316530 May 31, 2023 22:17 FXStreet Market News
Optimism (OP) price is sinking this week with a 20% drop since Monday as risk assets in global markets dive. The selling pressure can be felt in nearly every corner for equities, cryptocurrencies like Bitcoin and Ethereum, and altcoins and meme stocks. OP though is showing signs of an end nearby in this technical correction with price action primed for a 40% upbeat move.
Optimism price is falling like a rock this week with daily declines of several percent since Monday. OP is not a single case but is rather under the scrutiny of a global risk-off push in global markets where equities and cryptocurrencies are selling off hand in hand. With crypto selling pressure going into its third day, some indicators like the Relative Strength Index (RSI) are too far oversold and hence due for a pullback.
OP is nearing a longer-term green ascending trendline that has already been tested on multiple occasions in the past. Add to that the big figure of $1.30 as a psychological number, and there are two perfect reasons for a rebound. A rebound could quickly go to $1.90 with the pivotal level at $1.46 as the only element in its way of a 40% recovery.
OP/USD daily chart
A break of that green ascending trendline and the $1.30 level, however, would mean some serious risk of a full implosion in OP. At $1.10, there is still the S3 support level for May, but once through that it becomes a clear road to $0.65. That would mean a new low for 2023 and a near 60% decline for this week.
Full Article316529 May 31, 2023 22:12 Forexlive Latest News Market News
Nigeria, Angola and Iraq are producing materially under their voluntary and formal cuts. It could be a problem for the oil market if they’re able to restore those flows.
Full Article316528 May 31, 2023 22:12 FXStreet Market News
The US Dollar (USD) has started to gather strength against its major rivals mid-week amid a negative shift witnessed in risk perception following Tuesday’s uninspiring performance. The US Dollar Index, which tracks the USD’s valuation against a basket of six major currencies, turned north early Wednesday and reached its highest level since mid-March above 104.50 before retreating modestly.
The USD’s performance is likely to continue to be impacted by risk perception in the second half of the day with investors keeping a close eye on headlines surrounding the debt-limit bill.
On Tuesday, the House Rules Committee advanced the debt-ceiling bill to the House by an uncomfortably close vote of 7 to 6, causing investors to adopt a cautious stance. Several Republican lawmakers voiced their oppositions against the bill, which will be debated in the House floor and voted on Wednesday before moving to a final Senate vote.
The US Dollar Index (DXY) managed to close above the key technical level of 104.00 (Fibonacci 23.6% retracement of the November-February downtrend) on Tuesday, reflecting buyers’ willingness to defend that support. In case the DXY starts using 104.50 (static level) as support, it could target 105.00 (psychological level, static level) and 105.60 (200-day SMA, Fibonacci 38.2% retracement) next.
On the downside, 104.00 stays intact as key support. A daily close below that level could attract USD sellers and open the door for an extended slide toward 103.00, where the 100-day Simple Moving Average (SMA) is located.
It’s also worth noting that the Relative Strength Index (RSI) indicator on the daily chart stays near 70, suggesting that the DXY could correct lower in the short term before the next leg higher.
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%.
If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank.
If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure.
Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
316527 May 31, 2023 22:09 FXStreet Market News
The data published by the US Bureau of Labor Statistics (BLS) revealed on Wednesday that the number of job openings on the last business day of April stood at 10.1 million, compared to 9.74 million in March. This reading came in higher than the market expectation of 9.37 million.
“Over the month, the number of hires changed little at 6.1 million. Total separations decreased to 5.7 million,” the BLS noted in its publication. “Within separations, quits (3.8 million) changed little, while layoffs and discharges (1.6 million) decreased.”
The US Dollar gathered strength against its rivals after this report and the US Dollar Index was last seen rising 0.5% on the day at 104.58.
Full Article316526 May 31, 2023 22:09 FXStreet Market News
Gold price recovers after slumping to two-month low. Econmists at Commerzbank discuss XAU/USD outlook.
“The market apparently still sees a small risk that the compromise found at the weekend to raise the debt ceiling in the US will not pass Congress. Voting is set to take place in the House of Representatives today; afterwards the Senate will need to give its approval.”
“The Fed Fund Futures are still pricing in another 25 bps Fed rate increase at the next meeting in June with a probability of roughly 60%. A rate hike on this scale is still fully priced in at one of the next two meetings. In the market’s view, this is likely to be reversed again by year’s end. Against this backdrop, the Gold price has been showing relative strength of late, especially as the US Dollar is priced at its highest level since mid-March.”
Full Article316525 May 31, 2023 22:05 FXStreet Market News
Bank of England (BoE) Monetary Policy Committee member Catherine Mann noted on Wednesday that the gap between the headline and core inflation in the UK is more persistent than in the US and the Euro area, as reported by Reuters.
Mann further added that firms will use it if they have a high pricing power and said that they will remain on a path that has an “awful a lot of volatility.”
GBP/USD edged slightly higher with the immediate reaction to these comments. As of writing, the pair was trading at 1.2380, where it was still down 0.3% on a daily basis.
Full Article316524 May 31, 2023 22:05 FXStreet Market News
The GBP/USD pair attracts some dip-buying near the 1.2350-1.2345 area on Wednesday and climbs to the top end of its daily trading range during the early North American session. The pair is currently placed around the 1.2400 mark, below the 50-day Simple Moving Average (SMA) hurdle tested the previous day.
The US Dollar (USD) trims a part of its intraday gains to the highest level since mid-March in reaction to the disappointing release of the Chicago PMI, which fell to 40.4 in May from the 48.6 previous. The British Pound, on the other hand, continues to draw some support from the possibility of additional interest rate hikes by the Bank of England (BoE), bolstered by stronger-than-expected consumer inflation figures released last week. This, in turn, lends some support to the GBP/USD pair, though the lack of follow-through buying warrants caution before positioning for an extension of the recent bounce from the 1.2300 neighbourhood, or a nearly two-month low set last Thursday.
Investors now seem convinced that the Federal Reserve (Fed) will keep interest rates higher for longer and have been pricing in another 25 bps lift-off at the next FOMC policy meeting in June. The bets were reaffirmed by the US Core PCE Price Index released on Friday, which indicated that inflation remains sticky. Apart from this, the risk-off impulse supports prospects for a further near-term appreciating move for the safe-haven buck and might contribute to capping any meaningful upside for the GBP/USD pair. The global risk sentiment takes a hit in the wake of weaker Chinese PMI prints, which adds to worries about a global economic downturn and benefits safe-haven assets.
The aforementioned fundamental backdrop warrants some caution for aggressive bullish traders ahead of important US macro releases scheduled at the beginning of a new month, including the closely-watched Nonfarm-Payrolls (NFP) on Friday. In the meantime, a generally weaker tone around the equity markets might continue to act as a tailwind for the Greenback and keep a lid on any meaningful upside for the GBP/USD pair, at least for the time being.
316523 May 31, 2023 22:02 Forexlive Latest News Market News
The dollar has jumped on this report, which indicates that companies are still gung-ho to find workers. The market is pricing in a 62% chance of a June hike.
Full Article316522 May 31, 2023 22:02 FXStreet Market News
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316521 May 31, 2023 21:56 Forexlive Latest News Market News
The US dollar is under broad pressure on manufacturing worries after a regional manufacturing survey plummeted. The pound is taking full advantage and has nearly erased today’s decline.
Sterling is also benefiting from comments from BOE hawk Catherine Mann, who said the gap between headline and core inflation in the UK is more persistent then in the US or eurozone.
Treasuries are also weighing on the US dollar with 10-year yields down 4.8 bps to 3.64% and the front end down 10 bps.
A Chicago-area survey of manufacturers fell by the most since the dawn of the pandemic, highlighting the kind of negativity that was in the comments of the Dallas Fed survey yesterday.
Full Article316520 May 31, 2023 21:56 FXStreet Market News
Eurostat will release the preliminary estimate of Eurozone Harmonised Index of Consumer Prices (HICP) data for May on Thursday, June 1 at 09:00 GMT and as we get closer to the release time, here are the expectations forecast by the economists and researchers of four major banks regarding the upcoming EU inflation print.
Headline HICP is expected to decelerate at 6.3% year-on-year vs. 7.0% in April and annual core HICP is seen softening marginally to 5.5% against the former release of 5.6%. If so, headline would be the lowest since February 2022 and would also be the first deceleration in core since June 2022.
“Inflation is expected to have fallen from 7.0% in April to 6.0% in May. Half of the decline is due to lower energy prices. The price correction for food pushed down the inflation rate by an estimated 0.3 percentage points. However, the inflation rate excluding energy and food is also expected to have fallen by 0.2 percentage points to 5.4% in May. The main reason for this is the introduction of the 49-Euro ticket for regional public transport in Germany.”
“We forecast headline Euro-area HICP inflation to fall to 6.2% YoY in May (0.8ppt lower than in April), and core HICP inflation to remain unchanged at 5.6% YoY. Core price momentum is likely to remain strong enough to unnerve the ECB. We think it will remain concerningly high owing to strong labour market pressures, revived inflation expectations and survey evidence of continued upward inflationary pressures. We think a robust core inflation print lends support to our forecast for two further 25 bps hikes from the ECB at its next meetings, bringing its terminal rate to 3.75%.”
“We expect the May inflation data to deliver another massive decline in headline inflation from 7% yoy in April to 6% in May. Meanwhile, we think easing goods inflation will help core inflation fall from 5.6% to 5.5%, with a downside risk of 5.4% – which is set to increase the pressure on the ECB to do more rate hikes.”
“Headline inflation should make another major step down in May as base effects in energy kick in, down to 6.3% from 7.0% in April. We project core HICP inflation to also have eased from 5.6% to 5.5% YoY, with a sub-trend 0.2% MoM gain in seasonal adjusted terms, with temporary factors behind the drop. We though see core CPI re-accelerating in June following the acceleration in negotiated wages in 1Q to 4.3% and likely to pick up further in 2Q.”
Full Article316519 May 31, 2023 21:51 FXStreet Market News
Another day, another record low of the Turkish lira vs. the greenback, this time prompting USD/TRY to trade at shouting distance from the 20.80 zone.
USD/TRY maintains the bullish move unchanged and approaches the round level at 21.00, as market participants continue to digest Erdogan’s victory at Sunday’s elections and latest news of potential changes to his cabinet.
On the latter, and according to officials, it is highly likely that M. Simsek, the former economy chief who is well-respected by financial markets for his orthodox policy expertise, will be appointed to the cabinet, potentially as either the finance minister or a vice president.
Some positive news from the calendar showed the economy expanded more than estimated by 4.0% YoY in the January-March period.
So far, the pair is gaining 1.45% at 20.6919 and faces the next hurdle at 20.7372 (all-time high May 31) followed by 21.00 (round level). On the downside, a break below 19.4286 (55-day SMA) would expose 19.1559 (100-day SMA) and finally 18.8321 (200-day SMA).
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