US President Joe Biden and one of his senior advisers warned on Monday that a federal government shutdown may result in widespread difficulties, including the loss of food benefits for almost 7 million low-income women and children, per Reuters.
He said he and House Speaker Kevin McCarthy had agreed a few months ago on spending levels for the government. The Republican-controlled House of Representatives may seek this week to approve drastic budget cutbacks that the Democratic-controlled Senate would almost likely reject. While the changes would not become law, a failure by both houses to reach an agreement might result in a partial government shutdown by next Sunday.
As of writing, the US Dollar Index (DXY) was down 0.02% on the day at 105.92.Full Article
China will be out on Friday September 29 for a national holiday, and then will also be out on Monday to Friday (inclusive) the following week (October 2 – 6).
ANZ comments on oil implications:
The Australian Dollar (AUD) lost some ground against the US Dollar (USD) as the latter strengthened the most in nine months, underpinned by elevated US bond yields. Hence, the AUD/USD is trading at 0.6423, printing minuscule gains as the Asian session begins, but on Monday, it dropped 0.25%.
Wall Street finished Monday’s session with gains led by the Nasdaq and followed by the S&P 500. The Greenback remains in the driver’s seat as investors brace for the US Federal Reserve’s mantra “higher for longer,” as US Treasury bond yields touch multi-year highs. The US 10-year T-bond rate hit 4.533% during the session, while the US Dollar Index (DXY) rose to a ten-month high at 106.09.
Data-wise, the Chicago Fed National Activity Index plunged to -0.16 in August from 0.07 in July, while the Dallas Fed Manufacturing Index plummeted to -18.1 in September from -17.2 the prior month.
Federal Reserve speakers in the central bank adopted a cautious stance, mainly Boston and San Francisco Fed Presidents Susan Collins and Mary Daly. Both stressed the Fed should be patient on monetary policy but haven’t ruled out another rate hike. Recently, the Chicago Fed President Austan Goolsbee said that a soft landing is possible, but inflation risks remain tilted to the upside.
Meanwhile, AUD/USD traders would take cues from the Australian economic docket with the release of the Reserve Bank of Australia (RBA) Conference in inflation. On the US front, the docket would release the S&P/Case-Shiller Home Prices, alongside housing data and the CB Consumer Confidence.
The Aussie’s daily chart portrays the currency pair as neutral to downward biased. Currently is consolidated at around the 0.6400 mark, but a bearish-harami candlestick chart pattern could pave the way for further losses. The first support is seen at the current exchange rate, at around two and a half years of support trendline. A breach of the latter would open the door to test the September 4 low of 0.6357, followed by the November 22 swing low of 0.6272. Conversely, if the pair climbs past the 0.6500 figure, the next resistance is at the 50-day moving average (DMA) at 0.6671.Full Article
The USD/JPY pair consolidates its recent gains after reaching the highest since October of 149.00 during the early Asian session on Tuesday. The stronger US Dollar (USD) is the main driver for the pair as the 10-year yield climbed to 4.53%, a level not seen since October 2007. The pair currently trade around 148.81, losing 0.04% on the day.
Meanwhile, the US Dollar Index (DXY), a measure of the value of the USD relative to a basket of foreign currencies, hovers around 105.95 after retreating from the highest level since November of 106.09 amid the fear of intervention by the Japanese authorities.
The higher for longer narratives in the US boosts the Greenback broadly. The Federal Reserve (Fed) is expected to hike rates one more time by the end of the year. The Federal Reserve Banks of Boston and San Francisco Presidents, Susan Collins and Mary Daly, emphasized that although inflation is cooling down, additional rate hikes would be necessary. While the Chicago Fed President Austan Goolsbee said that a soft landing is possible, inflation risks remain tilted to the upside and the Fed should have a 100% commitment to returning inflation to 2%.
On the other hand, Bank of Japan (BoJ) Deputy Governor Shinichi Uchida said on Monday, that the central bank needs to patiently continue monetary easing and needs to closely watch currency market moves. Similarly, the Bank of Japan (BoJ) Governor Ueda emphasized the need to spend more time assessing data before raising interest rates. This, in turn, might cap the upside of the US Dollar (USD) and act as a headwind for the USD/JPY pair.
Looking ahead, Japan’s Tokyo Consumer Price Index (CPI) for September, Industrial Production, and Retail Sales will be released on Friday. The attention will shift to the highly-anticipated US Core Personal Consumption Expenditure (PCE) Price Index, the Fed’s preferred measure of consumer inflation. The annual figure is expected to drop from 4.2% to 3.9%. Traders will take cues from these figures and find trading opportunities around the USD/JPY pair.Full Article
The USD/CAD slipped a scant 0.2% for Monday, after tapping into a mild intraday high of 1.3491.
The pair has fallen about 1.7% from September’s peak near 1.3694. Oil prices have been squeezing higher on market-wide supply constraint fears, which has been bolstering the commodity-based Loonie (CAD) despite the US Dollar’s (USD) broad rise across the market.
There is little of note on the economic calendar for Canada this week, and focus will squarely be on USD data impact.
Thursday will see US Gross Domestic Product (GDP) figures, as well as a speech from Federal Reserve (Fed) Chair Jerome Powell. Annualized GDP for the second quarter is forecast to tick higher from 2.1% to 2.3%.
On Friday, we will see US Personal Consumption Expenditure (PCE) data, which is expected to hold steady for the month of August at 0.2%.
Canadian GDP numbers will also land on Friday, but market impact is likely to be muted as US data churns the charts.
Canadian GDP for the month of July is expected to print at a flat 0%, but still an improvement over the previous month’s 0.2% decline.
The USD/CAD saw a clean rejection of the 200-hour Simple Moving Average (SMA) in intraday trading, and is set for a challenge of a rising near-term trendline from last Wednesday’s swing low near 1.3400.
On daily candlesticks, the USD/CAD is strung along the 200-say SMA. A bearish push from this region will see the pair lose the 1.3400 major handle, while a bullish rebound will need to reclaim the 1.3600 level before pushing to new highs.
Wall Street finished Monday’s session with solid gains, while the Greenback extended its gains to a new year-to-date (YTD) high; at the same time, US Treasury bond yields climbed.
The S&P 500 registered gains of 0.40% and ended at 4,337.44, while the heavy-tech Nasdaq led US equities gains with a .45% advance, closing at 13,271.32. The Dow Jones Industrial barely missed gains and was last up 0.13%, at 34,006.88.
Sector-wise, the biggest gainers were Energy, Materials, and Consumer Discretionary, each gaining 1.28%, 0.80 %, and 0.67%. The laggards were Consumer Staples, Utilities, and Real Estate, erasing from its value 0.43%, 0.20%, and 0.17%, respectively.
Equities climbed despite last week’s US Federal Reserve’s (Fed) decision to hold rates unchanged but upward revised forecast for the following year. The Federal Fund Rates (FFR) is expected to stay above 5% for 2023 and 2024, as revealed by the latest “dot-plots.”
Therefore, US Treasury bond yields exploited to the upside, with the 10-year benchmark note touching a 16-year high at 4.533%. The Greenback followed suit, with the US Dollar Index (DXY), which tracks the buck’s performance versus six currencies, touching 106.10, a level last seen in November 2022.
Federal Reserve speakers continued to cross newswires with Austan Goolsbee from the Fed of Chicago, saying the path for a soft landing is possible, though a “lot of risks and the path is long and winding.” Last week, two Fed officials called for patience on the US central bank, Boston and San Francisco’s Fed Presidents Sussan Collins and Mary Daly.
In the meantime, Fed Governor Michelle Bowman stressed an additional rate hike is needed, maintaining her hawkish stance.
Gold remained pressured at around the $1,915.00 zone in the commodity space, weighed by the rise in US bond yields. WTI lost 0.50% in the day, as a strong US Dollar and Russia’s lifting fuel ban weighed on the “black gold” price, despite being underpinned by tight supplies after Saudi Arabia and Russia’s 1.3-million-barrel crude oil cut.
Goldman Sachs says that while a sustained climb in oil prices could slow consumption and economic growth it will be a “manageable headwind” for the U.S. economy.
The note from GS economists goes on to discuss four key reasons why the Goldman team isn’t too concerned about the surge in oil prices. In summary:
“Oil prices have risen by $20 per barrel — compared to +$40 in the first half of 2008 and +$45 in the first half of 2022 — and our forecast of retail gasoline prices using futures and wholesale markets indicates that most of the rebound has already occurred,”
“The Fed should worry about the implications for price stability only if higher oil prices contribute to a de-anchoring of inflation expectations … We are relatively unconcerned about this risk and we do not expect the recent oil move to meaningfully boost consumer inflation expectations.”
The GBP/JPY spread the middle for Monday, with neither the Pound Sterling (GBP) nor the Yen (JPY) finding momentum to get the chart kickstarted for the new trading week.
The GBP has struggled to find support on the charts after the Bank of England (BoE) held rates steady last week in a split vote, and it appears the end of the rate hike cycle for the UK has landed much sooner than many analysts expected. With the UK’s domestic economy teetering in the fundamental data, the BoE is hoping interest rates are high enough to keep inflation capped moving forward.
On the JPY side, the Bank of Japan (BoJ) Governor Kazuo Ueda and Deputy Governor Shinichi Uchida hit news wires on Monday. The BoJ officials talked down any hawkish expectations, reiterating the BoJ policy stance that inflation is at risk of dipping below 2%, the Japanese central bank’s minimum target before a reversal of the BoJ’s negative rate regime can be considered.
The early week sees little of note for the GBP/JPY on the economic calendar, and traders will be looking towards Thursday’s Tokyo inflation reading and Friday’s Gross Domestic Product (GDP) figures for the UK.
Japan’s Tokyo Consumer Price Index (CPI) reading is slated for 23:30 GMT late Thursday, and the core annualized figure is forecast to tick lower from 2.8% to 2.6%.
On the UK side, GDP numbers are forecast to hold steady, with the annualized GDP growth rate for the second quarter expected to print at 0.4%, in-line with the previous reading.
Intraday action has the GBP/JPY hamstrung just below the 182.00 major handle, and the pair is set to build in a floor from 181.00 as bidders look for a re-challenge of the 200-hour Simple Moving Average (SMA) settling into 182.70.
Daily candlesticks see the Guppy settling back into the 100-day SMA, with the long-term bull trend leaving the GBP/JPY well above the 200-day SMA near 172.00. The pair has slipped below the 34-day Exponential Moving Average (EMA) in the near-term, and buyers will need to remount the 186.00 handle from August’s last swing high before establishing a continuation of the bull trend.
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Bitcoin (BTC) price is pushing north, but the headwinds continue to oppose the recovery rally. However, the odds still favor the upside, though only narrowly. On the other side, Ethereum (ETH) and Ripple (XRP) investors and traders have a lot going on with both price actions leaving longs and shorts a lot to ponder over. Generally, the market has a lot to decipher, with a quick rally in the cards, according to experts.
Bitcoin (BTC) price is in an overall uptrend, in what appears to be a recovery rally, with the $26,000 psychological level holding forte for the flagship crypto even as profit takers engage the load-shedding gear. Increased buying pressure above this level could send BTC north, confronting the resistance confluence between the 200- and 50-day Exponential Moving Averages (EMA) at around 26,933, before heading up to the 100-day EMA at $26,962.
However, it would take more than just buying pressure to drive Bitcoin price north, considering the low volatility in the market. With the Relative Strength Index (RSI) moving north, momentum is growing. With such bullish interest, BTC bulls could launch a subsequent attack at the range limit presented by the EMAs before the next breakout.
Traders must also put off their profit-taking appetite, with a confirmed break and close above the $27,771 likely to fuel optimism that could send BTC to the 50% Fibonacci retracement level around the $28,208 to $28,215 range.
BTC/USDT 1-day chart
Conversely, selling pressure from the supplier congestion zones indicated by the EMAs could extend the downtrend for Bitcoin price, with a likely retest of the $25,613 range. In the dire case, the slump could extrapolate to the $25,100 support level, last tested during mid-June. Such a move would constitute a 5% slide.
Ethereum (ETH) price appears due for a move north, supported by the promising outlook of the RSI, which is about to signal a call to buy as its edges closer to the signal line (yellow band) in the rising trajectory.
Traders heeding this call could send Ethereum price north, likely to the $1,650 resistance level. In a highly bullish case, the gains could extend to the 50-day EMA at $1,672. Such a move would constitute a 5% ascent above the current level.
ETH/USDT 1-day chart
On the flip side, profit-taking could send Ethereum price back towards $1,551 or lower to collect the sell-side liquidity resting underneath.
Ripple (XRP) price was rejected from the mean threshold of the supply zone order block at $5,337. This was expected, considering the zone is characterized by aggressive selling. With the 50-, 100- and 200-day EMAs at $0.5300, 0.5468, and 0.5391, all resting within the supply zone, the bears have the advantage.
However, the RSI is showing rising momentum, while the Parabolic SAR continues to track XRP from below, acting as support at $0.4760. These are both bullish indicators, likely to give Ethereum price the pivot for its move north.
XRP/USDT 1-day chart
In the same way, the token has been recording lower highs and lower lows, indicating growing seller momentum. This could see ETH break below $0.4191 or in the dire case, send ETH below the $0.4600 to tag to mid-July.
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin’s market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
The XAU/USD took a step lower on Monday, knocking into $1,915.00 and seeing little relief pressure as the US Dollar (USD) catches bids across the board.
Spot gold prices have steadily drifted lower in 2023, peaking just below $2,080.00 back in early May. The XAU/USD is down almost 8% from the year’s high, but still remains well-supported looking long-term, with Gold up nearly 20% from last October’s lows of $1,650.00
Gold’s long-standing relationship with US Treasury yields has softened in recent months; while the yellow metal has a tendency to closely track with US yields, that relationship has broken down for most of 2023. US yields have appreciated considerably, but Gold remains unable to capitalize on bond momentum.
Despite downward price pressure, analysts are forecasting lofty end-of-year Gold spot valuations.
Commodity analysts from Société Générale (SocGen) see Gold capped under $2,000 to end the trading year, but 2024 is expected to see Gold prices improve to $2,200 by the end of 2024, on the back of easing inflation expectations and a slipping US Dollar Index.
Hourly candles see Gold flubbing to last week’s swing lows below $1,915.00, while the upside is set to be constrained by near-term resistance from the 100-hour Simple Moving Average (SMA) near $1,925.00.
On the daily candlesticks, the XAU/USD is seeing a notable lack of meaningful momentum, with Gold stuck near the 200-day SMA which is still moving bullish into $1,930.00.
Bidders will be looking to shove Gold back above $,1930.00 to continue a push higher, while sellers will be looking to take the XAU/USD down to August’s lows below $1,890.00.
Chevron chairman and CEO Mike Wirth spoke in a US TV interview, CNBC, on Monday.
He pithily wrapped up what’s driving the price higher:
Said US oil is going above $100/bbl, higher for non-US oil.
Brent update:Full Article