CFD Markets News and Forecasts — 15-05-2022

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15.05.2022
23:50
Japan Producer Price Index (YoY) above expectations (9.4%) in April: Actual (10%)
23:50
Japan Producer Price Index (MoM) came in at 1.2%, above forecasts (0.8%) in April
23:43
EUR/USD fades bounce off five-year low around 1.0400, EC Growth Forecasts eyed EURUSD
  • EUR/USD seesaws in a tight range after bouncing off 2017 lows.
  • Inflation, economic fears regain market attention as risk-on mood loses traction amid the quiet Asian session.
  • US data, ECB hawks joined Powell’s 50 bps comments to trigger corrective pullback around multi-day low.
  • Eurozone economic forecasts will be important amid impending geopolitical woes in the region.

EUR/USD fails to extend the previous day’s corrective pullback from the lowest levels since 2017, taking rounds to 1.0400 during a quiet Asian session on Monday.

The major currency pair’s bounced off the multi-month lows the previous day as firmer sentiment joined downbeat US data and Fedspeak. Also favoring the EUR/USD rebound were recently upbeat comments from the European Central Bank (ECB) policymakers. However, renewed fears of economic growth and inflation, as well as a cautious mood ahead of the European Commission’s (EC) quarterly economic forecasts, seem to probe the pair buyer of late.

Downbeat prints of the US Michigan Consumer Sentiment Index for May backed Fed Chair Jerome Powell’s repetition of 50 bps rate hikes concerns and pulled the US Dollar Index (DXY) back from a 20-year high the previous day. Also challenging the greenback gauge was cautious optimism in China and hopes of de-escalation of the geopolitical crisis surrounding Russia and Ukraine. Furthermore, the ECB policymakers’ July rate hike chatters also underpinned the Euro strength and helped EUR/USD to rebound from the multi-month low.

However, the latest headlines suggest Germany’s firmer view of banning oil imports from Russia, as well as worsening military actions in Donbas, weigh on the risk appetite and the EUR/USD prices.

Amid these plays, S&P 500 Futures print mild gains while the US 10-year Treasury yields stay mostly unchanged at around 2.94%. That said, Wall Street benchmarks portrayed the biggest daily gains in over a week whereas the US Treasury yields also recovered on Friday.

Moving on, quarterly inflation and growth forecasts from the European Commission will be crucial to watch for EUR/USD prices are traders await more clues on the bloc’s economic conditions amid the ongoing Russia-Ukraine war, as well as chatters of July rate hike.

Technical analysis

Although oversold RSI conditions signal further recovery moves toward a three-week-old resistance line near 1.0500, any further upside appears difficult but may challenge the monthly peak of 1.0641 on crossing the immediate hurdle.

Meanwhile, the 1.0350-40 support zone, comprising the recent low and the year 2017 bottom, puts a strong floor under the EUR/USD prices.

 

 

23:43
AUD/JPY to test 90.00 as risk-on improves, RBA minutes in the limelight
  • AUD/JPY is heading towards 90.00 on positive market sentiment.
  • Aussie investors are keeping eye on RBA minutes and employment data this week.
  • The Japanese yen will be impacted by the release of GDP numbers.

The AUD/JPY pair is advancing towards the psychological resistance of 90.00 amid a strong rebound from last week’s low of 87.48. The risk barometer experienced a firmer responsive buying action around the previous week’s low, which turned into an initiative buying after the asset overstepped 89.00. A solid recovery move came after the risk-off impulse faded away and investors approached risk-sensitive assets to park their funds amid lower volatility.

The antipodean is going to remain in limelight this week amid the availability of multiple catalysts that will keep investors sneaking over it. On Tuesday, the release of the Reserve Bank of Australia (RBA) minutes will depict the rationale behind dictating the 35 basis points (bps) interest rate decision by RBA’s Governor Philip Lowe in May’s first week. To tame the soaring inflation, the RBA elevated its interest rates for the first time after the Covid-19 pandemic.

Followed by the RBA meeting minutes, the Australian Bureau of Statistics will report Employment Change on Thursday, which is seen at 25k, higher than the prior print of 17.9k. Also, the Unemployment Rate may land at 3.9%, against the prior print of 4%.

On the Japanese front, investors are solely focusing on the Gross Domestic Product (GDP) numbers, which are due on Wednesday. A preliminary estimate for the annualized figure is -1.8% while the quarterly numbers are expected at -0.4%.

 

23:18
WTI Price Analysis: Dribbles below $110.00 even as bulls eye monthly resistance
  • WTI grinds higher during the four-day uptrend, approaches short-term key hurdle.
  • RSI conditions suggest difficulties for buyers in crossing the resistance line.
  • 61.8% Fibonacci retracement level, weekly support line restrict short-term downside.

WTI crude oil prices keep the previous week’s recovery moves, despite being sidelined at around $109.50 during Monday’s Asian.

In doing so, the black gold stays above a one-week-old ascending support line, as well as the 50-SMA. The same joins firmer RSI conditions, not overbought, to keep buyers hopeful.

However, an upward sloping trend line from April 18, around $111.00 by the press time, joins the RSI lines rush towards overbought territory to test the energy prices.

Should the quote rises past $111.00, the 78.6% Fibonacci retracement (Fibo.) of the March-April downturn, near $111.60, could act as an additional upside filter before directing the WTI bulls towards late March’s swing high of $115.85.

On the contrary, pullback moves may remain elusive until staying beyond the 61.8% Fibo close to $107.00, quickly followed by the aforementioned support line surrounding $106.10.

Even if the quote drops below $106.10, the 50-SMA level of $105.15 will test WTI sellers before directing them to the $100.00 psychological magnet.

WTI: Four-hour chart

Trend: Limited upside expected

 

23:10
USD/JPY eyes 130.00 as focus shifts to Fed’s Powell, BOJ supports policy easing USDJPY
  • USD/JPY is marching towards 130.00 as Fed-BOJ diverges on policy measures.
  • The BOJ promised more quantitative easing to spurt the growth rate.
  • Fed’s Powell has already hinted at more jumbo rate hikes this year.

The USD/JPY is gradually moving higher and is expected to reclaim the psychological mark of 130.00 as investors are bracing for a hawkish tone from Federal Reserve (Fed)’s chair Jerome Powell on Tuesday. The speech from Fed Powell will put some light on the monetary policy stance by the Fed in its June interest rate announcement.

Fed’s Powell in his interview with the Marketplace national radio program on Friday unexpectedly added the option of two more jumbo rate hikes consecutively in the next policy meetings. Earlier, the street was expecting only one more jumbo rate hike in addition to the 50 basis points (bps) elevation announced in the first week of May. Also, Fed’s Powell emphasized bringing price stability as mounting price pressures are weighing on the paychecks of the households.

Meanwhile, the Japanese yen is facing intense pressure after the Bank of Japan (BOJ) favored more quantitative easing on Friday. BOJ’s Harihuko Kuroda promised conservative monetary policy going forward, in his statement on Friday as the economy has yet not achieved its pre-pandemic growth levels and inflation is still not at par with the targeted levels.

Going forward, the monthly US Retail Sales will be on the radar as investors are seeing it at 0.7% against the former figure of 0.5%. While the Japanese docket will report the Gross Domestic Product (GDP) numbers. The annualized figure is seen at -1.8% while the quarterly numbers are expected at -0.4%.

 

22:58
USD/CAD sellers attack 1.2900 on firmer oil, DXY pullback USDCAD
  • USD/CAD stays pressured after reversing from 18-month high the previous day.
  • WTI crude oil approaches monthly high amid firmer sentiment, fears of EU oil embargo on Russian energy imports.
  • US data, risk-on mood favored sellers ahead of more inflation-linked data.

USD/CAD flirts with the 1.2900 key support, following a pullback multi-month high, during the initial hours of Monday’s Asian session. In doing so, the Loonie pair justifies firmer prices of Canada’s key export item, WTI crude oil, as well as softer US Dollar Index (DXY), with eyes on risk catalysts.

The quote dropped the most since late August 2021 the previous day after the market’s risk-on mood weighed on the US dollar while firmer prices of oil exerted additional downside pressure on the USD/CAD prices.

That said, WTI crude oil prints a four-day uptrend as it approaches the monthly high surrounding $110.00. A pause in the US dollar’s north-run joins fears emanating from Europe, over Russian oil imports, propelling the black gold prices of late.

The US dollar’s weakness could be linked to the decade-low prints of the US Michigan Consumer Sentiment Index for May, to 59.1. Also challenging the greenback buyers were comments from Fed Chairman Jerome Powell who repeated calls for 50 bps rate hikes in the next two meetings. It should be observed that the recent hopes of overcoming the covid resurgence in China also underpin the firmer sentiment and weigh on USD/CAD prices.

Against this backdrop, Wall Street benchmarks portrayed the biggest daily gains in over a week whereas the US Treasury yields also recovered. The risk-on mood weighed on the US Dollar Index (DXY) by dragging it from the 20-year high. That said, S&P 500 Futures print 0.45% intraday gains by the press time.

Moving on, China’s April month figures for Retail Sales and Industrial Production may offer immediate direction to USD/CAD prices, due to direct linkages with oil, but major attention will be given to US Retail Sales and Canada Consumer Price Index (CPI) figures for a clear view.

Also read: USD/CAD Weekly Forecast: The rarefied air above 1.3000

Technical analysis

A three-week-old ascending support line and March’s monthly high challenge USD/CAD bears around the 1.2900 threshold.

 

22:47
Goldman Sachs cuts US GDP forecasts for 2022 and 2023 – Bloomberg

“Goldman Sachs Group Inc. economists cut their forecasts for US growth for this year and next to reflect the shake-out in financial markets amid the Federal Reserve’s tightening of monetary policy,” said Bloomberg in its latest analytical piece during early Monday in Asia.

The news also mentioned, “In a report Sunday, the economists led by Jan Hatzius said they now expect the economy to grow 2.4% this year and 1.6% in 2023, down from 2.6% and 2.2% previously.”

“The economists projected the unemployment rate will rise to 3.7% by the end of 2023 after falling to 3.4% in coming months,” said Bloomberg.

Market implications

Growth fears are largely heard and priced in amid concerns over inflation, geopolitics and covid, which in turn restricts the market’s reaction to the news. However, the same probes the previous day’s cautious optimism during the inactive hours of the Asian session.

Read: Much to gold’s dissatisfaction, the USD index seems unstoppable

22:35
Gold Price Forecast: XAU/USD consolidates above 1,800, focus shift on US Retail Sales
  • XAU/USD is balancing around $1,810.00 as DXY steadies ahead of US Retail Sales.
  • Upbeat US NFP and inflation have strengthened the chances of a jumbo rate hike by the Fed in June.
  • An establishment below the 200-EMA is advocating gold bears.

Gold Price (XAU/USD) displayed an extreme volatility contraction in the New York session on Friday amid a light economic calendar. The bright metal is expected to deliver similar performance and is hovering around $1,813.55, following the footprints of doldrums in the US dollar index (DXY).

The DXY witnessed a sheer fall on Friday after printing a fresh 19-year high of 105.00. Investors bent towards some profit-booking measures that dragged the asset lower to 104.50. The asset is consolidating around 104.50 and is seeing more downside on mounting selling pressure.

The precious metal has been through a period of high tides backed by the announcements of higher inflationary pressures last week and rising job additions in the labor force in the first week of May. This has bolstered the chances of a 50 basis point (bps) interest rate hike by the Federal Reserve (Fed) in June. To achieve price stability, the determination from the Fed may squeeze liquidity from the market at a much more rapid pace.  Now, investors are shifting their focus to the US Retail Sales, which are due on Tuesday. The monthly Retail Sales figure is expected at 0.7%, higher than the prior print of 0.5%.

Gold technical analysis

On the daily scale, XAU/USD has established below the 200-period Exponential Moving Average (EMA) at $1,856.65. The precious metal has been weakened after slipping below the trendline plotted from the 9 August 2021 low at $1,687.78. The Relative Strength Index (RSI) (14) has shifted into a bearish range of 20.00-40.00, which signals more pain ahead.

Gold daily chart

 

22:34
New Zealand Business NZ PSI: 51.4 (April) vs previous 51.6
22:31
AUD/USD keeps recovery moves above 0.6900 ahead of China Retail Sales AUDUSD
  • AUD/USD portrays steady start of the week, keeps Friday’s rebound from two-year low.
  • Firmer sentiment, softer US data helped trigger corrective pullback around multi-month low.
  • Fears of inflation, growth join geopolitical, covid woes to exert downside pressure.
  • Softer prints of April’s Retail Sales, Industrial Production from China can weigh on recent recovery, risk catalysts are important too.

AUD/USD holds onto the recovery moves from a two-year low, after a consecutive six weeks of a downtrend, as bulls attack 0.6950 during the early hours of Asian morning on Monday. In doing so, the Aussie pair consolidates recent losses amid quiet markets with eyes on China’s headline data for April. However, the key risk catalysts keep the rebound in check before the key economics from Australia’s major customer.

Hopes of sooner de-escalation of coronavirus risk in China’s Shanghai and Beijing joined Fed Chair Jerome Powell’s repetition of 50 bps rate hikes concerns to initially trigger the AUD/USD pair’s U-turn from the lowest level since 2020 on Friday. The recovery moves got additional support from the US Michigan Consumer Sentiment Index for May, as well as firmer equities, to keep buyers hopeful afterward.

That said, Shanghai’s plan of zero-COVID at the community level by mid-May, backed by comments supporting 64% vaccinated people above age 60, seemed to have renewed optimism in China. On the same line was a three-day “at home” stay for residents for covid testing to tame and confirm the covid resurgence in Beijing. Furthermore, China’s push for more employment generation to the college students also suggests the dragon nation’s push to do all it can to overcome the economic imbalance triggered by the COVID-19 resurgence.

On the different page, Fed Chairman Jerome Powell’s reiteration of 50 bps rate hikes in the next two meetings preceded the decade low prints of the US Michigan Consumer Sentiment Index for May, to 59.1, to favor the AUD/USD bulls.

Amid these plays, Wall Street benchmarks portrayed the biggest daily gains in over a week whereas the US Treasury yields also recovered. The risk-on mood weighed on the US Dollar Index (DXY) by dragging it from the 20-year high.

Looking forward, April month figures for Retail Sales and Industrial Production, as well as comments from the National Bureau of Statistics (NBS), from China will be crucial for nearby trade directions. Given the covid resurgence, the headline numbers are likely to arrive softer-than-prior, which in turn can weigh on the AUD/USD prices, coupled with the latest geopolitical fears emanating from Russia. That said, China’s Retail Sales growth may shrink further to -6.0% from -3.5% prior whereas the Industrial Production growth can ease to 0.7% from 5.0% previous readouts.

Technical analysis

January’s low around 0.6965 precedes a one-week-old descending trend line near 0.6990 to restrict short-term AUD/USD recovery moves.

 

22:01
GBP/USD sees upside above 1.2250 as risk-on impulse rebounds, UK Employment in focus GBPUSD
  • GBP/USD looks to scale above 1.2250 amid positive market sentiment.
  • Brexit jitters on the expectation of a retaliatory move from the EU on the UK's unilateral move to reject NIP.
  • This week, employment data from the UK and US Retail Sales will remain focused.

The GBP/USD pair is hovering around 1.2250 at open and is likely to elevate further amid a rebound in the risk-sensitive assets experienced on Friday, which is expected to be carry-forwarded on Monday. The FX domain found relief on Friday after a spree of bearish days amid back-to-back economic events in the US economy.

The announcement of the interest rate decision by the Federal Reserve (Fed) in which the central bank stepped up its benchmark rates by 50 basis points (bps), followed by upbeat Nonfarm Payrolls (NFP) and higher-than-expected Consumer Price Index (CPI) spooked the market participants.

The US agencies reported the additional jobs in the total labor force at 428k, much higher than the estimates of 391k, which US inflation recorded at 8.3%, higher than the forecasts of 8.1%. The above-expected recordings from the US economy have raised the odds of one more jumbo rate hike by the Fed in its monetary policy in June.

Now, investors’ focus will shift to the US Retail Sales on Tuesday. A preliminary estimate for the monthly Retail Sales is 0.7%.

On the pound front, sterling remained mute on the underperformance of the Gross Domestic Product (GDP) numbers. The quarterly GDP landed at 0.8%, lower than the consensus of 1%. Meanwhile, Brexit jitters have elevated further as some retaliatory moves are expected from the European Union (EU) as the UK is likely to lay the groundwork to unilaterally disapply parts of the Northern Ireland Protocol (NIP), said TD Securities.

Now investors are focusing on releasing the ILO Unemployment Rate to be unveiled by the UK National Statistics on Tuesday. The economic data is seen unchanged at 3.8%.  

 

21:55
Brexit angst resurfaces: UK's Johnson sees room for a deal on N.Ireland post-Brexit trade

It is reported today that the UK government is expected to reveal a plan to unilaterally change the Nothern Irlenadf protocol on Tuesday.

The Belfast Telegraph newspaper is cited by Reuters in reporting that the British Prime Minister Boris Johnson said he wanted to resolve a standoff with the European Union over Northern Ireland's post-Brexit trade rules, but he kept open the option of unilateral action that the EU says could start a trade war.

"Johnson was due to travel to Belfast on Monday to urge local political leaders to form a new power-sharing government, a key institution under the 1998 Good Friday peace agreement.

After elections this month, pro-British unionists refused to join a new administration because of their opposition to the Northern Ireland Protocol which governs post-Brexit trade.

Johnson, in excerpts of an article to be published by the Belfast Telegraph newspaper which were released late on Sunday, said reform of the Protocol was essential for Northern Ireland to move forward.

"There is without question a sensible landing spot in which everyone's interests are protected," he said. "Our shared objective must be to the create the broadest possible cross-community support for a reformed Protocol in 2024.""

"While the UK is now leaning toward legislation rather than Article 16, the effect is similar, analysts at TD Securities said. "Expect retaliatory threats from the EU, but on both sides, any changes will be a long bureaucratic process, meaning Brexit could be in the news for another year or more."

 

 

21:48
EUR/USD bulls lurk at key hourly support in the open EURUSD
  • EUR/USD is on the backfoot but bulls are lurking at support. 
  • Ears will be to the ground this week to Fed speakers. 

EUR/USD has opened with a slight offer to test below the 1.04 figure. The US dollar is also a tough soft so the gap in the euro is vulnerable to the upside towards reclaiming positive territory. The markets were risk-on at the end of the week so there is the possibility of a continuation to the upside. Moe on the technicals below. 

Meanwhile, the Dow Jones Industrial Average rose by 1.5% to 32,196.66, the S&P 500 rose 2.4% to 4,023.89 and the Nasdaq Composite was 3.8% higher at 11,805.00. Friday's gains, however, were not enough to pull the indexes from a weekly slump, as all three declined, with the Nasdaq 2.8% lower. The S&P 500 saw a weekly loss of 2.4% while the Dow slipped 2.1%.

This leaves the risk sentiment mixed for Asian equities and risk-related currencies for the day ahead. However, the euro can befit from sharply higher yields in the EU with the German yields moving up 11bps and Italian yield by some 134bps.  

Elsewhere, the focus will be US Fed speakers. "Fed officials will continue to provide remarks in the upcoming week on the heels of a strong CPI report, which seems to have cemented the urgency to move quickly to a more neutral policy stance", analysts at TD Securities said.

"Chair Powell's participation at a WSJ Q&A and NY Fed's Williams remarks are likely to grab the spotlight. Any chatter about the possibility of MBS sales would also garner attention."

EUR/USD technical analysis

The bears are in town but a move from the bulls could be on the cards according to the price action and the W-formation. The price has completed the formation and is holding at support. If the bulls commit, then resistance between the figure and 1.0420 could come under pressure to open the way to 1.0450. 

20:20
NZD/USD bulls step in as risk assets rise NZDUSD
  • NZD/USD bulls move in to try and postpone the downside.
  • RBNZ is in focus, a 50bps hike is expected. 

NZD/USD ended the week on the front foot, correcting some of the damage done on the longer-term charts to close just over 1% higher after rallying from a low of 0.6222 to a high of 0.6289. Risk currencies, such as the high beta kiwi, were boosted by a better performance in global stocks and US equities in the New York session. However, the US benchmarks still closed in the red for the week which does not sit well for the time ahead. 

The Dow Jones Industrial Average rose by 1.5% to 32,196.66, the S&P 500 rose 2.4% to 4,023.89 and the Nasdaq Composite was 3.8% higher at 11,805.00. Friday's gains, however, were not enough to pull the indexes from a weekly slump, as all three declined, with the Nasdaq 2.8% lower. The S&P 500 saw a weekly loss of 2.4% while the Dow slipped 2.1%.

"Nevertheless, domestic factors do matter for the NZD, analysts at ANZ Bank said. This week is a fairly quiet one locally until Thursday when we get the Budget, and these haven’t typically been big days for FX (unlike bonds). So we are left watching global events, at least until next week’s MPS. And in that regard, what happens next depends on how risk assets fare as bond yields likely edge higher, having corrected sharply lower last week. Risk assets are in essence playing chicken with the Fed – but the Fed is (publicly at least) showing no signs of flinching. And they’re not in a position to back down either, so brace for volatility," the analysts at ANZ Bank explained in full. 

RBNZ in focus

Meanwhile, ANZ Bank is expecting a rate hike from the central bank of 50 basis points as soon as May. "But with longer-term inflation expectations measures no longer accelerating sharply, the RBNZ may conclude that they have the flexibility to take things at a more normal pace from the second half of the year."

 

 

19:00
AUD/USD Price Analysis: Pre-open glance on daily chart eyes prospects for a downside continuation AUDUSD
  • AUD/USD bulls move din last week and that could lead to a bullish open.
  • Thereafter, there are bearish prospects for the longer term. 

AUD/USD, from a technical perspective, is stacking up for a downside continuation for the week ahead. However, a bullish correction could be on the cards for the opening sessions. 

As illustrated below, the close on Friday left a strong bullish candle which shows the bulls have moved in, albeit from within a void in price balance on the longer-term charts which leave the potential for a downside continuation for the foreseeable future. 

AUD/USD daily chart

The tweezer bottom and bullish close are fundamental towards a bullish start for the open. There will be prospects of a move to mitigate the price imbalance from the prior highs toward the 50% mean reversion mark in the coming days.

The first objective will be a test of 0.6967 28 Jan lows as per the structure illustrated above. Thereafter, the 0.7050s will be eyed. If bulls commit at either of these levels, it could be all downhill from thereon:

AUD/USD weekly chart

 The space below the first presumed support area is a price imbalance all the way to the deaths of the 0.6530s. 

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