Technical Analysis Today

[Zerologic]

US retail sales data brings gold pullback

After reaching a record high, gold was reluctant to continue its rise ahead of the Fed's meeting to cut interest rates this week. Gold prices yesterday fell to a low of $2560 from a high of $2586 after the US released retail sales data.

US Retail Sales rose 0.1% in August monthly, compared to a revised 1.1% increase recorded in July. However, this was above consensus expectations of a fall of 0.2%, according to data from the US Census Bureau.

US Retail Sales excluding Autos, meanwhile, rose 0.1% after a 0.4% rise in July. This was below the forecast of a rise of 0.2%.

The retail sales data does not seem to support the strengthening of the dollar, but the impact on gold is different.

Gold prices briefly soared to a new all-time high of $2,589 as bets on the Fed cutting double interest rates increased. According to the FedWatch tool from the CME group, the probability of the Fed cutting interest rates by 50 basis points rose by 67% while the probability of a cut by 25 basis points fell by 37%.

In theory, the Fed's interest rate cut will provide support for gold as a non-yielding asset. Many analysts provide bullish support for gold, one of which is Michaël van de Poppe, Founder of MN Consultancy, who predicts a 10 year bullish commodity market including gold.

Today there are no high impact news releases in the economic calendar, but investors will probably consider US Building Permits data which measures permits for building new residential buildings which is estimated at 1.41M from the previous revised data of 1.40M.

 

[Zerologic]

Markets are volatile the Fed cuts interest rates in half including NZDUSD

The Fed finally cut interest rates by 0.50%, higher than the forecast of 0.25%, so that the Fed interest rate is now 5.00%.

The market looks volatile in response to the Fed's interest rate data, all currency pairs with the USD are experiencing turbulence. Gold briefly soared to $2600 but fell again to around $2547. Other currency pairs such as EUR/USD, and GBP/USD experienced similar conditions, rising then falling.

The NZD/USD pair also experienced turbulence after the Fed cut interest rates, this pair drew a bullish candlestick with a long wick on the top candle indicating that a strong rally came under high selling pressure. Yesterday's price formed a low of 0.61809 and a high of 0.62769 closing at 0.62085. The price soars up and then back to the starting point near the middle band line.

Looking for fresh insights into the health of New Zealand's economy, investors will focus on second-quarter Gross Domestic Product (GDP) data, which will be published later today. Zealand's GDP is predicted to fall -0.4% from the previous 0.2%, if the actual data is higher than the forecast it is expected to be good for NZD.

However, investors are also paying attention to US data, especially the FOMC economic projections and Unemployment Claims, which are predicted to be 230k, the same as the previous revision of 230k.

 

[Zerologic]

USDJPY moves below the middle band ahead of the BoJ policy rate

USDJPY yesterday drew a bullish small body candlestick with a long wick on the top candle indicating the price had reached 143,937 and closed at 143,606. A UOB group analyst predicts USDJPY could test the 144.00 resistance which could trigger a rise towards 145.50.

The Japanese Yen weakened yesterday even though the Fed had cut interest rates by 50 basis points on Wednesday which caused market turmoil including USDJPY. Yesterday's FOMC and unemployment claims supported the strengthening of the US dollar as one of the reasons for the weakening of the Japanese Yen.

Fed policymakers raised their long-term projection for the Federal Funds rate from 2.8% to 2.9%. Meanwhile, the actual Unemployment Claims data was 219k smaller than the forecast 230 from the previous revision of 231k.

Today traders will focus on the BoJ interest rate forecast unchanged at 0.25% with an eye on the potential for future interest rate increases in the monetary policy statement.

 

[Zerologic]

Gold hit a new record high on hopes of global central banks cutting interest rates.

On Friday the price of gold surged to reach a new record high of $2625 on the FXOpen platform. With the soaring gold price in addition to the Fed's policy of cutting interest rates, there is also hope that global central banks follow the Fed's policy of easing policy.

Several global central banks have lowered interest rates, such as the South African Reserve Bank (SARB) reduced its benchmark interest rate by 25 basis points, and the Central Bank of the Philippines reduced its interest rate by 250 bp to 7.0%. Meanwhile, the Reserve Bank of India (RBI) is expected to cut interest rates at its next meeting.

The Bank of Japan left interest rates unchanged with some speculating a rate hike is on the way. The People's Bank of China (PboC) also kept interest rates unchanged at 3.35%.

Goldman Sachs Research forecasts gold prices could reach $2,700 at the start of the year on the back of Fed interest rate cuts and gold purchases by developing country central banks, and growing concerns about the US debt burden.

Geopolitical risk factors also support gold as a safe-haven asset amidst global economic uncertainty and anticipation in the event of a major third world war. Countries such as China, Taiwan, Russia, Europe, and the Middle East are currently making massive purchases of gold as a safe-haven asset.

Today the Japanese bank holiday may affect market liquidity, but traders are also paying attention to US manufacturing PMI and service PMI news.

 

[Zerologic]

AUD/USD strengthens ahead of RBA policy on the horizon

Yesterday the AUDUSD currency pair drew a bullish candlestick with a short shadow at the top of the candle indicating the strengthening of the Australian dollar against the US dollar. Price formed a high of 0.68537, a low of 0.67960, close at 0.69374.

The performance of the Australian dollar strengthened ahead of the RBA making its interest rate policy decision today. Analysts forecast that the RBA will keep interest rates unchanged at 4.35% with inflationary pressure remaining as expected and job growth optimistic.

Therefore, investors will pay more attention to RBA officials' statements to get clues about future policy by looking at hawkish or dovish statements.

On the other hand, the Fed is predicted to make cuts in November. According to the CME group's FedWatch tool, the forecast for a 50 basis point cut is 49.5% and the forecast for a 25 basis point cut is 50.5%. Meanwhile, in a Reuters poll, 100 economists predicted the Fed would cut interest rates by 25 basis points.

On the other hand, US manufacturing PMI data showed data of 47.0 lower than the predicted 48.6 from the previous revision of 47.9. Meanwhile, the services PMI showed actual data of 55.4, higher than the forecast of 55.3 but still below the previous revision of 55.7.

Today, apart from the market highlighting the RBA interest rate, it is also paying attention to The Conference Board (CB), which assesses consumer financial confidence which is forecast to rise to 103.9 from the previous 103.3.

 

[Zerologic]

Canadian Dollar strengthens against US Dollar, BOC Gov Macklem Speaks highlighted.

This week USDCAD experienced a significant decline, extending the previous week's decline. Yesterday the price drew a long body bearish candlestick indicating a strong decline forming a high of 1.35363 and a low of 1.34783 on FXOpen's chart. The price draws a bearish candlestick body along the middle band point to the lower band.

Recently, Bank of Canada (BoC) Governor Tiff Macklem stated that core inflation would continue to ease as expected and the inflation rate would get closer to the target of 2%, and keep inflation in the range of 1%-3%. Furthermore, there is a possibility that the BoC will reduce interest rates if all the incoming data supports a cut. The next decision is scheduled for October 23.

Market analysts now forecasted the possibility of interest rate cuts of 25 basis points at the next seven meetings. Since June the BOC has lowered interest rates in the last three decisions with a cumulative drop of 75 basis points to 4.25%.

Today, although there is no high impact category news schedule for the Canadian Dollar, traders may pay attention to data on US new home sales and Crude oil inventories.

 

[Zerologic]

USDCHF Rises Ahead of SNB Policy Rate

Yesterday USDCHF rose sharply drawing a long body bullish candlestick with almost no shadow on the top and bottom of the candle. Price formed a low of 0.84144, a high of 0.85067, and closed at 0.85012 on the FXOpen platform. Price rises from the lower band to approach the upper band line.

Ahead of the SNB interest rate decision the Swiss Franc performed weakly due to the strengthening of the USD which was supported by higher-than-expected US new home sales data. Actual new home sales data shows 716k from the forecast of 699k. However, the actual data is still lower than the previous revision of 751k.

The SNB is predicted to cut interest rates by 25 basis points from 1.25% to 1.00% in its interest rate policy decision which will be released today. Analysts expect the SNB to cut interest rates further as the Swiss economy's annual Consumer Price Index (CPI) has slowed to 1.1% in August. Investors will also look at the SNB Monetary Policy Assessment which may provide a picture of hawkish or dovish policy in the future.

Meanwhile, the Fed is predicted to cut interest rates by up to 50 basis points at its November meeting. According to the FedWatch tool by the CME Group, forecasts of the Fed cutting interest rates by 50 basis points rose by 59.2%, and forecasts of a 25 basis point cut by 40.8%.

Today investors are also waiting for US GDP data which is forecast at 3.0%, the same as the previous revision, and Unemployment Claims which is forecast at 224k from the previous revision of 219k. Markets will also consider Fed Chair Powell Speaks which may provide a hawkish or dovish policy picture before further interest rate decisions.

 

[Zerologic]

GBPUSD rises to hit new highs amid supportive US data

USD strengthened amid supportive US data, US GDP showed actual data of 3.0%, in line with expectations, the same as the previous revision of 3.0%. On the other hand, Unemployment Claims showed actual data of 218k lower than the forecast of 224k from the previous revision of 222k. Meanwhile, Core Durable Goods Orders were 0.5% higher than the forecast of 0.1% from the previous revision of -0.2%. Advance durable goods 0.0% from forecast -2.8% from the previous revision of 9.8%.

GBPUSD yesterday drew a long-body bullish candlestick with a Low of 1.33000, a high of 1.34335, and a close at 1.34140 on the FXOpen platform. The pair has set new record highs throughout 2024.

The Fed has recently cut interest rates by 50 basis points which has had an impact on global markets, some investors are even predicting the possibility that a rate cut might be carried out by the Fed in response to the slowing US economy even though the Fed Chair Jerome Powell last week confirmed the Fed's move is not a quick response to potential recession data, but rather a precautionary step to help shore up the US workforce.

According to the FedWatch tool from the CME Group, the forecast for the Fed cutting interest rates by 50 basis points is 51.1%, and the forecast for a 25 basis point cut is 48.9%.

Today, investors are waiting for the release of Personal Consumption Expenditure (PCE) inflation data, which is the Fed's most preferred indicator in determining the direction of interest rate policy. The Core PCE Price Index is forecast at 0.2%, the same as the previous revision of 0.2%.

 

[Zerologic]

The increase in gold prices was paused after the PCE data was released

Last week gold prices reached a record high of $2685 on Thursday, then gold prices declined on Friday to a low of $2642 on the FXOpen platform. One of the reasons for the decline in gold may be due to the release of PCE data.

Quoted from the Bureau of Economic Analysis, the PCE price index increased by 0.1%. Excluding food and energy, the PCE price index increased 0.1%. Real DPI increased by 0.1% in August and real PCE increased by 0.1%; goods increased by less than 0.1% and services increased by 0.2%.

Previously it was estimated that the Core PCE price Index was 0.2%, after the release it was only 0.1%. Lower values are usually less favorable for a currency. PCE is one of the Fed's main inflation measures for interest rate policy, low inflation allows the Fed to cut interest rates for real economic growth.

According to the FedWatch Tool by CME Group, the Fed's forecast for cutting interest rates by 50 basis points is 52.8% and the forecast for a 25 basis point cut is 47.2% on November 7 next month.

Today's news that may concern investors is China's Manufacturing PMI which is forecast to rise to 49.4 from the previous revision of 49.1. Gold traders consider Chinese economic data important because China is one of the largest global gold-importing countries. PMI values below 50 are usually still considered contraction, and values above 50 indicate expansion.

On the other hand, geopolitical turmoil still supports the trend of gold as a safe-haven asset. Fears of the outbreak of nuclear war could increase the value of gold as investors' most sought-after precious metal.

 

[Zerologic]

USDJPY rebounds half body of previous candlestick, waiting for Japanese job data

The USD/JPY currency pair at the end of last week drew a long bearish candlestick with a long shadow on the top candle. In trading on Monday, the price rebounded half the body of the previous candle with a low of 141,636 and a high of 143,907 on the FXOpen platform.

The new Japanese Prime Minister Shigeru Ishiba who won the Japanese prime ministerial contest has given a dovish statement weighing on the Japanese Yen where according to him monetary policy should be accommodative as the trend and directs it to depend on data. At its September meeting, the BOJ left interest rates unchanged at 0.1%-0.25%.

On the other hand, the Fed indicated the possibility of reducing interest rates back to normal if all recovery targets can be achieved. "Going forward, if the economy expands broadly as expected, policy will move toward a more neutral stance over time," Powell said in Nashville, Tenn. at a conference hosted by the National Association for Business Economics.

Today investors are waiting for Japan job data. Japanese Unemployment Rate is forecasted to fall by 2.6% from the previous revision of 2.7%. Data will released by the Statistics Bureau of Japan. Apart from that, traders will also anticipate hawkish statements in the BOJ Summary of Opinions news release which may provide projections for future monetary policy.

 

[Zerologic]

Gold prices rose amid heated geopolitical risks

Yesterday the price of gold rose again to around $2661 on the FXOpen platform. The price of gold yesterday formed a low of $2631 and a high of $2672 after falling to $2624 in trading on Monday.

The confrontation between Iran and Israel is thought to be one of the reasons gold rose again. Meanwhile, gold selling activity was somewhat limited amid Western investors' concerns about increasing monetary inflation due to the Fed's aggressive easing in response to worsening economic and financial conditions despite Powell's dismissal of this rumor.

The US Manufacturing PMI released yesterday showed 47.2% matching the figure recorded in August, lower than the forecast of 47.6. Services PMI is 51.5% and Hospital PMI at 58.6%. Meanwhile, JOLT Job Openings data showed 8.04m higher than the forecast of 7.64m with the previous revision of 7.71M according to the Bureau of Labor Statistics.

Today, the Chinese Bank holiday commemorates National Day, which may affect the liquidity and volatility of gold considering that China is one of the largest gold importers besides Türkiye and India.

Traders will also anticipate the ADP Non-Farm Employment Change forecast at 124k higher than the previous revision of 99k. Significant differences between actual data and forecasts may influence the market.

 

[Zerologic]

CHFJPY surged amid Japanese monetary releases

The Japanese Yen weakened yesterday against several other currencies USD, EURO, and CHF. The CHFJPY pair jumped up yesterday forming a bullish candlestick with a low of 169,229 and a high of 172,472 on the FXOpen platform.

Yesterday the BOJ's monetary base report showed data of -0.1% lower than the forecast of 0.8% with a revision of the previous data at 0.6%. This report shows Changes in the total amount of domestic currency in circulation and current account deposits held at the BOJ. Meanwhile, the BOJ interest rate is currently still at 0.25%.

Meanwhile, the SNB interest rate is now 1% and still hints at further rate cuts. The SNB has cut interest rates 25 bps from the previous 1.25% to 1.% due to the decline in Swiss inflation. The SNB now forecasts average inflation of 1.3% in 2024, 0.6% in 2025 and 0.7% in 2026.

It is thought that the SNB has the aim of weakening the Franc as Swiss exporting companies echo the negative impact that the expensive Swiss Franc is having on them. SNB communications suggest to markets that further rate cuts are still in the pipeline.

Today traders are focused on Swiss CPI data which is forecast to fall 0.1% from the previous 0.0%.

 

[Zerologic]

Yesterday GBPUSD fell drawing a long bearish candlestick with a small shadow at the bottom of the candle. The price formed a high of 1.32700 and a low of 1.30914 on FXOpen. The pair fell over 1% and traded around 1.31250 on dovish comments by BoE Governor Andrew Bailey, who said that the central bank could become more active in rate cuts if inflation eases. Meanwhile, the Final Services PMI from global S&P sources showed that actual data was lower than forecast, also weighing on the Sterling.

On the other hand, the US ISM Services PMI economic data showed actual data of 54.9%, higher than the forecast of 51.7% and the previous data revision of 51.5%. Manufacturing PMI at 47.2% matching the figure recorded in August. Hospital PMI at 58.6% 5.3-percentage point increase from the July reading of 53.3 percent.

Meanwhile, Unemployment Claims showed actual data of 225k, higher than the forecast of 222k and the previous revision of 219k. This mixed economic data is still encouraging the USD to strengthen.

Today investors are waiting for Non-Farm Employment Change data which is predicted to increase by 147k from the previous revision of 142k. Furthermore, the Unemployment Rate is predicted to be 4.2%, the same as the previous revision.

 

[Zerologic]

USDJPY extends gains despite dovish BOJ sentiment

In USDJPY trading last week, the price extended its increase after previously crossing the MA 50 from the downside. USDJPY crossed the MA 50 at 145,630 and is now in the range of 148,918 trying to approach the MA 200 at 151,000.

US Non-Farm Employment Change data released at the end of last week seems to be weighing on the JPY. NFP showed an actual value of 254k higher than the forecast of 147k from the previous data revision of 159k. Meanwhile, the Unemployment rate fell to 4.1% from the forecast of 4.2% and the previous data revision of 4.2%.

Meanwhile, BOJ board member Asahi Noguchi said that the central bank "must patiently maintain loose monetary conditions." This indicates that the BOJ is likely to make gradual adjustments to the level of monetary support while carefully assessing whether inflation sustainably reaches its 2% target, supported by wage growth. The BOJ also indicated there are no immediate plans for additional interest rate hikes but remains open to adjustments if economic conditions show improvement.

Today there is no high-impact economic schedule for USDJPY, there is only a leading indicator that measures the level of the composite index based on 11 economic indicators related to employment, production, new orders, consumer confidence, housing, stock prices, money supply, and interest rate spreads.

 

[Zerologic]

AUDUSD extends losses amid reduced Fed rate cut speculation

Yesterday the AUDUSD price drew a bearish candle with a long body crossing the middle band line from the upside. Price formed a high of 0.68099 and a low of 0.67428, closing at 0.67568.

AUDUSD's losing streak was further strengthened following the announcement of the US jobs report which showed a sharp increase in payrolls and stronger-than-expected wage growth. This data has reduced expectations of the Fed, cutting interest rates from the previous 50 bps to only 25 bps.

According to the Fedwatch forecast tool, the Fed cut interest rates 25 bps to 86.3% and the interest rate forecast was unchanged at 13.7%.

To further anticipate the Fed's steps in November, investors will pay attention to the US Consumer Price Index (CPI) data for September, which will be released on Thursday.

The Australian dollar was also under pressure due to risk-averse market sentiment as tensions in the Middle East escalated. Geopolitical risks tend to reduce the attractiveness of risk-sensitive assets.

Next AUD will be driven by the RBA meeting minutes. The RBA kept the Official Cash Rate (OCR) unchanged at 4.35% and gave no timetable for starting the rate cut cycle. Investors will pay attention to the Monetary Policy Meeting Minutes which may provide hawkish or dovish expectations for the RBA's interest rate policy.

 

[Zerologic]

Gold prices fall drawing lower lows

Yesterday's gold price finally fell, drawing lower lows after several days of trading moving in a range.

Yesterday the price of gold reached a high of $2652 and a low of $2605. The candlestick opens at $2642 and closes at $2521 crossing the middle band line from the upside.

The decline in gold prices is predicted due to the rise in the US dollar following solid economic data and reduced speculation of a major Fed interest rate cut.

Besides that, the Chinese Central Bank (PBoC) reported unchanged gold reserves of 72.8 million ounces (2,264 tons) at the end of September, which means that the Chinese Central Bank did not buy gold even though the central banks of other countries such as India, Türkiye, and Poland continued to buy gold.

From another angle rising tensions in the Middle East weigh on speculative interest.

Today the Federal Open Market Committee (FOMC) will announce the minutes of its September meeting. However, the minutes may not be a shocking document, as Fed officials' comments flooded the news following the extraordinary NFP report. Meanwhile, on Thursday the US will release the Consumer Price Index (CPI) for September with a Core CPI forecast of 0.2% from the previous data revision of 0.3%.

 

[Zerologic]

Reserve Bank of New Zealand keeps interest rate at 4.75%, USDCAD extends hikes.

USDCAD yesterday drew a long body bullish candlestick with slight shadows on the top and bottom of the candle. USDCAD price formed a high of 1.37180, and a low of 1.35318 on the FXOpen platform. USDCAD climbed higher after breaking the upper band line at 1.36477.

At yesterday's meeting, the RBNZ decided to maintain interest rates at 4.75%. This decision appears to still cause the CAD to weaken further against the USD due to strong demand for US dollars caused by previous US economic data.

In the summary of the October 2024 meeting, members of the Monetary Policy Committee agreed that the stance of monetary policy has been consistent with ensuring low and stable inflation. New Zealand's annual consumer price inflation is assessed to currently be within the Committee's 1 to 3 percent target band and is expected to converge to the target midpoint.

Today investors will focus on the FOMC Meeting Minutes which will determine the direction of US interest rate policy in the future.

 

[Zerologic]

USDCHF fell still within the range when the US CPI data was released

Yesterday the USDCHF price drew a bearish candlestick with a small wick on the top candle. The price formed a high of 0.86138 and a low of 0.85568 on the FXOpen platform. Even though the price is falling, the movement is in the range between the middle and upper band lines.

Yesterday's US economic data showed core CPI 0.3% greater than the forecast 0.2%, the same as the previous revision of 0.3%. CPI goods and services purchased by consumers was 0.2% from the forecast of 0.1%, the same as the previous revision of 0.2%. CPI year of year 2.4% from a forecast of 2.3% lower than the previous revision of 2.5%. On the other hand, Unemployment Claims data showed 258k, greater than forecast, 231k from the previous revision of 225k.

Mixed US economic data seems to be one of the reasons for USDCHF's decline yesterday. According to the CME group's FedWatch tool, the target rate probability for the November 7 FED meeting is predicted to be cut by 25 bps at 83.3% and the forecast rate is unchanged at 16.7%.

On the other hand, geopolitical risks in the Middle East still overshadow the uncertainty of global geopolitical risks. If the escalation of war continues, it might increase safe-haven flows that benefit the Swiss Franc.

Today there will still be US economic news releases that may be of interest to investors, core CPI and CPI month of month.

 

[Zerologic]

Silver gapped down seen at Monday's market open

Silver is now traded at around 31,179 on the FXOpen platform. Last weekend Silver prices rose drawing a bullish candlestick with a low of 31,055 and a high of 31,624 extending the previous day's rise.

Silver prices experience a gap down at market opening and can even be seen on the daily timeframe, where the open price is far below the close price of the previous candle.

Last week's summary Silver faced downward pressure by drawing a bearish candle with a long shadow at the bottom of the candle, reflecting the price under pressure and trying to rise again at the end of the week. Briefly Silver prices rose to 32,955 but fell again to 30,119.

The robust US economic data including the labor market and CPI which supports a stronger USD seems to affect the value of Silver because it lifts US Treasury yields making it less attractive for Silver which does not provide yields.

Gold and Silver often go hand in hand, but it seems that Silver's movement is lagging behind Gold, this may be weighed down by weak industrial demand and weak Chinese interest.

Today the Japanese bank holiday commemorates Health-Sports Day, also the Canadian bank holiday commemorates Thanksgiving Day, and the US bank holiday commemorates Columbus Day. Bank holidays can affect transaction volume in the forex market.

 

[Zerologic]

USDCAD extends the increase that started on October 2

Yesterday's USDCAD price was still drawing a bullish candlestick with higher highs lower highs which reflects a bullish market.

Although Canadian economic data released on Friday showed job growth was higher than expected and showed signs inflation pressures may be easing. However, the market may still doubt the possibility that the Bank of Canada will cut interest rates by 50 bps. Investors may still be watching to see whether the labor market recovery is sustainable.

On the other hand, the dollar index (DXY) shows an increase in value at 103.212 which started at the beginning of October. This increase was also triggered by US economic data last week which showed CPI data rising 0.2% and an increase in payroll employment of 254k in September, although: PPI final demand was unchanged in September. Prices for final demand services increased 0.2 percent, and the index for final demand goods decreased 0.2 percent. Prices for final demand rose 1.8 percent for the 12 months ended in September.

Today investors will focus on Canadian CPI data which may be one of the benchmarks for the BoC in formulating interest rate policy.