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Australian jobs market report coming up Thursday 19 May 2022 – growth in jobs expected

May 19, 2022 06:33   Forexlive Latest News   Market News  

The report is due at 0130GMT.

This
snapshot (below) is from the ForexLive economic data calendar, access
it here.

• The
  numbers in the right-most column are the ‘prior’ (previous month)
  result.
• The
  number in the column next to that, where is a number, is the
  consensus median expected.

Westpac are looking for a below-consensus headline result:

• Given that weekly payrolls suggest weather and holiday events dampened jobs growth in April, Westpac anticipates employment to lift by 20k for the month.
• The participation rate holding flat at 66.4% should see unemployment rate move downwards (Westpac f/c: 3.9%).

Canada says China has lifted its restrictions on Canadian canola (after 3 year ban)

May 19, 2022 06:26   Forexlive Latest News   Market News  

The Canadian government has announced that China has lifted its restrictions on Canadian canola.

The ban had been in place for around 3 years – a three-year-old trade dispute. Market access for two Canadian canola companies has been reinstated.

Info via Canadian media reporting.

EUR/USD sees a downside to 1.0400 as risk-off mood looms, EU Consumer Confidence in focus

May 19, 2022 06:26   FXStreet   Market News  

• EUR/USD is expecting more downside on souring market mood.
• Sustained Eurozone HICP numbers are compelling for a rate hike by the ECB.
• The DXY has rebounded sharply on improvement in safe-haven appeal.

The EUR/USD pair is attempting to find a cushion around 1.0460 after a sheer downside move from 1.0564 recorded on Wednesday. A thunderous FX arena on a soaring risk-aversion theme brought a swift sell-off in the risk-sensitive currencies. The asset sees more weakness as negative market sentiment is still dominating the global markets.

The shared currency bulls found barricades near their crucial resistance at 1.0550 after the Eurostat reported the Harmonized Index of Consumer Prices (HICP) on Wednesday. The annualized Eurozone HICP landed at 7.4%, a little lower than the estimates and prior figure of 7.5%. The euro bulls are facing tremendous pressure despite a minor fall in the HICP numbers as investors have started believing that the inflationary pressures will persist longer due to supply chain issues and the Eastern European crisis. To contain the ramping up inflation, European Central Bank (ECB) policymakers advocate a rate hike cycle to start with a quarter-to-a-percent rate hike in July.  

On the dollar front, the US dollar index (DXY) has rebounded sharply amid an improved safe-haven appeal. The DXY is oscillating marginally below 104.00 and is expected to overstep the round-level resistance as market sentiment may remain negative for a little longer. Also, Philadelphia Federal Reserve (Fed) Bank President Patrick Harker has favored two 50 basis points (bps) rate hikes in June and July.

This week, the Eurozone Consumer Confidence will remain in focus. The confidence of the European consumers is expected to improve to -21.5 against the prior print of -22.

JPMorgan cuts US GDP estimates for 2022 and 2023

May 19, 2022 06:21   FXStreet   Market News  

JP Morgan cut its expectation for US real Gross Domestic Product (GDP) for the second half of 2022 and for 2023, per Reuters.

The details suggest that the firm’s economic and policy research department cut its second half view to 2.4% from 3% and cut its first half 2023 target to 1.5% from 2.1% and for the second half of 2023 it cut its view to 1% from 1.4%.

The forecast report also mentions, “It said there may be enough of a growth slowdown to lead to a gradual increase in the unemployment rate later next year, helping to relieve some wage pressures that have been building.”

In the end, the research led by economist Michael Feroli concludes, “In short, we forecast a soft landing, but are well aware that this outcome has rarely (if ever) occurred.”

FX implications

Fears of inflation and growth are omnipresent nowadays and exert major pressure on the risk assets. The same weighs on the Antipodeans and underpins the US dollar strength. That said, the US Dollar index snapped a three-day downtrend on Wednesday whereas the AUD/USD prices declined the most in a week the previous day, around 0.6970 by the press time.

Read: Forex Today: Dollar soars as Wall Street plunges

JPMorgan has cut its US GDP estimates for both 2022 and 2023

May 19, 2022 06:17   Forexlive Latest News   Market News  

The narrative has shifted for equity market losses, from at first being about rising interest rates and tightening financial conditions, to now being also about growth/earnings worries as inflation erodes spending power and profits.

This via Reuters with updated JPM forecasts showing slower growth expected ahead:

• H2 GDP 2.4% (from 3%)
• H1 2023 1.5% (from 2.1%)
• H2 2023 1% (from 1.4%)

JPM say there may be enough of a growth slowdown to lead to a gradual increase in the unemployment rate later in 2023, this will alleviate some of the wage pressures that have been building.

“In short, we forecast a soft landing, but are well aware that this outcome has rarely (if ever) occurred,”

SPX (weekly candles):

Deutsche Bank says S&P500 to 3650, then as high as 4800 by the end of this year

May 19, 2022 06:09   Forexlive Latest News   Market News  

Deutsche Bank with their latest SP500 forecast, says it’ll fall to 3,650

• this would be a 24% decline, which is an average recession decline

DB citing:

• growth is slowing
• thus earnings-led declines for stocks, valuations are vulnerable

DB says that if the labour market can hold up and growth is not hit too hard then they see a year-end rally to 4,700 / 4,800

Weekly S&P500 candles:

AUD/JPY Price Analysis: Broke a bearish flag and accelerates towards 89.00 and beyond, as bears eye 87.30

May 19, 2022 06:09   FXStreet   Market News  

• On Wednesday, the AUD/JPY grinds lower by almost 2% on weak Aussie data and dismal sentiment.
• A bearish flag in the 1-hour chart targets 88.40, but the market mood could drive prices towards 88.00.
• AUR/JPY Price Forecast: In the 1-hour chart is downward biased and could aim towards 87.30 if bears achieve a daily close below 88.40.

The Australian dollar gave back its Tuesday’s gains after Wednesday’s Asian Pacific session began on the wrong foot, once the Wage Price Index (WPI) rose lower than estimations, meaning that expectations of a 40-plus bps rate hike by the Reserve Bank of Australia (RBA) wane, putting 25-bps instead in play. At the time of writing, the AUD/JPY is trading at 89.22.

Sentiment remains dismal, as shown by US equities tumbling between 3.57% and 5.06%. Asian stocks point to a lower open, and those factors in the FX market weighed on risk-sensitive currencies, like the AUD, the NZD, the CAD, and the GBP.

During the Asian session, the Australian economic docket featured the Q1 Wage Price Index rose by 2.4% y/y, lower than the 2.5% estimated, while the quarterly reading grew 0.7%, also less than the 0.8% foreseen. Even though both figures grew more than the previous period, they are trailing the high inflationary pressures in Australia, with the inflation rate reported at 3.7%, the highest since 2009, and headline inflation reaching 5.1%.

Once the data is in the rearview mirror, that would likely deter the RBA from increasing the size of tightening monetary policy, as some banks backpedaled from expecting a 40-bps rate hike to a 25-bps one.

Meanwhile, during the overnight session for North American traders, the AUD/JPY opened around 90.89, but once the Aussie WPI was released, the cross-currency pair tumbled, following the AUD/USD, which also erased Tuesday’s gains. That said, the AUD/JPY fell below the 50, 200, and 100-hour simple moving averages (SMAs) each at 990.44, 90.19, and 89.77, respectively, and settled around 89.10s.

AUD/JPY Price Forecast: Technical outlook

From a daily chart perspective, the cross stills neutral-upward biased, but failure at 91.00 leave the pair vulnerable to further selling pressure, which means that the AUD/JPY might tumble towards 87.30 before resuming the uptrend.

The AUD/JPY 1-hour chart depicts the pair as downward biased. The ascending channel, which depicted a bearish flag, kept the price within those boundaries until it finally broke around 90.10, which exacerbated the cross fall towards 89.10s.

That said, the AUD/JPY first support would be the 89.00 mark. Break below would expose the S1 daily pivot at 88.44, followed by the 88.00 mark, and the S2 daily pivot at 87.72, before reaching the abovementioned 87.30 YTD low.

Key Technical Levels

Gold Price Forecast: XAU/USD remains steady around $1,820 despite the freaky risk-off impulse

May 19, 2022 06:09   FXStreet   Market News  

• Gold price has turned topsy-turvy despite negative market sentiment looms.
• Fed policymaker is expecting two more jumbo rate hikes in June and July.
• A 40.00-60.00 range of the RSI (14) is indicating rangebound moves going forward.

Gold price (XAU/USD) is oscillating in a tight range of $1,815.64-1,822.05 in the early Asian session despite the market mood jitters on soaring inflation worldwide. The precious metal has not been affected by intensified negative impulse in the FX domain. Risk-sensitive currencies have taken a bullet and global equities have witnessed an intense sell-off on Wednesday as the risk-off impulse heightened.

The gold prices are untouched amid carnage in the risk-perceived assets while the US dollar index (DXY) has rebounded sharply after hitting a low of 103.20 on Wednesday.  Earlier, the DXY eased 1.5% from its 19-year high at 105.00 recorded last week.

Meanwhile, Philadelphia Federal Reserve (Fed) Bank President Patrick Harker has dictated that the Fed is expected to feature two 50 basis points (bps) interest rate hikes in June and July’s monetary policy meetings. Later, it will stick to a traditional quarter-to-a-percent rate hike to contain the price pressures.  

The gold prices are expected to react to risk sentiment and the movement of the DXY amid the unavailability of any major economic event in the US that could result in a decisive move for the bright metal.

Gold technical analysis

On an hourly scale, gold prices have rebounded sharply after successfully testing their previous lows at $1,807.72. The precious metal has formed a Double Bottom chart pattern that signals a bullish reversal on lower selling volume while testing the previous lows. The 20- and 50-period Exponential Moving Averages (EMAs) at $1,817.37 and $1,816.43 respectively have turned flat, which signals a directionless move. Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in a 40.00-60.00 range that signals the further auction in a tight range.

Gold hourly chart

NZD/USD bears are moving in as inflation fears are stoked

May 19, 2022 05:49   FXStreet   Market News  

• NZD/USD on the backfoot in borad risk-off sentiment.
• Wall Street’s route came on the heels of an uber hawkish Fed chairman and inflation fears. 

At 0.6294, NZD/USD is under pressure in the open of Asian trade due to generalised rout in risk assets. The moves in markets come on the heels of the US Federal Reserve Chair Jerome Powell who amplified a strong hawkish tone yesterday, pledgeding to ratchet up interest rates as high as needed, including taking rates above neutral, in order to cap runaway inflation that he said threatened the foundation of the economy.

The initial reaction in markets immeadiately after the interview with the Walls Street Journal was a firmer US dollar and risk-off in financial markets, but the moves were soon pared and the US benchmarks rallied to fresh highs on the day.

However, all of this was reversed on wednesday when the retailer, Target, reported that higher-than-expected costs ate into its quarterly earnings. The stock fell over 25% and was tracking its worst day since the Black Monday crash on Oct. 19, 1987, highlighting worries about the US economy after the retailer became the latest victim of surging prices. 

Consequently, the Dow Jones Industrial Average tumbled by 3.6% to 31,490.07 while the S&P 500 plunged 4% to 3,923.68. The Nasdaq Composite was 4.7% lower at 11,418.15. The US 10-year yield fell by 8.6 basis points to 2.88%.

”Big beats to UK and Canadian CPI stoked inflationary fears, and US retailer stocks have been hammered. So we’re back to watching the ebb and flow of global risk appetite again, and it’s still volatile, and showing no real signs of basing,” analysts at ANZ bank said.

Today is new Zealand’s Budget day

”Budgets don’t tend to be as important for FX as they are for bonds, but anything that clearly upsets the fragile fiscal sustainability/growth/inflation balance could have an influence on the Kiwi at the margin. Technically, the failure to sustain the break of 0.6365 was disappointing, but 0.63 is the level to watch today (as to whether it holds),” the analysts at ANZ Bank said. 

TD says the strength of the USD to persist this quarter, and maybe beyond

May 19, 2022 05:45   Forexlive Latest News   Market News  

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TD maintains a bullish bias on the USD through Q2

• “The market has quickly shifted from Fed hikes to global recession fears. The surprise rests on the shift in correlations, raising the question of how much stress has been priced in.
• USD strength should persist through Q2 (and perhaps a bit longer), yet we also note the recent decoupling with many global factors,”
• “The USD offers nice hedging properties for global investors, especially as markets have started to climb the wall of worry again,”

—

(ps. The wall of worry came out the winner on Wednesday US time)

Wells Fargo says “a mild recession our base case “

May 19, 2022 05:17   Forexlive Latest News   Market News  

Via a Wells Fargo note issued Wednesday (US time):

• “Based on economic data trends we have been tracking, we believe the economy is now beginning to cross over a probability level that makes a mild recession our base case for the end of 2022 and early 2023, and we are continuing to shift out equity sector guidance and allocations to more defensive positioning,”

Wells Fargo revised their year-end GDP target for 2022 to 1.5% (down from 2.2%)

• and -0.5% for 2023 (from 0.4%)

Algorand price in bearish continuation to $0.30

May 19, 2022 05:02   FXStreet   Market News  

• Algorand price action shows clear signs of another round of selling.
• ALGO is at risk of another 35% wipe in value.
• A move exceeding last week’s flash crash lows is very likely.

Algorand price action has recovered a significant amount of last week’s losses, but the technical structure screams of a bearish continuation move. First, however, sellers need to show a clear rejection of higher prices – so far, this has not happened.

Algorand price action generates anxiety for bulls and bears

Algorand price is at a make-or-break point on its daily Ichimoku chart. Today is exactly one week from the flash crash made on May 12. Since that crash, Algorand has made an impressive 40% gain off those lows – but those gains are now at risk of being wiped out.

A standard bearish continuation pattern known as a bear flag is currently present. Bear flags are upwards moving channels that occur after a downtrend, then typically weaken or lose momentum before sellers return and resume downside pressure to new lows.

The critical price level that bears will want to target is a daily Algorand price close at or below $0.44. A close at $0.44 would be the lowest close in five days and position ALGO just a hair above last Tuesday’s flash crash close and below the open. ALGO has an open path to the 2022 low at $0.34. However, Algorand price may move lower than $0.34, possibly to the 2020 Volume Point of Control at $33.

ALGO/USDT Daily Ichimoku Kinko Hyo Chart

If bulls want to invalidate any further downside pressure, then, at a minimum, they’ll need to close Algorand price above the Tenkan-Sen at or above $0.50. But the road above $0.50 has many strong resistance levels, some sharing the same value area, which exacerbates that resistance. As a result, any near-term upside potential is likely limited to the 2022 Volume Point of Control at $0.75.