes, raising the rate by 50 basis points at once. Meanwhile, fears of a dramatic global economic growth downturn support the instrument marginally.

Supply networks are still being disrupted, and high energy and other commodity prices are worsening the problem. As a result, global financial regulators’ activities aimed at tightening monetary conditions are pushing the economy into recession, as is the case in the UK and the EU.

Daily Analysis Report 17 June ‘2022

Daily Analysis Report 17 June '2022

Daily Analysis Report 17 June '2022

EUR/USD

The European currency has retreated somewhat against the US dollar, surrendering some of the gains the day before and updating local highs from June 10. The asset is supported by the European Central Bank’s (ECB) tighter language, which is expected to begin an interest rate hike cycle at its July meeting. The regulator held an emergency meeting earlier this week to consider steps to maintain the economic growth rate in light of the expected tightening of monetary policy. The ECB plans to create exceptional economic conditions for those countries that would be most vulnerable when borrowing costs rise.

The outcome of the Swiss National Bank meeting, which raised the interest rate by 50 basis points, bringing it to –0.25 percent, contrary to most projections, also contributed to the rise of “hawkish” emotions in the market. Furthermore, the Swiss regulator stated they are investigating the potential of terminating some of their currency purchasing schemes. Investors are concentrating today on a set of eurozone macroeconomic statistics on consumer pricing developments.

GBP/USD

The British pound is in a downward trend versus the US dollar, retreating from the local highs of June 10, which were updated the day before. After a week of extraordinary volatility, the instrument tests the level of 1.2300 for a breach, and investors are locking in their profits. The day before, attention had been on the outcomes of the Swiss National Bank and Bank of England meetings. The Swiss regulator hiked the interest rate by 50 basis points unexpectedly, while the British regulator increased the value by 0.25 percent, making it the fifth change in a row. The conclusion was unanimous again, but three of the nine board members favored a 50-basis-point rise. However, if inflation continues to climb, the Bank of England has hinted at a more significant rate cut in the coming months. Traders are anticipating lectures from Bank of England representatives Silvana Tenreyro and Huw Pill today. The Bank of England’s Quarterly Bulletin will also be released during the day.

NZD/USD

The New Zealand currency stabilizes near 0.6350 against the US dollar, showing mixed characteristics. Despite releasing exceptionally negative macroeconomic numbers from New Zealand the day before, the “bulls” nevertheless managed to take the lead in NZD/USD. After increasing by 3.0 percent in the preceding quarter, GDP fell by 0.2 percent. Analysts expected the indicator to slow down but hoped the positive dynamics would stay at 0.6 percent. The New Zealand economy declined from 3.1 percent to 1.2 percent annually, despite market expectations of a 3.3 percent increase. After decreasing 1.9 percent in April, the REINZ House Price Index dropped 1.6 percent in May. The instrument is marginally boosted during the morning session by Manufacturing PMI data, which showed an increase from 51.2 to 52.9 points in May, which was better than analysts’ expectations of a 52.7 point increase.

USD/JPY

The US dollar continues to rise against the Japanese yen, testing 134.00 for a breakout. The results of the Bank of Japan meeting, which did not tighten monetary policy yet again, provide strong support for the instrument. As expected, the interest rate was retained at –0.1 percent, with only one board member voting in support of boosting it. Furthermore, the Bank of Japan maintained its quantitative easing program, aiming for inflation to remain persistently above its 2% target. Unlike many developed economies, Japan’s economy is used to deflationary events, and it has mostly avoided the global acceleration of inflation in recent years.

As a result, the Bank of Japan is dealing with an extraordinarily low yen exchange rate, endangering the financial stability of Japanese markets. Nonetheless, it is clear that the regulator prefers consumer price growth at the moment and is willing to wait for the national currency to depreciate for a while longer.

XAU/USD

Gold prices have retreated from new local highs set on June 13, which were updated the day before. Following the release of the findings of the US Federal Reserve meeting on Thursday, XAU/USD mainly traded in an uptrend, with the interest rate being raised by 75 basis points all at once for the first time since 1994, in response to the acceleration of inflation in May. Furthermore, during the July meeting, the regulator did not exclude a similar increase in value. The projections for 2022 have been updated for the pace of GDP growth and inflation (from 4.3 percent to 5.2 percent ).

Many investors are exiting long positions today, as the news backdrop has worsened substantially following the meetings of the world’s top regulators. However, European data on consumer inflation for May and a statement by the US Federal Reserve may contribute to market action towards the conclusion of the week.

Daily Analysis Report 16 June ‘2022

Daily Analysis Report 16 June '2022

Daily Analysis Report 16 June '2022

EUR/USD

The euro is about 1.0440 against the US dollar, indicating that it is generally stable. The day before, EUR/USD displayed exceptionally erratic dynamics, updating local lows from May 13 but ending the day’s trading session in the “green” zone. The final minutes of the US Federal Reserve meeting, which marked a new phase of the US regulator’s war against galloping inflation, injected volatility into the market. The interest rate was instantly hiked by 75 basis points, as many analysts predicted, despite a 50 basis point correction being forecast previously.

The decision was partly based on US consumer inflation data released last week, which showed that price increases resumed in May after a minor dip in April. If the circumstances warrants, the regulator also hinted at a tightening of monetary policy, even the most aggressive measures. According to the Fed’s latest prediction, the benchmark rate will rise to 3.4 percent by the end of the year. The regulator will have to increase the present value by 175 basis points. The European Central Bank (ECB) called an emergency meeting on Wednesday to tackle the region’s most vulnerable nations’ rising borrowing costs. The regulator stated that when monetary policy is tightened in the future, a unique tool will be devised to partially offset the rising cost of borrowing in the debt market for EU nations suffering economic difficulties. The European Central Bank is projected to hike interest rates by 25 basis points during its July meeting.

GBP/USD

The British pound is trading in a downward trend against the US dollar, following a significant rise the day before. The instrument waits for new drivers to arrive on the market before evaluating 1.2140 for a breakdown. The Bank of England will make an interest rate decision today. Most likely, the value will be hiked by 25 basis points to 1.25 percent. At the same time, officials are concerned about the possibility of a slowdown in economic growth. Macroeconomic data released earlier this week showed a drop in UK GDP for the second month in a row, raising concerns that the country’s economy might enter a full-fledged recession.

Meanwhile, the external macroeconomic backdrop is deteriorating: energy prices are rising to new highs, and the deepening of the military war in Ukraine poses new hazards to the global economy, interrupting the supply chain of commodities due to increased sanctions pressure on Russia’s economy.

AUD/USD

The Australian dollar is rising slowly, testing the 0.7000 level for a breakout. The AUD/USD pair is establishing a strong “bullish” momentum, which allowed quotes to retreat from their local lows of May 12, the day before. The final minutes of the US Federal Reserve, which perfectly justified the expectations of the “hawks,” drew the attention of investors yesterday. For the first time since 1994, the regulator hiked the rate by 75 basis points, as expected, without ruling out similar moves at future sessions. Simultaneously, the agency’s estimates proved negative, preventing the US currency from demonstrating long-term growth. According to the Federal Reserve, inflation is expected to continue to rise in the United States.

Simultaneously, the US GDP projection for 2022 was reduced from 2.8 percent to 1.7 percent. The instrument is now supported by a positive May report on the Australian job market. The country’s employment change showed a substantial increase of 60.6K following only 4.0K in April, while the prediction was for a 25.0K increase. At the same time, the indicator’s dynamics were driven by the rise in full-time employment, while part-time work fell by 8.7K. Despite expectations of a drop to 3.8 percent, Australia’s unemployment rate stayed at 3.9 percent in May.

USD/JPY

The US dollar is steadily rising against the Japanese yen, following a previous correction. Although the minutes of the US Federal Reserve reflected the “hawkish” sentiment of the regulator, which raised the interest rate immediately by 0.75 percent for the first time since 1994 but also revised its near-term forecasts for the worse, the American currency showed an unexpected negative trend on Wednesday. The Fed also stated that it intends to maintain its tight monetary policy. In particular, the rate will be increased by 0.50 percent to 0.75 percent in July. Japan’s macroeconomic statistics released today failed to provide the yen with much assistance.

After expanding by 12.5 percent the month before, exports increased by 15.8 percent in May. Analysts predicted a 16.4 percent gain. Imports increased by 48.9% simultaneously, accelerating from a 28.3% increase in April. As a result, the Merchandise Trade Balance Total Deficit in May jumped from 842.8 billion to 2384.7 billion Japanese yen.

XAU/USD

Gold prices are consolidating near 1830.00, indicating a trend of corrective decrease and attempting to recoup a notable advance the day before, which occurred despite the US Federal Reserve’s strong moves targeting tightening monetary policy. The American regulator opted to hike the rate by 75 basis points at once but was obliged to lower its March inflation and GDP dynamics estimates. An emergency meeting of the European Central Bank (ECB), which plans to begin raising interest rates in July but is trying to offset the negative impact of rising borrowing costs on the economy, also sparked market concerns.

The Bank of England and the Bank of Japan will also have meetings till the end of the week. The Bank of England is set to hike the rate by 25 basis points, while the Bank of Japan is limited to debating the detrimental impact of the national currency’s low exchange rate on economic growth. The challenge of excessive inflation for the Japanese economy, which deflationary trends have traditionally plagued, is not as severe as it formerly was.

Daily Analysis Report 14 June ‘2022

Daily Analysis Report 14 June '2022

Daily Analysis Report 14 June '2022

EUR/USD

The euro has risen slightly against the US dollar, recovering from a “bearish” start to the week, as a result of which the EUR/USD pair has updated local lows from May 16. The instrument is waiting for further growth drivers to arrive before testing 1.0430 for a breakout. On the other hand, investors are not in a rush to open new trading positions ahead of this week’s meetings of major central banks, the most important of which is the US Federal Reserve, which will announce its interest rate decision tomorrow. Investors are confident that the US Federal Reserve will continue to tighten monetary policy; the only question today is how quickly it will do so.

In any case, traders will be watching authorities’ words closely for any shift in attitude. Today, Germany is slated to release a set of consumer inflation numbers for May; it is believed that the amount will fall slightly from 0.9 percent to 0.8 percent and that the annual price increase rate will continue at 7.9 percent. Data on the eurozone’s Consumer Price Index will be released on Friday.

GBP/USD

The British pound is trading in an uptrend against the US dollar, correcting after a confident “bearish” trend on June 8, which caused the instrument to update record lows on May 18, 2020. The development of technical aspects is significantly responsible for growth. Specifically, investors are establishing long positions in the US dollar, preferring to await the result of Wednesday’s US Federal Reserve meeting. According to inflation figures issued on Friday, consumer prices do not appear to have passed their peak levels, surprising market participants. The macroeconomic backdrop in the United Kingdom is similarly murky. On Monday, GDP figures were released, showing that the national economy contracted by 0.3 percent in April after dropping by 0.2 percent in March.

Industrial production declined 0.6 percent in April after falling 0.2 percent the month before, while manufacturing output decreased 1% in the same period after falling 0.2 percent the month early. This week, investors will be focused on the outcomes of the Bank of England meeting, from which they expect more actions aimed at tightening monetary policy; however, due to the British economy’s second consecutive month of decline, there are concerns that such actions by the regulator will be noticeably complicated.

NZD/USD

The New Zealand currency recovers ground against the US dollar, retreating from local lows of May 16 and testing 0.6275 for a breakout, attempting to reverse the confident slide the day before. On Tuesday, correctional emotions for the US dollar were seen across the market. They were linked to the US Federal Reserve’s approaching meeting, which will conclude with the release of an interest rate decision on Wednesday. Current projections suggest a 50-basis-point hike; however, given the freedom of inflation data in the United States at the end of last week, it’s likely that the regulator will take more harsh actions.

The most critical data from New Zealand will be released on Thursday when new data on the dynamics of the Gross Domestic Product for Q1 2022 will be presented. The New Zealand economy’s quarterly growth rate is expected to be reduced from 3.0 percent to 0.6 percent. In comparison, annual GDP is expected to grow by 3.3 percent, higher than the prior estimate of 0.2 percent.

USD/JPY

When partnered with the Japanese yen, the US dollar exhibits multidirectional trading behavior, consolidating near record highs and the level of 135.00. Investors prefer to wait for the outcome of the US Federal Reserve meeting, which will be held on Wednesday. Therefore activity on the instrument has been noticeably falling since the end of the previous trading week. Following the announcement of US inflation statistics last Friday, the Fed’s chances of raising the rate by 75 basis points or adjusting the timeframe of the scheduled halt in monetary tightening have increased dramatically. The Bank of Japan will also meet this week, although no significant action is expected from the Japanese regulator.

Although the Japanese economy faces tolerable inflation risks, regulator representatives warn of the dangers of the rapid depreciation of the national currency. Japan’s macroeconomic indicators issued today added to the yen’s pressure: Industrial Production declined by 1.5 percent in April after falling by 1.3 percent the month before, and the hand lost 4.9 percent annually after falling by 4.8 percent.

XAU/USD

Gold prices are recovering from local lows on May 18 with sluggish corrective growth. The instrument had been steadily declining the day before, owing to the quick rise in fears of a new coronavirus outbreak in China. Shanghai authorities have announced additional mass testing in almost all of the city’s districts, with five residents already barred from leaving their homes. Beijing has also reported an increase in COVID-19 infections, which could force the closure of several businesses. Gold demand is also dwindling against the backdrop of a resumption of the rise in US Treasury note yields: the measure jumped to 3.301 percent from 3.300 percent the day before.

Investors are not in a rush to start new long positions on the instrument ahead of the release of the US Federal Reserve’s last minutes on Wednesday. Given the previously released poor data on consumer inflation, the regulator is expected to raise the interest rate by at least 50 basis points. However, given the disappointing data on consumer inflation, a more aggressive hike is possible.

Daily Analysis Report 13 June ‘2022

Daily Analysis Report 13 June '2022

Daily Analysis Report 13 June '2022

EUR/USD

The European currency is losing ground versus the US dollar, testing 1.0500 for a break and updating local lows from May 19. Investors are assessing the US macroeconomic data provided on Friday, which has caused them to reconsider the US Federal Reserve’s monetary policy possibilities. In May, the Consumer Price Index in the United States increased from 0.3 percent to 1.0 percent, exceeding market expectations of 0.7 percent. Inflation has returned to 40-year highs, reaching a fresh high of 8.6 percent in April, while consumer prices jumped by 8.3 percent. Simultaneously, the CPI excluding food and energy fell from 6.2 percent to 6.0 percent in May.

Contrary to projections, inflation in the United States does not appear to have reached it is high. In this sense, it is likely that the US Federal Reserve will continue to raise interest rates by the end of the summer and may even tighten its “hawkish” stance. Analysts at Barclays Bank, for example, anticipate the US Federal Reserve will hike rates by 75 basis points at its next meeting on Wednesday.

GBP/USD

During the morning session, the British pound is trading in a decline versus the US dollar, updating local lows from May 16. The GBP/USD currency pair is attempting 1.2300 for a break, prompted by US consumer inflation data issued on Friday, indicating a further price acceleration rather than a gradual decrease. In May, the annual rate hit a new high of 8.6%, prompting a reconsideration of the US Federal Reserve’s monetary policy possibilities. At the meeting on Wednesday, June 15, it is expected that the US regulator will aim to raise its “hawkish” rhetoric over the pace of interest rate hikes. On the other hand, the Bank of England’s interest rate representative meeting is set for Thursday, June 16. The value is projected to rise due to the UK regulator’s actions; in addition, officials’ comments will be crucial. The UK will release a large set of macroeconomic information on Monday and Tuesday to help markets prepare for the regulator’s final meeting. After a brief dip in April, price growth rates in the United States rose to 8.6% in May. Not the most reliable macroeconomic indicators from New Zealand, in turn, exert pressure on the New Zealand dollar’s holdings. In May, electronic card retail sales fell from 7.1 percent to 1.9 percent. Sales fell from 2.1 percent to 0.7 percent on an annual basis.

USD/JPY

Compared to the Japanese yen, the US dollar has been relatively active, renewing record highs and testing 135.00 for a breakout. The dollar is seeing renewed buying activity at the start of the week, as traders expect the US Federal Reserve to tighten monetary policy further at its meeting on Wednesday. Furthermore, based on US macroeconomic data provided last Friday, it is anticipated that the regulator would tighten its “hawkish” stance by hiking interest rates by 75 basis points at its June meeting. The figures indicated that inflation in the country had accelerated, implying that consumer prices had not yet reached their peak in April. The Bank of Japan will hold a meeting of representatives this week; nonetheless, the regulator aims to maintain its loose monetary policy and is prepared to provide extra stimulus if the situation warrants it.

XAU/USD

Gold prices have begun to adjust, retreating from their local highs of May 9, which were updated at the start of the week. Long positions initiated last Friday when demand for XAU/USD soared again after the release of multidirectional macroeconomic indicators on inflation in the US was being liquidated by investors. According to newly available statistics, the hand accelerated to 8.1 percent in May, a new high since December 1981. Every month, the country’s Consumer Price Index increased from 0.3 percent in April to 0.7 percent in May. As a result of the revision of inflation figures, the US Federal Reserve is likely to adopt a more aggressive strategy aimed at tightening monetary conditions. The regulator may choose to hike interest rates more quickly, for example, by 75 basis points, or to continue the planned value adjustment after two meetings in June and July. It was previously believed that following two rate hikes in the summer, officials would take a breather to examine the impact of the actions implemented on the economy and consumer price growth.

 

Daily Analysis Report 09 June ‘2022

Daily Analysis Report 09 June '2022

Daily Analysis Report 09 June '2022

EUR/USD

The European currency is rising somewhat versus the US dollar, attempting to rebound from a predominantly “bearish” start to trade this week, which saw EUR/USD update local lows from June 2. The instrument is testing the level of 1.0730 for a breakout, awaiting the release of the final minutes of the European Central Bank’s (ECB) interest rate meeting later today. According to projections, the regulator will maintain the current monetary policy settings but will announce a probable increase in the value in July. The ECB, on the other hand, may be more decisive, raising the rate as early as June or announcing the start of a quantitative tightening program.

The European regulator is anticipated to adopt a more aggressive monetary policy because of the good figures on the euro area’s gross domestic product published the day before. In quarterly terms, Eurozone GDP for Q1 2022 was revised from 0.3 percent to 0.6 percent, and in annual terms, from 5.1 percent to 5.4 percent.

GBP/USD

The British pound is trading in a multidirectional manner against the US dollar, with a price near 1.2535. Traders are not rushing to open new positions ahead of the European Central Bank’s (ECB) interest rate meeting. Furthermore, the macroeconomic backdrop remains bleak, and investors are gearing up for next week’s meetings of the Bank of England, the Federal Reserve of the United States, and the Bank of Japan. Macroeconomic data slightly influenced the pound’s positions issued the day before in the United Kingdom. In May, the S&P Global Construction PMI in the UK dropped from 58.2 to 56.4 points, although market expectations were for a drop to only 56.6 points. At the same time, Halifax House Prices fell from 1.2 percent to 1.0 percent in May, which might be seen as an indication that the country’s inflation peak has passed.

AUD/USD

The Australian dollar depreciates moderately against the US dollar, maintaining the corrective momentum established the day before. The AUD/USD is approaching the local lows of June 2, updated last Tuesday, and is targeting 0.7180 for a break. The Reserve Bank of Australia (RBA) opted to raise the interest rate by 50 basis points to 0.85 percent this week, despite most projections expecting only a 25-basis-point hike. The regulator went on to say that inflation has a detrimental impact on economic growth in a follow-up statement. 

The data from China today backs up the instrument strongly: Export volumes increased by 16.9% in May, compared to only 3.9 percent a month before, and growth of 8% is expected in the following months. Imports grew by 4.1 percent in the same time, which was twice as excellent as projections, and the trade surplus increased from 51.12 billion dollars to 78.76 billion dollars in May.

USD/JPY

The US dollar is trading in a mixed manner, consolidating near fresh record highs and the level of 134.00 and continuing the general rise that began on May 30. The probability of the Bank of Japan sustaining its current loose monetary policy exerts pressure on the yen’s position. While practically all major financial regulators have begun to raise interest rates considerably (the European Central Bank (ECB) is set to start the program in July), the Japanese government is pushing for further stimulus. Masazumi Wakatabe, the regulator’s Deputy Governor, said such words were made, who also agreed that new incentives could be introduced if the economic circumstances warranted them.

The yen received little apparent support from macroeconomic indicators provided in Japan yesterday. The Eco Watchers Survey on Current Situation rose from 50.4 to 54.0 points in May, compared to a forecast of 49.2 points. Revised data on the dynamics of gross domestic product for Q1 2022 were revised upward from –0.2 percent to –0.1 percent in quarterly terms and from –1.0 percent to –0.5 percent in annual terms.

XAU/USD

Gold prices are essentially unchanged, settling at about 1855.00. Trading participants are not in a rush to open new positions on the instrument before the final minutes of the European Central Bank’s (ECB) monetary policy meeting today. The ECB is expected to suggest a probable increase in interest rates at its upcoming meetings. Still, it is also feasible that the regulator will modify the value as early as June. The Federal Reserve of the United States and the Bank of England will reveal their monetary policy choices next week. Both authorities are likely to increase interest rates to combat inflationary threats.

Meanwhile, even though gold does not yield interest income, demand for it as a safe-haven asset remains strong, and the geopolitical scenario does not support a quick resolution to the current crisis in Ukraine.

Daily Analysis Report 08 June ‘2022

Daily Analysis Report 08 June '2022

Daily Analysis Report 08 June '2022

EUR/USD

During the Asian session, the European currency fell slightly versus the US dollar, settling near 1.0680. The market’s activity remains low as the news backdrop shifts marginally. Yesterday, investors were focused on German Factory Orders data, which showed a loss of 2.7 percent in April after falling by 4.2 percent the month before, despite experts expecting a 0.5 percent increase. The negative dynamics expanded from –2.9 percent to –8.9 percent annually, which was also worse than market expectations. Only data on Sentix Investor Confidence in the Eurozone, which rose from –22.6 to –15.8 points in June, provided minor support for the instrument, despite experts expecting slight improvement.

Investors are currently anticipating the release of new figures on the dynamics of the Eurozone GDP for the first quarter of 2022. According to previous projections, the region’s GDP grew by 0.3 percent quarter over quarter and 5.1 percent year over year. Employment Change figures for Q1 2022 will also be revealed during the day.

GBP/USD

During the morning session, the British pound trades with multidirectional dynamics against the US dollar, retracing following a day of rapid increase. The instrument is waiting for new drivers to arrive on the market before testing 1.2550 for a breakdown. The British pound grew due to a vote of confidence in British Prime Minister Boris Johnson. The official received the Conservative Party’s support as expected, albeit with only 59 percent of the total votes.

Analysts draw comparisons with previous Prime Minister Theresa May, who resigned after receiving 63 percent of the vote in a similar referendum. Statistics from the United Kingdom provided additional support for the pound on Tuesday. The S&P Global Services PMI rose from 51.8 to 53.4 points in May, outperforming analysts’ unbiased estimates.

AUD/USD

In the Asian session, the Australian dollar is actively depreciating versus the US dollar, correcting after a day of equally vigorous growth. Under pressure from the recovering US dollar, the instrument tests the level of 0.7200 for a break. Contrary to expectations, the Reserve Bank of Australia (RBA) hiked its interest rate by 50 basis points to 0.85 percent on Tuesday. Officials rationalized the decision by rising consumer prices in a follow-up statement, stressing that they remain under control and are often lower than in other advanced nations. The speech of US Treasury Secretary Janet Yellen, who once again focused on the challenges of high inflation in the US, put pressure on the US currency.

The official recognized that the US Federal Reserve is to blame for rising costs and mentioned external dangers, such as supply chain disruptions and the looming oil market crises. Yellen also advocated for securing the flow of Russian oil to global markets to avoid a worsening of the problem with “black gold” and gasoline prices.

USD/JPY

In Asian trading, the US dollar rises boldly against the Japanese yen, testing 133.00 for a breakout and updating multi-year highs. A further increase in US Treasury yields, which makes the dollar more appealing as a safe-haven asset, supports the positive dynamics. The yen’s pressure increased due to Bank of Japan Governor Haruhiko Kuroda’s speech, in which he reaffirmed the regulator’s commitment to further monetary stimulus. This indicates that the regulator still views inflationary pressure as a transient phenomenon beneficial to the country’s economy, which is facing deflationary dangers.

Optimistic macroeconomic indicators from Japan provide minor support for the yen today. The country’s GDP declined by 0.1 percent in Q1 2022, which was much better than the market’s projection of a 0.3 percent decline. After a predicted drop of 1%, the Japanese economy slowed by 0.5 percent annually.

XAU/USD

During the Asian session, gold prices stabilize near 1850.00, with uncertain dynamics. The instrument had shown a moderate increase the day before, recovering from its local lows of June 1 and nearly fully recouping Monday’s losses. A drop aided the formation of the uptrend in the yield on US Treasury notes, which fell from 3.038 percent to 2.979 percent from their prior highs. On the other hand, investors are not in a rush to create new trading positions in the instrument, preferring to wait for monetary policy decisions from key global financial authorities.

The European Central Bank (ECB) will meet this week, and the market expects the regulator to announce the start of a quantitative tightening program. Next week, the US Federal Reserve and the Bank of England will discuss the key issues, and the market expects “hawkish” rhetoric from both. Based on Governor Haruhiko Kuroda’s recent comments, the Bank of Japan would continue a dovish stance.

Daily Analysis Report 07 June ‘2022

Daily Analysis Report 07 June '2022

EUR/USD

During today’s Asian session, the euro is trading flat against the US dollar, staying at 1.0680 and waiting for new drivers to emerge on the market. This week, investors are particularly interested in the outcomes of the European Central Bank (ECB) meeting, which will take place on Thursday. Even though there is no talk of rising interest rates, the regulator may suggest such a possibility in the future. The quantitative easing (QE) program is expected to begin ahead of monetary tightening.

Meanwhile, the euro is under pressure as tensions over the Russian-Ukrainian conflict rise. Both parties are unwilling to address the crisis at the negotiating table, preferring to gain an early advantage to enhance their negotiating position. The EU continues to impose sanctions on Russia’s economy, but this has had the effect of driving inflation in the region and causing a quick rise in costs for energy and a variety of other items.

GBP/USD

During the morning session, the British pound is trading lower versus the US dollar, testing 1.2500 for a break. Following a failed attempt at corrective increase the day before due to technical causes, the pound has reverted to a little loss. The vote results of Conservative deputies, who spoke in support of incumbent Prime Minister Boris Johnson, who faces a No-Confidence Vote for a serious violation of quarantine rules, gave some support for the British pound. 211 Conservative Party members voted for Johnson, while 148 voted against him. The instrument’s dynamics are unaffected by today’s macroeconomic statistics from the United Kingdom. After declining 1.7 percent in April, BRC Like-For-Like Retail Sales fell 1.5 percent in May.

NZD/USD

During the Asian session, the New Zealand dollar has mixed trade behavior, consolidating near 0.6470. The instrument attempts to develop a modest “bearish” signal established after last week, when the New Zealand dollar updated its local highs from April 27. Investors are currently not in a hurry to open fresh trading positions, preferring to wait for new drivers to emerge on the market. Last week’s assessment of the US labor market was cautiously optimistic:

In May, nonfarm payrolls were above market expectations (390K vs. 325K).

The unemployment rate stayed unchanged at 3.6 percent.

The average hourly wage continued to decline.

However, for the time being, this is sufficient for the US Federal Reserve to continue tightening monetary policy as planned. Analysts currently estimate two additional 50-basis-point rate hikes in June and July, following which the regulator will likely take a break to examine the actions adopted.

USD/JPY

In Asian trade, the US dollar is gaining ground versus the Japanese yen, forming a “bullish” trend that began at the end of May. USD/JPY is attempting a breakout above 132.60, renewing twenty-year highs. The US dollar is supported by increasing US Federal Reserve interest rates and increasing the yield on national government bonds, making it a desirable safe-haven currency. Furthermore, the Bank of Japan remains a wait-and-see approach and is just beginning to respond to inflationary threats. Still, the US regulator’s monetary policy outlook for the next several meetings is pretty clear. The Japanese economy, which has been in a deflationary position for many years, will undoubtedly react.

Japan’s macroeconomic statistics released today failed to provide the yen with much assistance. After increasing by 2% in March, labor cash earnings increased by 1.7 percent in April. Analysts predicted a far more modest 0.5 percent growth rate. At the same time, overall household spending declined by 1.7 percent in April, following a 2.3 percent drop the month before. Analysts had predicted a 0.8 percent drop.

XAU/USD

During the Asian session, gold prices are hovering around 1840.00, attempting to recover from a modest fall on Monday. Given the likelihood of the US Federal Reserve tightening monetary policy further, the increase in 10-year US bond yields makes the US dollar an incredibly appealing asset for investment. The European Central Bank’s current posture also negatively influences gold (ECB). To combat the rapid rise in inflation, the regulator has recently spoken out in support of hiking interest rates.

On Thursday, the European Central Bank (ECB) will convene, and some analysts predict it will announce the start of a pullback in its quantitative easing (QE) program. According to current predictions, an increase in the interest rate is possible in Q3 2022 if the market scenario does not change dramatically.

Daily Analysis Report 06 Jun ‘2022

Daily Analysis Report 06 Jun ‘2022

Daily Analysis Report 06 Jun ‘2022

EUR/USD

During the Asian session, the euro has been relatively stable against the US dollar, maintaining around 1.0720. Last week’s trade concluded in an uneasy flat, even though it managed to update both local highs from April 25 and local lows from May 23 over the week. Weak macroeconomic indicators on business activity and retail sales, which were issued in the euro area last Friday, put pressure on the single currency’s positions at the start of the week. In May, the eurozone’s S&P Global Manufacturing PMI declined from 54.9 to 54.8 points, while the Services PMI fell marginally from 56.3 to 56.1 points, despite experts expecting no changes. In April, retail sales in the eurozone decreased by 1.3 percent.

The indicator increased from 1.6 percent to 3.9 percent on an annual basis but fell short of the predicted value of 5.4 percent. As a result, demand for the euro is remaining steady as market investors expect the European Central Bank (ECB) to ratchet up its rhetoric this week. The agency will announce its rate decision on Thursday, and some analysts believe it will dramatically alter its rhetoric during the current meeting. The ECB is expected to announce a pullback in its quantitative easing program, after which it will rapidly begin a cycle of interest rate hikes.

GBP/USD

During the morning session, the pound was mixed against the US dollar, trading at about 1.2500. Because several European markets are closed for national holidays at the start of the new week, market activity remains muted. Simultaneously, investors continue to assess previously available macroeconomic indicators to conduct further price analysis. The report on the US job market, released last Friday, was rather upbeat, pointing to the maintenance of some market tension, which is required to keep the US Federal Reserve’s “hawkish” policy in place. The US economy added 390,000 new employment in May outside the agricultural sector. Non-Farm Payrolls were 436K in April, compared to 325K predicted by analysts in May. Simultaneously, the unemployment rate remained unchanged at 3.6 percent (expected to decrease to 3.5 percent ). The average hourly earnings climbed by 0.3 percent month over month and 5.2 percent year over year, significantly less than market expectations.

AUD/USD

During the Asian session, the Australian dollar is losing ground versus the US dollar, seeking 0.7200 for a break. The Australian dollar is developing a “bearish” momentum, which began at the end of last week when it retreated from its local highs of April 22. The US dollar was strengthened on Friday by a positive report on the national job market, giving us hope that the US Federal Reserve will maintain its current monetary policy to keep inflation from rising too quickly. Australia’s numbers, on the other hand, were discouraging. In May, the AiG Performance of Construction Index decreased from 55.9 to 50.4 points, worse than experts’ expectations. 

In April, home loans granted in Australia plummeted by 7.3 percent after growing by 0.9 percent the month before. Analysts had predicted a 1% drop. Investors will be waiting for the Reserve Bank of Australia’s (RBA) interest rate announcement tomorrow. The amount is expected to be hiked by 25 basis points to 0.6 percent as the regulator responds to rising inflationary pressures in the country.

USD/JPY

In Asian trade, the US dollar is slightly lower, staying at 131.00 and local highs from May 9, after receiving a little upward boost with a rather solid report on the US labor market for May last Friday. At the same time, business activity statistics and measures of Average Wages and total Unemployment were somewhat below market expectations. The numbers give investors hope that the US Federal Reserve’s “hawkish” stance of raising interest rates by 50 basis points will be maintained during the June and July meetings.

The Bank of Japan, on the other hand, is taking a wait-and-see approach, even though rising inflationary pressures are already impacting the Japanese economy. This week, many macroeconomic indicators will be disclosed, with the latest quarterly GDP statistics, which will be released on Wednesday, taking center stage. According to the earlier forecast, the country’s economy will decrease by 0.2 percent quarter-on-quarter and 1.0 percent year-on-year in Q1 2022.

XAU/USD

During the Asian session, gold prices exhibited a tiny corrective rise, following a relatively active loss last Friday, when the instrument retreated from its local highs of May 9. With the release of the May data on the US job market, which supported the view of additional tightening of the US Federal Reserve’s monetary policy, the pressure on the instrument grew after the week. In May, the non-agricultural sector of the US economy added 390,000 new jobs, while the unemployment rate stayed at 3.6 percent.

Analysts predicted a 325K job increase while expecting the unemployment rate to drop to 3.5 percent. The gradual tightening of the rhetoric of other financial authorities is also exerting downward pressure on gold’s price. According to economists, the European Central Bank (ECB) is expected to reduce its quantitative easing program soon. The Reserve Bank of Australia (RBA) may also announce a 25-basis-point hike this week.

Daily Analysis Report 02 Jun ‘2022

Daily Analysis Report 02 Jun ‘2022

Daily Analysis Report 02 Jun ‘2022

EUR/USD

The euro is trading mixedly against the US dollar, stabilizing at about 1.0650 following two sessions of fall that saw local lows from May 23 renewed. Since Tuesday, the euro has been under pressure following the release of eurozone inflation statistics for May. The Harmonised Index of Consumer Prices increased from 3.5 percent to 3.8 percent, exceeding market expectations. The Core Consumer Price Index updated a new high of 8.1 percent in May, despite experts expecting just 7.7 percent.

Furthermore, disappointing Retail Sales data in Germany were released yesterday: in April, the indicator fell by 0.4 percent in annual terms after falling by 1.7 percent the month before, despite preliminary market estimates predicting positive dynamics of 4.0 percent, and sales fell by 5.4 percent every month after rising by 0.9 percent in March. Expectations that the European Central Bank (ECB) will begin a cycle of interest rate hikes provide some support for the single currency. The members of the regulator’s board have yet to agree on a concrete timetable for tightening monetary policy. Still, given the current pricing pressure, it is evident that this will happen soon.

GBP/USD

During the morning session, the British pound trades with multidirectional dynamics against the US dollar, updating local lows from May 20. The pound is testing 1.2480 for a break, being pressured by the strengthening dollar, which took control of the market on Tuesday. Positive macroeconomic data from the United States provided mild support to the US currency yesterday. In May, the ISM Manufacturing PMI increased from 55.4 to 56.1 points, despite economists expecting a drop to 45.5 points.

At the same time, a similar index from S&P Global fell marginally from 57.5 to 57.0 points in May. Treasury yields are recovering in one way or another. Investors are hoping that the US Federal Reserve’s strategy will result in a notable reduction in inflationary pressure in the country. We can deduce from macroeconomic statistics on consumer price dynamics that inflation has passed its peak; nonetheless, the uncertainty of external causes cannot be dismissed just yet.

NZD/USD

During the morning session, the New Zealand dollar remained steady against the US dollar, stabilizing between 0.6470 and local lows from May 27. The NZD/USD pair tried a corrective rise the day before, but the “bulls” could not consolidate on new highs, and the instrument retreated to the “red” zone near the end of the daily session. The New Zealand currency was boosted yesterday by upbeat data from China and Australia, where the economic slowdown was weaker than economists had projected. According to Chinese statistics, the Caixin Manufacturing PMI increased from 46 to 48.1 points in May, but the growth estimate was only 47 points.

Manufacturing activity is expected to pick up in the coming months, as firms in Shanghai reopened on June 1 following a lengthy shutdown. Pressure on the instrument was exerted by cautiously hopeful statistics from the US on manufacturing activity and the US Federal Reserve’s monthly economic review “Beige Book,” which was released near the end of the session. The American regulator noticed moderate economic development in almost all of the country’s twelve Federal Reserve districts, as expected. However, other communities have reported that growth has halted as the economy deteriorates. Food and energy prices are rising, and property markets react to rising interest rates.

USD/JPY

In Asian trade, the US dollar is mixed against the Japanese yen, with a breakout challenging firm resistance at 130.00. The day before, USD/JPY showed a consistent rise, maintaining the “bullish” momentum established at the start of the week, and the instrument was also bolstered by reasonably upbeat macroeconomic data from the US and a pretty positive economic review from the US Federal Reserve, the “Beige Book.” Investors are not in a rush to build trading positions, preferring to wait for new drivers to emerge on the scene. Traders are concentrating their attention today on May’s ADP Employment Change report.

According to current projections, employment will increase by 300 thousand new jobs, up from 247 thousand a month ago. The final report on the US labor market for May will be released on Friday. Investors have historically had high expectations, implying that a healthy labor market will be one of the factors influencing the Federal Reserve’s tight monetary policy. 

XAU/USD

During the Asian session, gold prices are trading in various directions, maintaining near 1845.00. After a relatively aggressive growth the day before, which allowed the instrument to retreat from the local lows of May 19, XAU/USD is looking for new drivers. As market volatility intensified, gold was once again supported by rising demand for safe-haven assets. The prospects for the US Federal Reserve’s monetary policy have recently been the subject of much conjecture. At the same time, the European Central Bank (ECB) may also begin tightening monetary policy shortly as the eurozone experiences record levels of consumer inflation.

According to current projections, the US regulator will hike rates by 50 basis points in June and July, followed by reflecting on the actions taken. Meanwhile, the Russian-Ukrainian conflict rages on, posing increasing hazards to the global economy, which has yet to recover from the COVID-19 pandemic’s shocks. The EU and the US are tightening sanctions, complicating supply chains, and driving up the cost of various goods, including energy.

Daily Analysis Report 24 May ‘2022

Daily Analysis Report 24 May '2022

Daily Analysis Report 24 May '2022

EUR/USD

During the Asian session, the European currency is generally stable against the US dollar, maintaining near local highs from April 26. The euro rose sharply the day before in response to ECB President Christine Lagarde’s speech, in which she indicated a 50-basis-point rate hike at the end of Q3 2022. In addition, the ECB is expected to declare the conclusion of the quantitative easing program in early July, according to the official. Unexpectedly positive macroeconomic numbers from Germany were another “bullish” factor for the euro.

The German IFO Business Climate Index increased from 91.9 to 93 points in May, outperforming the projected decrease to 91.4 points. For the same period, the IFO Current Assessment index improved from 97.3 to 99.5 points, beating expectations of a drop to 97.2 points. While the market projected a fall to 85.8 points, the IFO Expectations index rose from 86.8 to 86.9 points. The emphasis of European investors today is on Markit data on industrial and service sector business activity for May. Another address by ECB President Christine Lagarde is planned near the close of the afternoon session.

GBP/USD

During the morning session, the British pound is trading near zero against the US dollar, hovering near the local highs set the day before. The GBP/USD exchange rate is hovering around 1.2565, waiting for new drivers to emerge. The pound had managed to accelerate its growth the day before in response to unexpectedly positive statistics from Germany and the European Central Bank’s (ECB) tightening of monetary policy. The European Central Bank is expected to begin hiking interest rates shortly, positively impacting inflation dynamics, which are still at record highs.

On the other hand, analysts worry that tightening monetary policy could slow the region’s economic recovery. Today, investors anticipate releasing a UK business activity statistics set from Markit for May. Current projections point to a mild drop in corporate activity, but US data has not met optimistic expectations.

AUD/USD

During the Asian session, the Australian dollar displayed a small loss against the US dollar, correcting following a very sharp rise the day before, which saw the instrument reach fresh local highs for the first time since May 6. The AUD/USD pair briefly consolidated above the high resistance level of 0.7100, but the “bulls” then marginally corrected. The devaluation of the US currency was blamed for the increased buying activity in statements by Christine Lagarde, President of the European Central Bank (ECB). She announced the conclusion of the bond purchase program in July and an increase in interest rates at the end of Q3 2022.

Weak macroeconomic data from Australia puts downward pressure on the Australian currency. In May, the Commonwealth Bank Manufacturing PMI declined from 58.8 to 55.3 points, worse than experts’ expectations of dropping to 57.8 points. The Services PMI fell from 56.6 to 53 points for the same period, while experts predicted a drop to 52.2 points. In May, the Commonwealth Bank Composite PMI dropped from 55.9 to 52.5.

USD/JPY

 

In Asian trade, the US dollar fell slightly against the Japanese yen, keeping close to the local lows of April 27 and testing the level of 127.50 for a break. The US dollar is under pressure again due to upbeat macroeconomic reports from Europe and Japan. The pressure on dollar quotes increased at the start of the week after Christine Lagarde, the European Central Bank (ECB) president, gave a “hawkish” speech, announcing the commencement of monetary policy tightening measures in July.

As expected, the regulator will first complete the quantitative easing program before raising interest rates at a pace that will likely mirror the US Federal Reserve, i.e., in 50-basis-point increments. The yen is currently supported by relatively upbeat macroeconomic statistics on business activity. In May, the Jibun Bank Manufacturing PMI fell from 53.5 to 53.2 points, better than the negative forecast of a drop to 52 points. Over the same period, the Jibun Bank Services PMI rose from 50.7 to 51.7 points, when experts predicted the data to fall to 50.6 points.

XAU/USD

 

During the morning session, gold prices rose slightly, extending a pretty strong “bullish” momentum that began in the middle of last week. The demand for XAU/USD remains steady as global tensions rise and fundamentals remain unchanged. Many economies are experiencing historic inflation due to rising energy and other resource prices, driving investors to seek out less hazardous investments. As a result of growing inflation, central banks worldwide are tightening monetary policy, making gold ownership less appealing because it does not yield interest revenue.

Meanwhile, a special military operation in Ukraine continues, and the diplomatic process has been halted, prolonging the conflict. Currently, investors anticipate the release of May economic activity numbers in the United States and April data on the dynamics of new home sales. The Chair of the US Federal Reserve, Jerome Powell, is also slated to speak during the day.

Daily Analysis Report 23 May ‘2022

23 Mar 2022

Daily Analysis Report 23 May '2022

EUR/USD

The euro begins the new week with modest gains versus the US dollar, reaching 1.0600 for a breakout and ending near the local highs established last Thursday. The weakness of the US dollar, which came under pressure with a notable adjustment in the yield on US Treasury notes, gave moderate support for the single currency at the start of the week. Last Thursday, analysts reported that the work on 10-year notes had dropped to a three-week low of 2.77 percent, down from 3.2 percent earlier. The European Central Bank’s (ECB) soft monetary policy, or the widening gap between the two rates, pressures the euro.

Representatives of the European Central Bank are beginning to favor launching a rate hike program, but the Bank’s official attitude remains cautious. The ECB, on the other hand, is unlikely to be able to stay on the sidelines for long, and the argument here is not about rate competition or exchange rates. Inflation in the eurozone is at an all-time high, and the European regulator risks following in the footsteps of the US Federal Reserve, which for a long time dismissed record price growth as a fad.

GBP/USD

During the morning session, the pound continued its climb by trading in tandem with the US dollar, testing the level of 1.2550 for a breakout and updating local highs from May 5. The increase of corrective mood for the US dollar against the backdrop of a noteworthy decline in the yield on US Treasury bonds has aided the strengthening of the British pound at the start of the week. Traders are also following the lead of reasonably upbeat macroeconomic data from the UK released on Friday, which outperformed negative expectations. Retail Sales rose 1.4 percent in April after dipping 1.2 percent the month before, despite economists expecting a 0.2 percent drop.

The index fell sharply by 4.9 percent on an annual basis after gaining by 1.3 percent in March, while prior market predictions indicated a more active loss of 7.2 percent. Retail Sales Excluding Fuel, up 1.4 percent month over month but down 6.1 percent year over year, compared to a forecasted decline of 0.2 percent month over month and 8.4 percent year over year. Housing prices in the United Kingdom were announced today. The Rightmove House Price Index climbed by 2.1 percent month over month and 10.2 percent year over year, which was somewhat higher than the prior readings of 1.6 percent MoM and 9.9 percent YoY.

NZD/USD

During the Asian session, the New Zealand currency strengthens versus the US dollar, building on last week’s strong “bullish” Trend. NZD/USD is attempting a breach above 0.6450, updating local highs from May 5. The instrument is in an uptrend against the backdrop of a US currency correction, accompanied by a steep decline in the yield on US Treasury bonds. The New Zealand currency is also rising due to news from Shanghai, where authorities expect to relax previously imposed quarantine restrictions beginning June 1. On the other hand, New Zealand’s macroeconomic backdrop remains relatively neutral.

According to data released on Friday, credit Card Spending fell from 3.4 percent to 1.1 percent in April, lower than experts’ average projection of 1.6 percent growth. New Zealand’s exports fell slightly in April, from 6.48 billion to 6.31 billion dollars. Still, imports fell even more sharply, from 7.06 billion to 5.73 billion dollars over the same period, resulting in a 584 million increase in the country’s Trade Balance, up from 581 million dollars a month earlier. Traders are anticipating the outcome of the Reserve Bank of New Zealand (RBNZ) meeting, which will be revealed on May 25, and expect another 50 basis point increase in interest rates.

USD/JPY

During the Asian session, the US dollar is trading in a decline versus the Japanese yen, testing the level of 127.50 for a breakdown. USD/JPY is trading near the local lows of April 27, suggesting that the decline will continue in the short term. The corrective mood in the US currency and a reduction in the yield on US Treasury bonds have aided the formation of the “bearish” Trend. Although the most recent data on consumer prices in the US indicated the likely crossing of the growth peak, investors worry about further worsening inflation.

The US Federal Reserve’s policy has not altered significantly in recent months, and the regulator aims to hike the interest rate by another 50 basis points at its next meeting. The Bank of Japan, on the other hand, is taking a wait-and-see approach, preferring to focus on managing the quantitative easing program. According to Japanese inflation data released on Friday, the National Consumer Price Index increased by 2.5 percent in April, up from 1.2 percent a month earlier. Market analysts predicted only a 1.5 percent increase.

XAU/USD

Gold prices are still rising moderately at the start of the week, updating local highs from May 12. The instrument is attempting a breakout around 1850.00, with no apparent evidence of a weakening trend. The fundamental driver of gold’s current rise is the weak dollar, under pressure since less-than-optimistic macroeconomic data last week. Furthermore, the dramatic drop in US Treasury yields is causing investors to react unfavorably.

Market participants are waiting for the minutes of the US Federal Reserve’s most recent meeting to be released this week to see unambiguous evidence of the Central Bank’s “hawkish” monetary policy continuing. On Thursday, updated statistics on Q1 2022 will be released on US GDP dynamics. The prior estimate represented a 1.4 percent yearly decline in the US GDP.

Daily Analysis Report 20 May ‘2022

Daily Analysis Report 20 May '2022

Daily Analysis Report 20 May '2022

EUR/USD

During the Asian session, the European currency has been relatively stable against the US dollar, maintaining local highs since May 5. The instrument had seen active growth the day before, allowing the effects of Wednesday’s “bearish” trend to be leveled and bringing the euro to a high of roughly 1.0600. The EUR/USD was boosted yesterday by anticipation that the coronavirus quarantine in Shanghai will be lifted soon, allowing many businesses to resume normal operations and improving foreign trade dynamics.

Yesterday’s macroeconomic data from the United States put slight pressure on the dollar’s position. Initial Jobless Claims rose from 197 thousand to 218 thousand for the week ending May 13, above market estimates by 18 thousand. In May, the Philadelphia Fed Manufacturing Index fell drastically from 17.6 to 2.6 points, whereas economists had predicted a drop of about 16 points. The European Central Bank (ECB) meeting minutes released the day before also contributed to the single currency’s slight gain. The regulator warned of the rising dangers of a significant rise in inflation in the region in the study but maintained optimistic estimates for the third and fourth quarters of 2022. Furthermore, many ECB board members are gradually coming out favoring tighter monetary policy. Analysts believe the rate hike will happen in the late summer or early autumn.

GBP/USD

During the morning session, the British pound trades with mixed dynamics against the US dollar, stabilizing at about 1.2450. On Thursday, the pound exhibited strong growth, allowing it to entirely recover from its Wednesday loss. GBP/USD also briefly surged above 1.2500, updating local highs from May 5. The instrument’s rise was aided by the depreciation of the US dollar, which was under pressure due to the country’s bad macroeconomic statistics. Furthermore, corrective moods become more intense at the end of the week.

As a result, the market’s fundamental picture is shifting slightly, and investors are still frustrated by the UK’s consumer inflation dynamics numbers announced this week. The Consumer Price Index increased from 7% to 9% in April, falling just 0.1 percent short of market expectations. Inflation in the United Kingdom increased from 1.1 percent to 2.5 percent every month. Today’s traders are concentrating on British retail sales statistics. At the moment, investors are following the GfK Consumer Confidence numbers. The index dropped from -38 to -40 points in May, missing the estimate of -39 points.

AUD/USD

During the Asian session, the Australian dollar is slightly lower against the US dollar, testing 0.7000 for a break. Corrective sentiments are strong again, and traders are not in a rush to make new purchases without the presence of additional drivers, following vigorous growth the day before, which allowed the instrument to renew local highs from May 9. In addition, the Australian dollar is under modest pressure following the release of an uncertain labor market report. In April, Australia’s employment rate climbed by barely 4,000 people after increasing by 20.3 thousand.

 

Positive dynamics were expected to accelerate to 30 thousand, according to analysts. Full-Time Employment increased from 19.9 thousand to 92.4 thousand, but a steep decrease in Part-Time Employment of 88.4 thousand prevented the final level from setting a new high. The unemployment rate stayed unchanged at 3.9 percent, while the participation rate fell marginally from 66.4 to 66.3 percent. The Australian dollar, in turn, is bolstered by positive news from China, where the arduous multi-week quarantine in Shanghai, which has slowed China’s economic recovery, is scheduled to end on June 1.

USD/JPY

In Asian trading, the US dollar has mixed characteristics against the Japanese yen, stabilizing near 127.70 and settling near April 27 lows. The demand for the yen is progressively increasing as interest in risk declines; yet, the dollar can provide significant competition in this regard. Furthermore, many investors favor the US dollar since the interest rate differential between the US Federal Reserve and the Bank of Japan is large and expected to grow. As a result, the two countries’ inflationary risks remain disproportionate.

While the US regulator is concerned about rising pricing pressures, the Japanese regulator can afford to take a wait-and-see approach, focusing solely on the quantitative easing program. According to today’s inflation statistics in Japan, the increase in the National Consumer Price Index in April from 1.2 percent to 2.5 percent was much greater than market predictions of 1.5 percent. According to analysts, the country’s national CPI, excluding food and energy, increased by 0.8 percent after falling by 0.7 percent a month prior.

XAU/USD

Gold prices stabilized after a day of aggressive expansion that saw the instrument hit new local highs on May 12. The XAU/USD pair is pushing 1840.00 for a breakout, but market activity remains modest. On Friday, the macroeconomic calendar is empty; therefore, no big changes in the instrument’s dynamics could be expected. Experts attribute yesterday’s increase in gold to the dollar’s weakness against the backdrop of poor macroeconomic data from the United States.

 

Initial Jobless Claims climbed from 197 thousand to 218 thousand for the week ending May 13. The Philadelphia Fed Manufacturing Index declined from 17.6 to 2.6 points in May, with a minor rebound to 16 points expected. Existing Home Sales decreased 2.4 percent in April, compared to a 0.7 percent drop projected by investors.

 

Daily Analysis Report 18 May ‘2022

Daily Analysis Report 18 May '2022

Daily Analysis Report 18 May '2022

EUR/USD

During the Asian session, the European currency fell slightly versus the US dollar, stabilizing near 1.0530 after a significant surge the day before, owing to upbeat macroeconomic data from Europe. In Q1 2022, Eurozone GDP increased by 0.3 percent, exceeding the previous estimate of 0.2 percent. The European economy’s growth rate was also revised upward, from 5% to 5.1 percent. In Q1 2022, the Employment Change climbed from 2.2 percent to 2.6 percent.

News from China, where it appears that the quarantine, which was first implemented in Shanghai, is nearing completion, gave more support for the risky euro. The quarantine restrictions are expected to be lifted on June 1. Investors are currently focused on Eurozone consumer inflation numbers. Inflation is predicted to fall from 2.4 percent to 0.6 percent in April, while year-on-year inflation is expected to continue near record highs of 7.5 percent.

GBP/USD

During the morning session, the British pound trades with mixed dynamics against the US dollar, hovering near local highs from May 5 and resistance at roughly 1.2500. Strong news on the UK labor market for March-April boosted the pound the day before. In April, the change in claimant count was 56.9 thousand, down from 81.6 thousand a month earlier. Analysts predicted a drop of 38.8 thousand. In March, the Average Earnings Excluding Bonuses increased from 4.1 percent to 4.2 percent, matching market expectations.

Average Hourly Earnings Bonus increased its growth from 5.6 percent to 7.0 percent, much higher than the market’s projection of a 5.4 percent decrease. With moderate projections, the ILO Unemployment Rate in the UK decreased from 3.8 percent to 3.7 percent in March. Investors are waiting for consumer inflation data for April to be released today. According to current projections, the indicator will rise from 7 percent to 9.1 percent. If market forecasts are correct, pressure on the Bank of England may rise dramatically, prompting the regulator to take more decisive action on monetary policy tightening.

AUD/USD

During the Asian session, the Australian dollar exhibits a small loss against the US dollar, correcting following considerable gains after the previous trading week. AUD/USD updated local highs from May 11 due to the “bullish” trend, having managed to consolidate above the psychological barrier at roughly 0.7000. Since the beginning of the week, the emergence of a rally has been aided by a corrective mood in the US currency. Still, the broader fundamental picture of the market has remained relatively unchanged.

News from China, where quarantine in Shanghai is nearing completion, provides more support for the Australian dollar. Officials anticipate that all quarantine restrictions will be lifted on June 1. The current macroeconomic statistics from Australia harm the instrument’s behavior. After increasing 0.33 percent in March, the Westpac Leading Index declined 0.15 percent in April. The Wage Price Index increased by 0.7 percent QoQ and 2.4 percent YoY in Q1 2022, which was somewhat below market expectations of 0.8 percent QoQ and 2.5 percent YoY, respectively.

USD/JPY

In Asian trading, the US dollar falls slightly against the Japanese yen, testing 129.00 for a break. USD/JPY is trading flat in the short term, unable to develop the corrective momentum established last Friday. During the Asian session, investors are focused on a set of macroeconomic statistics from Japan. Japan’s GDP fell by 0.2 percent in Q1 2022 after growing by 0.9 percent the previous quarter. At the same time, the indicator outperformed expectations, which predicted a 0.4 percent contraction in the economy in quarters.

The Japanese economy slowed by 1% in yearly terms after increasing by 3.8 percent the previous quarter. The actual dynamics were much better than the projected 1.8 percent reduction. In March, the volume of Industrial Production in the country did not change from February readings, showing a monthly increase of 0.3 percent and an annual reduction of 1.7 percent.

XAU/USD

During the morning session, gold prices fell slightly, forming a corrective push that began the day before when quotes updated local highs from May 12. Under pressure from the surging US dollar, gold is ready to challenge psychological support at 1800.00 once more. Tuesday’s data on retail sales trends in the United States exceeded market forecasts. Retail sales volumes fell from 1.4 percent to 0.9 percent in April, while economists projected a 0.7 percent drop. For the same period, retail sales excluding automobiles fell from 2.1 percent to 0.6 percent, which was twice as excellent.

The Retail Sales Control Group fell from 1.1 percent to 1.0 percent in April, while predictions predicted a significant drop to 0.5 percent. As a result, sales numbers do not yet indicate a significant decrease in domestic consumer activity. This mitigates some of the risks investors are concerned about the US Federal Reserve’s monetary tightening pace slowing down.

Daily Analysis Report 17 May ‘2022

Daily Analysis Report 17 May '2022

Daily Analysis Report 17 May '2022

EUR/USD

During the Asian session, the European currency exhibited mixed trading against the US dollar, consolidating near 1.0440 and anticipating new market drivers. The euro exhibited a sluggish increase the day before, maintaining Friday’s momentum, which allowed the instrument to recover from its lowest level since January 2017. Meanwhile, the news and macroeconomic backdrop remained bleak, and the reasons for the instrument’s increase were primarily technical. Yesterday’s European data disappointed some purchasers, but they had little impact on the market overall.

In March, the eurozone trade deficit was 17.6 billion euros, which was much higher than the previous month’s figures (-11.3 billion euros) and projections of a 6.6 billion euro improvement in dynamics. Investors are currently concentrating on the most recent data on GDP dynamics in the euro region for Q1 2022. According to previous figures, the European economy rose by 0.2 percent QoQ and 5% YoY. Quarterly employment numbers will also be released during the day, and a speech by Christine Lagarde, President of the European Central Bank (ECB), in which the official is expected to alter the regulator’s projections for the direction of monetary policy shortly.

GBP/USD

During the morning session, the British pound is uptrending against the US dollar, developing a corrective signal generated after last week. The instrument is looking for a breakout around 1.2335, which would update local highs from May 11. The pound’s current rise is mostly due to technical issues, while the US dollar’s holdings remain relatively strong versus the British currency and across the market. Andrew Bailey, the Governor of the Bank of England, delivered negative news to the news agenda yesterday.

Speaking before the British Parliament, the official stated that the prospect of high inflation remains substantial. The country’s authorities are still unable to control its rapid expansion due to various external causes. Aside from record-high energy prices, there is also a new problem: the food crisis. Ukraine and Russia are major wheat and other grains suppliers to European markets. Still, there is a risk of significant supply disruptions due to a special military operation in Ukraine and a flurry of sanctions against the Russian economy, leading to a rapid rise in prices and acute food shortages in some areas. India’s announcement that it will restrict wheat exports to suit domestic needs exacerbates the problem since record heatwaves are expected to cut crop output.

AUD/USD

AUD/USD renews local highs from May 11, despite a steep drop yesterday due to poor macroeconomic data from China. China’s retail sales plummeted unexpectedly by 11.1 percent in April, following a 3.5 percent drop the month before, despite forecasts expecting a 6 percent drop. The rate of Industrial Production in the country fell by 2.9 percent in April after growing in March.

Positive dynamics were expected to stay at 0.7 percent in the estimates. Today, the Reserve Bank of Australia meeting minutes supports the Australian dollar (RBA). The regulator remained upbeat about inflation forecasts, predicting that it would return to target levels once external concerns stabilized. According to RBA representatives, consumer prices may decrease to the top limit of the specified range of 3% by mid-2024. According to the RBA, interest rates are expected to rise to 1.5 percent by the end of 2022 and 2.5 percent by the end of 2023.

USD/JPY

The US dollar continues to trade cautiously bullishly against the Japanese yen, holding just below the psychological level of 130.00, where trading began this week. The Japanese yen is attempting a weak corrective rise, but the strength of the dollar’s “bulls” prevents it from expecting a more or less sustained rise. Furthermore, disappointing Chinese data released earlier this week had a big impact on the yen’s stance, as it represented the weakening of economic prospects across the Asia-Pacific region. Meanwhile, the yen receives little support from Japanese macroeconomic data.

According to data issued the day before, the Producer Price Index rose 1.2 percent in April after climbing 0.9 percent the month before. In yearly terms, the Producer Price Index increased from 9.7% to 10% during the same period, beating expectations of a decrease to 9.4%. Today, investors are excited about a 1.3 percent increase in the Japanese Tertiary Industry Index in March, much better than analysts’ expectations of 0.4 percent growth.

XAU/USD

Gold prices stabilized following a significant corrective rise on Monday, which saw the instrument rise above the psychological threshold of 1800.00 for the first time. The market’s reaction to the gradual increase in risk sentiment saw XAU/USD go below this level for the first time in 14 weeks yesterday. In addition, as the US Federal Reserve begins a long-awaited cycle of hiking interest rates, market participants increasingly prefer the dollar as a safe-haven asset, properly expecting additional interest income.

Investors are focusing on China’s macroeconomic statistics on retail sales and industrial production dynamics in April, which were released yesterday. The US Fed’s James Bullard, Loretta Mester, and US regulator Jerome Powell are scheduled to speak today during the day.

Daily Analysis Report 13 May ‘2022

Daily Analysis Report 13 May '2022

Daily Analysis Report 13 May '2022

EUR/USD

During the Asian session, the euro exhibited poor growth versus the US dollar, correcting following a significant drop the day before, causing the single currency to hit new lows for the instrument since January 2017. The EUR/USD is attempting to consolidate above 1.0400, but insufficient catalysts are for the single currency’s development. During the day, investors will focus on the release of statistics on the dynamics of industrial production in the eurozone for March. Still, current analyst projections imply that the euro will not be able to gain any support.

However, considering that the US macroeconomic calendar is similarly neutral, the instrument could increase exclusively due to technical causes. The dollar is still in great demand due to concerns about the global economy’s development prospects. Consumer inflation figures provided by the US Federal Reserve on Wednesday indicated that prices might be peaking. However, they are still high enough to prevent the US Fed from relaxing monetary tightening pressure.

GBP/USD

GBP/USD hit its lows since May 2020 as the British pound exhibits an upswing in trading, correcting following another loss the day before. The pound’s rise on Friday is attributable to strengthening technical reasons, while the fundamental picture shifts slightly but still contributes to the continued depreciation of the British currency. The macroeconomic data issued the day before in the United Kingdom disappointed, raising fears of a probable recession. The country’s GDP decreased by 0.1 percent in March, despite analysts expecting it to rise by 0.1 percent.

In quarterly terms, growth dropped from 1.3 percent to 0.8 percent, which was worse than estimates of 1.0 percent, while in annual terms, the economy is still displaying positive dynamics, rising from 6.6 percent to 8.7 percent, just shy of the predicted value of 9 percent, according to the latest data. Although preliminary market forecasts projected a favorable trend at the level of 0.1 percent, the pace of Industrial Production in the country fell by 0.2 percent in March after falling by 0.3 percent the month before.

AUD/USD

During the morning session, the Australian dollar is active corrective growth versus the US dollar, recovering from a severe fall the day before, which caused the AUD/USD to approach record lows since June 2020. Investors close short positions, causing a technical correction as the instrument’s fundamental picture shifts somewhat. The US dollar remains in strong demand as a safe-haven currency. Investors anticipate a further downturn in the global economy, which could be exacerbated by the world’s leading central banks’ “hawkish” stance.

Consumer inflation in the United States may have reached its high, but the reduction has been slower than analysts had predicted. There is no need to expect a swift shift in the US Federal Reserve’s monetary policy direction. If interest rates rise in the future, the American economy’s growth prospects are likely to deteriorate. Weak macroeconomic statistics from Australia are now exerting pressure on the Australian currency’s position. After gaining 3.9 percent in March, HIA New Home Sales dipped 1.2 percent in April.

USD/JPY

In Asian trade, the US dollar recovers against the Japanese yen following a sharp drop the day before, leading to local lows re-establishing from April 27. On Thursday, the dollar displayed a negative trend versus the Japanese yen, one of the few currencies on the market. They relate this behavior to the US Federal Reserve’s “hawkish” policies, which analysts believe may slow down the country’s economic growth shortly. The Bank of Japan, for its part, is currently waiting to see what happens and has not yet begun an interest rate hike cycle.

Existing inflationary threats have a favorable impact on the Japanese economy, prone to deflationary occurrences, making the yen an attractive safe-haven currency, notwithstanding the widening interest rate differential between Japan and the United States. The yen was also helped by positive macroeconomic data from Japan released yesterday. The Eco Watchers Current Situation indicator increased from 47.8 to 50.4 in April, while the Eco Watchers Outlook index increased from 50.1 to 50.3.

XAU/USD

During the Asian session, gold prices are recovering, retreating from the local lows of February 7, which were updated at the start of Friday’s trade. Technical corrective factors have aided the rise in quotations, while the fundamental picture still favors the dollar’s future. Despite the crossing of the peak, US inflation numbers reported in the last few days indicated that prices are still rising at an alarming rate. This may necessitate the US Federal Reserve strengthening price-control measures, such as raising interest rates.

The chances of a 75 basis point hike at the regulator’s June meeting are still slim but don’t forget that the US Federal Reserve has other options. The department may, in particular, speed up the implementation of the quantitative tightening program

Daily Analysis Report 12 May ‘2022

Daily Analysis Report 12 May '2022

Daily Analysis Report 12 May '2022

EUR/USD

During the Asian session, the euro traded with mixed dynamics against the US dollar, stabilizing near 1.0500. The euro attempted to increase the day before, aided by the President of the European Central Bank’s (ECB) upbeat words, but the “bulls” failed to consolidate on fresh local highs. EUR/USD eventually fell back into the “red” zone, maintaining the short-term trend of flat dynamics. The European Central Bank is expected to conclude the asset buyback in early Q3 2022, after which it would begin hiking interest rates.

ECB President Christine Lagarde said this the day before in a speech in Ljubljana. Much will, however, rely on the outcome of the military confrontation in Ukraine, which is still quite dangerous. The instrument’s dynamics were unaffected by macroeconomic information from Europe released on Wednesday. The Consumer Price Index in Germany increased by 0.8 percent in April, which was in line with market predictions. Inflation hovered at about 7.4% on an annual basis.

GBP/USD

During the morning session, the British pound is trading in a downtrend against the US dollar, testing 1.2200 for a break and updating local lows since May 2020. The pound is again under pressure from the surging dollar, which continues to enjoy unwavering support despite a deteriorating global economic outlook. Furthermore, the instrument is under pressure from weak macroeconomic data from the United Kingdom, which reflect the risk of a recession in the country. The market is currently anticipating the release of March data on UK GDP trends and Industrial Production volumes.

The day before, investors were led by releasing US consumer inflation data for April, which is still one of the primary guiding principles for the US Fed when deciding on monetary policy. In April, the Consumer Price Index excluding Food and Energy surged from 0.3 percent to 0.6 percent, exceeding analysts’ predictions of 0.4 percent. The index slowed from 6.5 percent to 6.2 percent on a year-over-year basis, exceeding market expectations of 6.0 percent.

AUD/USD

During the Asian session, the Australian dollar steadily fell against the US dollar, testing 0.6900 for a break. Since June 2020, the AUD/USD has been breaking new lows. The instrument had sought to strengthen the day before, with solid data from China providing support; however, with the start of trading in the US session, the “bulls” swiftly lost all their gains, reacting to the release of April consumer inflation data in the US. In April, Chinese figures showed that the Consumer Price Index increased from 0% to 0.4 percent, twice as high as market expectations.

China’s annual inflation rate increased from 1.5 percent to 2.1 percent, exceeding expectations of 1.8 percent. Inflation in the United States has accelerated from 0.3 percent to 0.6 percent (excluding food and energy). Meanwhile, in May, Consumer Inflation Estimates in Australia (a Melbourne Institute indicator) declined from 5.2 percent to 5.0 percent, exceeding analysts’ expectations by 0.2 percent.

USD/JPY

During Asian trade, the US dollar fell slightly against the Japanese yen, maintaining the corrective trend established the day before. The USD/JPY is testing 129.60 for a break, retreating from the record highs set at the start of the week. The macroeconomic figures from Japan help to strengthen the Japanese currency. In April, bank lending increased by 0.9 percent after increasing by 0.5 percent. The indicator was predicted to decelerate to 0.4 percent, according to analysts.

In April, the Eco Watchers Current Situation Index increased from 47.8 to 50.4 points, above estimates of 42.9 points. For the same period, the Eco Watchers Outlook increased from 50.1 to 50.3 points, which was higher than analysts’ predictions of 47.4 points. Finally, the non-seasonally adjusted Current Account jumped from 1648 billion yen to 2549 billion yen in March.

XAU/USD

During the Asian session, gold prices are consolidating near 1850.00. The instrument anticipates the appearance of fresh growth drivers; nevertheless, the “bulls” are constrained by the strengthening US currency, which is bolstered by the expectation of a rate hike by the Federal Reserve. The April inflation numbers were issued in the United States yesterday, indicating a slight easing of price pressure in the country but still indicating considerable inflation threats.

Such information is unlikely to significantly impact the US Federal Reserve’s present intentions to raise interest rates and begin a quantitative tightening program. The instrument is bolstered by the continued geopolitical concerns in Eastern Europe, where Russia continues to execute a special military campaign on Ukrainian territory despite a barrage of sanctions. Markets are also reacting positively to news from China, where a two-month quarantine in Shanghai is nearing its end.

Daily Analysis Report 11 May ‘2022

Daily Analysis Report 11 May '2022

Daily Analysis Report 11 May '2022

EUR/USD

During the Asian session, the euro rose slightly versus the US dollar, trading near 1.0540 and developing a flat trend in the short term. Trading has been exceedingly murky since the start of the week, preventing the single currency from forming any pronounced patterns or even moving away from its record lows set in January 2017. Market investors are anxious about the chances of global economic recovery as the situation in Ukraine escalates and rising inflationary threats. Demand for the risky euro remains low. The latter are pressuring the world’s central banks to tighten monetary policy faster, which will only slow the recovery and inevitably negatively impact.

The European Central Bank (ECB) is currently waiting to see what happens; however, some ECB officials are optimistic about the likelihood of initiating a rate hike this summer. The European macroeconomic numbers presented on Tuesday were confusing. In May, the German ZEW Current Situation Survey revealed a drop from -30.8 to -36.5 points, which was worse than experts’ expectations of -35 points. At the same time, the ZEW Survey on Economic Sentiment for the euro area improved from -43 to -29.5 points, beating expectations of -41 points.

GBP/USD

 

The British pound is rising against the US dollar, attempting to rebound from a four-session slide that saw it hit fresh lows not seen since June 2020. Extremely low demand for riskier assets puts downward pressure on the instrument, pushing the US dollar to new highs. Despite the Bank of England’s efforts to calm the situation, experts fear that a sharp increase in interest rates will significantly negatively impact the British economy’s recovery, possibly leading to recession. Meanwhile, the energy situation remains precarious as the EU and the UK continue to ratchet up sanctions against Russia’s economy in response to a special military campaign in Ukraine.

The figures released the day before added to the pressure on the British pound. Thus, BRC Like-For-Like Retail Sales fell by 1.7 percent in April after falling by 0.4 percent the month before, while analysts projected an acceleration of negative dynamics but a little smaller drop of –1.6 percent. Investors will be watching for updated statistics on the dynamics of UK GDP for Q1 2022 tomorrow.

AUD/USD

After a steep drop in quotations over the previous four trading days, the Australian dollar shows corrective growth against the US dollar. The instrument has updated record lows since July 2020 due to the “bearish” behavior, dropping below the threshold of 0.7000. On Wednesday morning, positive inflation statistics from China gave significant support for the instrument. After a month of zero growth, the country’s Consumer Price Index increased by 0.4 percent in April. A gain of 0.2 percent was forecast by investors. Inflation rose from 1.5 percent to 2.1 percent annually, beating market expectations of 1.8 percent.

Industrial inflation dropped slightly from 8.3 percent to 8.0 percent during the same time but was still better than projected at 7.7%. In contrast to the US Federal Reserve, the Bank of England, and the European Central Bank, the Chinese economy, which is in a tough position due to forced quarantine limitations, is demonstrating a reasonably active dynamic, allowing the People’s Bank of China to keep room for maneuvering (ECB). In contrast, the Australian statistics released yesterday leave a lot to be desired. The Westpac Consumer Confidence Index fell by 5.6 percent in May, after decreasing by only 0.9 percent.

USD/JPY

In Asian trading, the US dollar is trading flat with the Japanese yen, stabilizing near 130.35 and looking for new growth factors. The US consumer inflation numbers, which are likely to be released today, may provide a new signal for buying. According to current projections, the consumer price rise is expected to decrease sharply in April, from 1.2 percent to 0.2 percent. Inflation may moderate from 8.5 percent to 8.1 percent annually. New inflation data will allow the US Fed to assess the chances for further tightening monetary policy, albeit it is evident that the market’s most “hawkish” projections have yet to materialize.

The Fed has been sluggish in boosting interest rates or reducing its balance sheet, allowing it to respond more precisely to shifting economic conditions. However, this technique comes with a price, and many analysts believe that the rate-hiking process began too late. Today’s macroeconomic statistics from Japan had no discernible effect on the instrument’s behavior. The Coincident Index increased from 96.8 to 97 points in March, which was only 0.2 points lower than market estimates. The Leading Economic Index increased from 100.1 to 101 points, above expectations of 100.4 points.

XAU/USD

After a distinctly “bearish” start to the week, gold prices stabilize near 1840.00. The instrument is currently trading at the local lows of February 11, 2022, and the news backdrop continues to support the US dollar. The USD index is near all-time highs, owing to extremely low demand for riskier assets. Investors are concerned about the likelihood of a worldwide economic slowdown as the Russian-Ukrainian conflict escalates and the quick rise in inflation in Europe and the United States. Immediate predictions are likewise negative, considering that the conflicting parties have lost all interest in peace talks, and Western countries are merely intensifying sanctions pressure on Russia’s economy.