17 Jun

Oil prices continue to be supported by voluntary cuts by OPEC countries. Hong Kong index fell to a 6-week low

By JustMarkets

At Friday’s close, the Dow Jones (US30) Index was down 0.15% (for the week -0.50%), while the S&P 500 (US500) Index decreased by 0.04% (for the week +1.69%). The NASDAQ Technology Index (US100) closed positive 0.12% (for the week +3.54%). Hawkish comments from Fed Chair Cleveland Mester bolstered the US dollar and pressured stocks when she said she wanted to see a few more months of good inflation data before cutting interest rates.

The University of Michigan’s US consumer sentiment index for June unexpectedly fell by 2.5 to a 7-month low of 65.6, weaker than expectations for a rise to 72.0. The University of Michigan’s US 1-year inflation expectations indicator for June was unchanged from May at 3.3%, which was weaker than expectations of a decline to 3.2%. The 5-10 year inflation expectations indicator rose to a 7-month high of 3.1% in June, above expectations of no change at 3.0%.

Equity markets in Europe mostly fell on Friday. The German DAX (DE40) fell by 1.44% (for the week -2.96%), the French CAC 40 (FR40) closed down 2.66% (for the week -3.96%), the Spanish IBEX 35 (ES35) decreased by 0.67% (for the week -3.37%), and the UK FTSE 100 (UK100) closed negative 0.21% (for the week -1.19%) on Friday. European markets are increasingly anxious about European politics after French President Macron announced snap legislative elections following his party’s defeat in last Sunday’s European Parliament elections.

Centeno, a spokesman for the ECB’s governing council, said the ECB should be cautious in bringing interest rates to levels that neither stimulate nor restrain the economy, suggesting the ECB would not be in a hurry before cutting rates again. His colleague, ECB Governing Council spokesman Vasle, said there is a good chance that cutting interest rates will be much slower than the process of raising rates. Swaps discount the odds of a 25 bps ECB rate cut by 16% for the 18 July meeting and 63% for the 12 September meeting.

Oil prices rose nearly 4% last week due to improved global demand forecasts, and OPEC’s current production policy continues to support the market. Despite the announcement that it may begin phasing out voluntary cuts in October, the group continues to stress that it will force non-compliant members to cut production in the coming months.

Asian markets were predominantly up last week. Japan’s Nikkei 225 (JP225) gained 0.32% for the week, China’s FTSE China A50 (CHA50) closed around its opening level for the week, Hong Kong’s Hang Seng (HK50) fell by 3.34% for the week and Australia’s ASX 200 (AU200) was negative 1.25%. Hong Kong’s Hang Seng Index (HK50) hit a six-week low on Monday. Hong Kong stocks have come under pressure in recent weeks as the prospect of lower US interest rates and further Western economic sanctions on Chinese companies have undermined investor confidence.

The offshore yuan stabilized at 7.26 per dollar as traders processed a variety of economic indicators from China. The country’s retail sales rose to a three-month high of 3.7% year-on-year in May, accelerating from a fifteen-month low of 2.3% in the previous month and exceeding the forecast growth of 3%, signaling a rebound in consumer spending. However, the broader economic picture remained mixed, with industrial production and fixed asset investment coming in below market forecasts in May and the urban unemployment rate remaining unchanged at 5%. On the monetary policy front, the People’s Bank of China (PBoC) decided to leave the medium-term lending rate unchanged at 2.5% for 10 consecutive months, which was widely expected.

S&P 500 (US500) 5,431.60 −2.14 (−0.04%)

Dow Jones (US30) 38,589.16 −57.94 (−0.15%)

DAX (DE40) 18,002.02 −263.66 (−1.44%)

FTSE 100 (UK100) 8,146.86 −16.81 (−0.21%)

USD Index 105.51 −0.04 (−0.04%)

Important events today:
  • – China Industrial Production (m/m) at 05:00 (GMT+3);
  • – China Retail Sales (m/m) at 05:00 (GMT+3);
  • – China Unemployment Rate (m/m) at 05:00 (GMT+3);
  • – US NY Empire State Manufacturing Index at 15:30 (GMT+3);
  • – US FOMC Harker Speaks at 20:00 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
17 Jun

The New Zealand dollar is falling

By RoboForex Analytical Department

Like other major currencies, the New Zealand dollar is under pressure from the strong US dollar. This development comes after the Federal Reserve’s updated forecasts last week. Stock market expectations point to only one interest rate cut this year, most likely in December.

Earlier, some American monetary policymakers confirmed these expectations, calling them reasonable.

The New Zealand services sector experienced a significant downturn in May, dropping the indicator to its lowest value since 2007. This reflects the country’s economic state, which is already in recession. The business activity index also decreased to 43.0 points from 46.6 points previously. Everything below the 50.0-point mark indicates a deterioration in the market situation.

Such data increases the likelihood that the Reserve Bank of New Zealand will decide to cut rates eventually. The main forecast is November. However, the RBNZ’s position, which has been voiced repeatedly, is that in 2024, the rates are unlikely to be revised down. The Central Bank believes that any reduction is not likely before mid-2025.

NZD/USD Technical Analysis

On the H4 NZD/USD chart, the market executed a correction wave to the level of 0.6220. At the moment, the market is forming another wave following the downward trend. The first target is at 0.6055. After reaching this level, a correction link to 0.6140 is possible (test from below). Next, we will consider a new wave of decline to 0.6016, the local target. Technically, this scenario is confirmed by the MACD indicator. Its signal line is located below the zero mark and is directed strictly downwards.

On the H1 NZD/USD chart, a downward impulse has been executed towards 0.6140. At the moment, a consolidation range has formed around this level. Today, we expect an exit from this range down to 0.6080. After reaching this level, a correction link to 0.6140 is possible (test from below), followed by a further decrease to 0.6055. The first target is trending down. Technically, this scenario is also confirmed by the Stochastic oscillator. Its signal line is located below the 20 mark and is directed strictly downwards.

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Financial News Forex and Currency News
17 Jun

Trade of the Week: UK100 index set for 1,000 pip move?

By ForexTime 

  • This week set to be UK100’s 2nd most-volatile period so far in 2024
  • UK100 may even see a 1000-pip intraday move
  • Traders brace for BOE decision, UK economic data
  • UK100 still holding on to QTD gains, but 3.8% lower from ATH
  • Wall Street predicts 15% future gains over next 12 months

 

This week could see big price swings for the UK100 stock index.

Markets currently predict this week to be the 2nd most-volatile period so far this year for this benchmark stock index.

The year-to-date peak was back in April, when Iran launched its unprecedented attacks on Israel, which stoked risk-off sentiment across global financial markets.

NOTE: FXTM’s UK100 stock index tracks the benchmark FTSE 100 index.

 

What could move the UK100 this week?

Traders will be highly tuned in to these 3 major economic events in the UK:

1) Wednesday, June 19th: UK May consumer price index (CPI)

The consumer price index, which measures headline inflation, is a key piece of economic data which tells investors and traders when the UK central bank can start cutting interest rates.

Here’s what economists predict for this week’s CPI releases:

  • CPI May 2024 vs. April 2024 (month-on-month): 0.4%
    If so, that would be an uptick from April’s 0.3% month-on-month figure.
  • CPI May 2024 vs. May 2023 (year-on-year): 2.0%
    If so, that would be considerably lower than April’s 2.3% year-on-year figure.
  • CPI core (excluding prices of energy, food, alcohol, and tobacco) year-on-year: 3.5%
    If so, that would be considerably lower than April’s 3.9% year-on-year figure.

As the CPI trends lower to the central bank’s 2% target, that increases the likelihood of a BOE rate cut.

In addition to the above, markets will also be shown the latest inflation rates on services, housing costs, retail prices, and producer prices.

 

POTENTIAL SCENARIOS:

  • UK100 index may push higher: if UK inflation does moderate lower towards the BOE’s 2% target, perhaps paving the way for a UK rate cut.
  • UK100 index may be dragged lower: if UK inflation proves higher-than-expected, taking its own sweet time in moderating towards the BOE’s 2% target, in turn delaying UK rate cuts.

Over the past 12 months, the UK CPI have triggered upside moves as much as 1.3%, or as much as 0.56% declines, in the 6 hours after the data release.

 

 

2) Thursday, June 20th: Bank of England (BOE) rate decision

To be clear, the BOE is not expected to lower its bank rate this week from its current 5.25% level.

If it does, that could be a major shocker for the UK100 index!

  • The odds for a rate cut on August 1st is down to a coin toss (47% chance).
  • Meanwhile, there’s an 84% chance currently given for a mid-September rate cut.

 

With those expectations in mind, investors and traders worldwide will be scouring for clues as to what the BOE might say about the timing of its eventual rate cut.

POTENTIAL SCENARIOS:

  • UK100 index may push higher: if the BOE signals that its rate cut might happen sooner (August?) rather than later (September?)
  • UK100 index may be dragged lower: if the BOE pushes back on the idea of imminent rate cuts, saying that its bank rate has to stay at the 5.25% peak for longer to convincingly subdue UK inflation.

Over the past 12 months, BOE rate decisions have triggered upside moves as much as 1.1%, or as much as 0.5% declines, in the 6 hours after the data release.

 

 

3) Friday, June 21st: UK May retail sales, June purchasing managers indexes (PMIs)

Overall, these data points are expected to show that the UK economy is on a steadier footing:

  • UK retail sales fared better in May, both on a month-on-month as well as year-on-year basis, compared to April 2024.
  • The manufacturing, services, and composite PMIs are expected to hold above the 50 line, which denotes expanding conditions (as opposed to a sub-50 reading which points to contracting conditions for that sector).

POTENTIAL SCENARIOS:

  • UK100 index may push higher: if the UK retail sales and PMI data come in below market expectations, forcing the BOE to proceed with rate cuts sooner rather than later.
  • UK100 index may be dragged lower: if the UK economic data exceeds market expectations and forces the BOE to delay its rate cuts.

Over the past 12 months, the UK retail sales data releases have triggered upside moves as much as 1.4%, or as much as 1.2% declines, in the 6 hours after the data release.

 

 

Political turmoil to inject more UK100 volatility?

As the French political turmoil has amplified investor angst surrounding European stock indexes (EU50, FRA40, etc.), the UK100 index has been able to hold on to its quarter-to-date (QTD) gains so far:

  • NETH25: +4.4%
  • UK100: +2.3%
  • GER40: -2.6%
  • EU50: -4.5%
  • FRA40: -8.5%

The above performance has enabled the UK stock market to reclaim the title as Europe’s largest stock market from France.

However, fundamental investors also note that the UK elections are set for merely two weeks away, on July 4th.

The closer we get to polling day, the more influence UK politics could hold over this benchmark stock index.

 

 

How might UK100 fare over the long term?

Wall Street analysts predict another 15% potential upside (12,000 pips / 1,200 index points) from the UK100’s current levels over the next 12 months.

But first, the above-mentioned near-term events must first be overcome before potentially crossing above the 9,300 level by this time in 2025, assuming Wall Street’s forecasts prove true.

 

 

From a technical perspective …

At the time of writing, the UK100 is trading about 3.8% below its all-time high (ATH), using intraday prices, of 8486.4 set on May 15th.

However, the 8120 level has provided support in recent sessions, with prices not straying far from its 50-day simple moving average (SMA) over the past week.

 

POTENTIAL RESISTANCE

  • 50-day SMA:  immediate resistance
  • 8250: upper downtrend line
  • 21-day SMA

POTENTIAL SUPPORT:

  • 8120 area: crucial support from recent sessions.
  • 8100: downward lower trendline
  • 8020 area: support in late-April 2024

However, such a drastic decline (to 8020) would have to come by way of an aggressively hawkish BOE or a serious bout of risk-off sentiment across global financial markets.

 

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Opinions Stock Market News
16 Jun

Speculator Extremes: New Zealand Dollar, Palladium lead Bullish & Bearish Positions

By InvestMacro

The latest update for the weekly Commitment of Traders (COT) report was released by the Commodity Futures Trading Commission (CFTC) on Friday for data ending on June 11th.

This weekly Extreme Positions report highlights the Most Bullish and Most Bearish Positions for the speculator category. Extreme positioning in these markets can foreshadow strong moves in the underlying market.

To signify an extreme position, we use the Strength Index (also known as the COT Index) of each instrument, a common method of measuring COT data. The Strength Index is simply a comparison of current trader positions against the range of positions over the previous 3 years. We use over 80 percent as extremely bullish and under 20 percent as extremely bearish. (Compare Strength Index scores across all markets in the data table or cot leaders table)

Here Are This Week’s Most Bullish Speculator Positions:

New Zealand Dollar


The New Zealand Dollar speculator position comes in as the most bullish extreme standing this week. The New Zealand Dollar speculator level is currently at a 91.5 percent score of its 3-year range.

The six-week trend for the percent strength score totaled 55.4 this week. The overall net speculator position was a total of 10,978 net contracts this week with a boost of 3,773 contract in the weekly speculator bets.

Speculators or Non-Commercials Notes:

Speculators, classified as non-commercial traders by the CFTC, are made up of large commodity funds, hedge funds and other significant for-profit participants. The Specs are generally regarded as trend-followers in their behavior towards price action – net speculator bets and prices tend to go in the same directions. These traders often look to buy when prices are rising and sell when prices are falling. To illustrate this point, many times speculator contracts can be found at their most extremes (bullish or bearish) when prices are also close to their highest or lowest levels.

These extreme levels can be dangerous for the large speculators as the trade is most crowded, there is less trading ammunition still sitting on the sidelines to push the trend further and prices have moved a significant distance. When the trend becomes exhausted, some speculators take profits while others look to also exit positions when prices fail to continue in the same direction. This process usually plays out over many months to years and can ultimately create a reverse effect where prices start to fall and speculators start a process of selling when prices are falling.

Copper


The Copper speculator position comes next in the extreme standings this week. The Copper speculator level is now at a 90.3 percent score of its 3-year range.

The six-week trend for the percent strength score was 3.0 this week. The speculator position registered 61,288 net contracts this week with a weekly edge higher by 161 contracts in speculator bets.

Mexican Peso


The Mexican Peso speculator position comes in third this week in the extreme standings. The Mexican Peso speculator level resides at a 89.8 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at -0.0 this week. The overall speculator position was 118,993 net contracts this week with a decline of -5,678 contracts in the weekly speculator bets.

Silver


The Silver speculator position comes up number four in the extreme standings this week. The Silver speculator level is at a 89.0 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a change of -3.9 this week. The overall speculator position was 51,692 net contracts this week with a drop of -4,711 contracts in the speculator bets.

British Pound


The British Pound speculator position rounds out the top five in this week’s bullish extreme standings. The British Pound speculator level sits at a 87.8 percent score of its 3-year range. The six-week trend for the speculator strength score was 53.8 this week.

The speculator position was 52,121 net contracts this week with a boost of 8,911 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

Palladium


The Palladium speculator position comes in as the most bearish extreme standing this week. The Palladium speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -17.5 this week. The overall speculator position was -13,914 net contracts this week with a decline of -1,242 contracts in the speculator bets.

Canadian Dollar


The Canadian Dollar speculator position comes in next for the most bearish extreme standing on the week. The Canadian Dollar speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -37.8 this week. The speculator position was -129,493 net contracts this week with a sharp decrease of -37,854 contracts in the weekly speculator bets.

Cotton


The Cotton speculator position comes in as third most bearish extreme standing of the week. The Cotton speculator level resides at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -27.8 this week. The overall speculator position was -20,056 net contracts this week with a reduction by -13,365 contracts in the speculator bets.

5-Year Bond


The 5-Year Bond speculator position comes in as this week’s fourth most bearish extreme standing. The 5-Year Bond speculator level is at a 4.5 percent score of its 3-year range.

The six-week trend for the speculator strength score was -21.0 this week. The speculator position was -1,497,424 net contracts this week with a gain of 75,613 contracts in the weekly speculator bets.

Soybean Oil


Finally, the Soybean Oil speculator position comes in as the fifth most bearish extreme standing for this week. The Soybean Oil speculator level is at a 4.6 percent score of its 3-year range.

The six-week trend for the speculator strength score was 4.6 this week. The speculator position was -48,951 net contracts this week with a drop of -12,366 contracts in the weekly speculator bets.

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Forex and Currency News Opinions
14 Jun

The Japanese yen fell to a six-week low after the Bank of Japan ended its meeting

By RoboForex Analytical Department

The Japanese yen exchange rate paired with the US dollar looks unimpressive by the end of this week. The USD/JPY pair rose to almost 158.00 immediately after the end of the June meeting of the Bank of Japan, which left the interest rate unchanged. Everything went according to expectations.

In March, the BoJ raised the rate for the first time in seven years, moving it from negative territory to zero.

In its comments, the regulator noted that it will continue to buy Japanese government bonds at the same pace as agreed in March until its July meeting. Thus, market expectations were ignored, which worked against the JPY. Investors hoped that the BoJ would at least carefully consider gradually reducing its balance sheet through government bonds as part of a smooth monetary policy transition from quantitative easing to tightening.

Previously, Bank of Japan Governor Kazuo Ueda confirmed the regulator’s intention to gradually reduce its substantial balance sheet in the future. However, the timing of this action remains uncertain.

USD/JPY Technical Analysis

On the H4 USD/JPY chart, the market has breached 157.47 upwards and is continuing to develop a growth wave towards 158.74. After reaching this level, a correction down to the level of 157.47 is a possibility (test from above). We will then assess the probability of continuing the growth wave to 159.36. Technically, this scenario is supported by the MACD indicator, with its signal line above the zero level and pointing upwards.

On the H1 USD/JPY chart, the market continues to develop a wave of growth to the level of 158.40. Further, a correction wave to 157.47 is possible, followed by growth to 158.74, the local target. Technically, this scenario is confirmed by the Stochastic oscillator, with its signal line above level 80 and preparing to decline to level 20.

 

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Financial News Forex and Currency News
13 Jun

Inflation is cooling, but not fast enough for the Fed: Policymakers now expect only one rate cut in 2024

By Christopher Decker, University of Nebraska Omaha 

It was a double-whammy Wednesday for economic-data enthusiasts.

During the morning of June 12, 2024, the Bureau of Labor Statistics published its latest inflation figures. The news was relatively good, showing that inflation rose 3.3% in the year to May 2024 – less than some analysts had expected.

A few hours later, the Federal Reserve concluded its June meeting by holding interest rates steady – as forecasters expected – and releasing an updated set of economic projections.

What does it all mean? The Conversation U.S asked economist Christopher Decker to explain.

What are your major takeaways from the latest inflation report?

The May inflation rate – as measured by the Consumer Price Index for All Urban Consumers, or CPI-U – was down a bit from April, but not by much. Basically, this implies that not much changed on the inflation front, and it’s been like this for a while now.

This isn’t a bad thing, though. I like to take the long view: U.S. inflation has really stabilized around 3.3%. In fact, we’ve been around 3% to 3.7% for 12 months now. So we have stable price growth – even if it’s higher than the Fed’s target rate of 2% – as well as wage and job growth. This economy is still quite strong.

In terms of the details, energy prices are down compared with last month – but energy prices tend to be volatile, so that might be a blip in the data, not a real trend. Labor markets are still tight. Average hourly earnings rose 4.1% this May compared to last year, indicating that employers need to pay higher wages to attract new workers and retain existing ones.

In May, inflation-adjusted earnings increased 0.5% from April to May of this year. So with wages outpacing inflation, consumer spending – which amounts to two-thirds of American gross domestic product – will likely increase. Payrolls increased by 272,000 in May, up from 165,000 and 310,000 in April and March, respectively.

In short, this report, along with other recent data reports, continues to show a fairly robust and stable economy.

Why has inflation stayed above the Federal Reserve’s 2% target for so long?

Housing and rents are major reasons inflation has stayed above 2%. Rental prices are up due to higher construction and maintenance costs, as well as strong demand from people priced out of homeownership. Home prices and mortgage rates remain high, making home purchases difficult, particularly for first-time homebuyers.

The Fed held interest rates steady today, and indicated it would likely cut rates one time in 2024. But just three months ago, policymakers were mulling three rate cuts this year. What changed?

The Fed is very data-driven, and when the data changes, the Fed changes course.

It’s important to remember that the Fed has hiked rates more than 10 times since March 2022. This was done in an effort to slow economic growth and thereby rein in inflation. I think a lot of policymakers thought that would push the inflation rate down more rapidly than it did. Instead, job growth remained stronger than expected.

In many ways, the labor market is still working through COVID-related disruptions. Many workers gradually reentered the workforce. Therefore, production could increase to meet demand for goods and services. This meant that there was room for the economy to grow even with slightly higher inflation.

The U.S. also saw supply-chain disruptions unlike anything in recent memory. We’re likely still dealing with a few residual effects here, as well. As a result, higher rates worked to slow inflation down – just not to 2%.

Now, time will tell if we are at a new normal. The Fed clearly doesn’t think so. It’s still holding fast to 2% inflation. If the labor market does seem to settle where it currently is, then we may see some elevated wage increases compared to pre-COVID rates. That could lead to slightly higher inflation rates, as firms seek to keep profit margins while covering higher labor costs.

If inflation is stable and wages have been showing some growth, why do so many Americans feel bad about the economy?

I think part of it is that people tend to compare today’s prices to prices they paid years ago – they’re not focusing so much on month-to-month inflation. For example, the average price of a dozen eggs is about $US2.70 today, whereas before COVID it was $1.46 or so. People remember that and feel ripped off – forgetting that eggs were $4.82 in early 2023 and those prices have generally fallen since.

What do you think will happen the rest of this year?

Even if we set aside the Fed’s 2% inflation target, from a macroeconomic perspective the data right now simply doesn’t suggest we need to change interest rates. Economic growth isn’t slowing dramatically, so cutting rates isn’t necessary. And inflation isn’t accelerating, so increasing rates isn’t justified.

Holding rates constant – as hard as that is for some potential homebuyers to hear – is just the most sound policy right now.

What do you think will happen in the long term?

I was looking at the Fed’s most recent “dot plot,” which shows where each of the Fed’s voting officers expect benchmark interest rates will settle in 2024, 2025 and 2026.

The majority of officials think the federal funds rate, currently at 5.3%, will stay at about this level for the rest of this year, then fall to a bit above 4% in 2025. Most then think it will reach 3.25% or so by 2026. So they are betting on the need for rate cuts in 2025 and 2026.

This makes sense to me – certainly for 2025. There are signs of a slowing economy and slowing job market. Expect any moves toward rate cuts to be gradual, though. The Fed is being very cautious, and so long as there are no dramatic spikes in the key job and inflation data, a gradual lowering is a fair bet.The Conversation

About the Author:

Christopher Decker, Professor of Economics, University of Nebraska Omaha

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Economics & Fundamentals Opinions
13 Jun

Target Thursday: 3 cryptos met expectations, with one surprise winner

By ForexTime

  • Cryptos soared post-CPI, tumbled after Fed
  • Avalanch rose as much as 6.2%, up 5.1% for the day
  • Solana rose as much as 6.3%, up 3.9% for the day
  • Chainlink rose as much as 6.9%, up 5.8% for the day
  • Dogecoin rose as much as 7.5%, up 5.5% for the day

 

It was a wild Wednesday for global financial markets!

Major US stock indices hit fresh record highs, while the US dollar saw its 2nd largest single-day decline so far this year!

Markets swung wildly as investors and traders reacted to the surprise cooling in US inflation, as measured by the consumer price index (CPI).

They also reacted to the Fed’s latest projections for fewer rate cuts this year.

The Fed’s just-released “dot plots” forecasted just one single rate cut for the year, fewer than the 3 previously forecasted back in March 2024.

However, in percentage terms, Wednesday belonged to cryptos – as expected.

 

We revisit our article published on Tuesday, June 11th, in which we asked the question:

“Which crypto could see the biggest moves this week?“

And here’s what we wrote:

“Of the 11 different cryptocurrencies offered by FXTM, Avalanch, Dogecoin and Solana have offered the biggest reactions to the US CPI prints and Fed decisions from the past 12 months.”

 

And once again, those 3 cryptos duly delivered massive moves on Wednesday, June 12th!

But they were pipped for the day’s total performance by a “dark horse” – Chainlink.

 

Here’s a recap of Wednesday’s full-day performance:

  1. Chainlink rose 5.8%
  2. Dogecoin rose 5.5%
  3. Avalanch rose 5.07%
  4. Solana rose 3.9%
  5. Cardano rose 3.5%
  6. Polygon rose 3.1%
  7. Ethereum rose 1.9%
  8. Ripple rose 1.9%
  9. Litecoin rose 1.7%
  10. Bitcoin Cash rose by 1.3%
  11. Bitcoin rose 1.2%

 

In terms of immediate post-CPI gains, Chainlink also managed to muscle its way into the leading pack:

  • Dogecoin rose as much as 7.5%
  • Chainlink rose as much as 6.9%
  • Solana rose as much as 6.3%
  • Avalanch rose as much as 6.2%

 

Then came along the Fed’s dot plot.

Cryptos then tumbled at the thought of higher-for-longer US interest rates.

Even those downside moves were massive for these 4 cryptos:

  • Solana fell as much as 6.7%
  • Dogecoin fell as much as 5%
  • Avalanch fell as much as 4.6%
  • Chainlink fell as much as 3.8%

 

Hence, with Chainlink’s smaller decline (in % terms), that explains why Chainlink was the biggest-gainer for Wednesday as a whole!

 

Those above-mentioned figures are also far superior compared to yesterday’s performance for Bitcoin – the world’s largest and most popular crypto:

  • Post-CPI: rose as much as 3.09%
  • Post-Fed: fell as much as 3.94%
  • ended Wednesday up just 1.2%

 

All in all, yesterday’s price action demonstrated yet again the volatile nature of cryptocurrencies.

Still, such big price moves may have been happy hunting grounds for traders with massive risk appetites who may have walked away with outsized profits, and perhaps a great trading story to tell as well.

Forex-Time-LogoArticle by ForexTime

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Cryptocurrencies Financial News
13 Jun

US Dollar declines as Fed signals potential rate cut and inflation eases

By RoboForex Analytical Department

The EUR/USD pair is holding steady around 1.0805 on Thursday, following a surge in volatility the previous evening. The Federal Reserve concluded its meeting with a neutral stance, maintaining the interest rate at 5.25% per annum as anticipated. The Fed’s comments hinted at a possible interest rate cut by December while projecting more aggressive rate reductions for 2025, which the market viewed positively.

However, it was the US inflation data that significantly impacted the EUR/USD pair, more so than the Fed’s announcement. The Consumer Price Index (CPI) for May showed a year-on-year increase of 3.3%, down from 3.4% in the previous month. On a month-on-month basis, the CPI was flat, compared to a 0.3% increase in April. Core inflation, which excludes volatile food and energy prices, also decreased to 3.4% year-on-year, surpassing expectations. This decline in price pressures followed unexpectedly robust employment market reports.

Investors have been highly reactive to each successive set of statistics, partly because the Fed has emphasised the significance of these data releases in shaping its monetary policy decisions. Following the inflation report, the EUR/USD briefly spiked to 1.0852 before retreating slightly.

EUR/USD technical analysis

On the H4 chart, EUR/USD surged past the consolidation range on the news, executing a correction wave to 1.0851. Currently, a downward impulse has brought it to 1.0800. We anticipate the formation of a consolidation range around this level. A downward breakout could lead to a further decline to 1.0776, potentially extending to 1.0701. The MACD indicator supports this bearish outlook, with its signal line positioned below zero and pointing downward.

On the H1 chart, EUR/USD has completed a decline to 1.0800. A corrective movement to 1.0826 may occur, testing from below. Following this correction, a new downward wave is expected to target 1.0766, with a continuation towards 1.0706 likely. The Stochastic oscillator, with its signal line currently above 20, suggests an upward move to 80, confirming the potential for this bearish trajectory.

Market outlook

As the market digests the implications of the latest US economic data and the Federal Reserve’s statements, fluctuations in the EUR/USD pair will likely continue. Investors should remain vigilant and prepared for further volatility as more economic indicators are released and the Fed’s monetary policy evolves.

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Financial News Forex and Currency News
13 Jun

The US Fed has planned only one rate cut this year and four cuts in 2025

By JustMarkets

At Wednesday’s close, the Dow Jones Index (US30) decreased by 0.09%, while the S&P 500 Index (US500) added 0.85%. The NASDAQ Technology Index (US100) closed positive 1.53%. Meanwhile, the S&P 500 (US500) and NASDAQ (US100) indices made new highs.

As expected, the FOMC kept the target range for the federal funds rate unchanged at 5.25%–5.50% and said it would not cut rates until there is more confidence that inflation is moving steadily toward 2%. The FOMC maintained its 2024 US GDP estimate at 2.4%, unchanged from March, but raised its 2024 core PCE prognosis to 2.8% from 2.6% in March. Meanwhile, the dot plot shows that policymakers see only one rate cut this year and four cuts in 2025. Fed Chairman Powell said that inflation has come down significantly but is still too high, and the Fed maintains its restrictive stance to reduce demand relative to supply. He added that the CPI report is “progress” but not enough to justify policy easing. Markets rate the odds of a 25 bps rate cut at 8% at the July 30–31 FOMC meeting and 60% at the next meeting on September 17–18.

Oracle (ORCL) climbed a record 13%, leading the S&P 500 stocks higher after announcing a cloud infrastructure partnership with Google Cloud, Microsoft, and OpenAI. Apple (AAPL) closed up over 2% after unveiling new artificial intelligence features, including operating system updates and a new artificial intelligence platform called Apple Intelligence.

Equity markets in Europe were mostly up on Wednesday. Germany’s DAX (DE40) rose by 1.42%, France’s CAC 40 (FR40) closed up 0.97%, Spain’s IBEX 35 (ES35) added 0.63%, and the UK’s FTSE 100 (UK100) closed positive 0.83%.

ECB executive board representative Schnabel said yesterday that the Eurozone economy is gradually recovering, but the “last mile” of disinflation is proving to be bumpy. His counterpart, ECB governing council spokesman Patsalides, said the ECB’s future actions on interest rates would depend on data, and there is no specific direction the Central Bank is sticking to.

President Macron has denied rumors of resigning if his party performs poorly in the upcoming legislative elections. Macron’s call for snap elections came in response to the far-right’s victory in the European Parliament elections, which has raised investor concerns about France’s economic and financial future.

WTI crude oil prices fell to $78 a barrel on Thursday, retreating from two-week highs, as EIA data showed US crude inventories rose by 3.73 million barrels last week, the highest in six weeks, and defeated market expectations of a 1.55 million barrel decline.

Asian markets were predominantly down yesterday. Japan’s Nikkei 225 (JP225) was down 0.66%, China’s FTSE China A50 (CHA50) lost 0.07%, Hong Kong’s Hang Seng (HK50) was down 1.31% and Australia’s ASX 200 (AU200) was negative 0.51%.

Hong Kong’s stock market rose by 0.50% in morning trading on Thursday after falling more than 1% in the previous session, mainly due to gains in consumer and technology stocks. Electric carmakers rose amid signs that the EU’s tentative decision to raise tariffs on Chinese cars matched market expectations.

In Australia, the unemployment rate fell to 4% in May from a three-month high of 4.1% in April, matching expectations. The Reserve Bank of Australia (RBA) will keep the money rate at 4.35% at next week’s meeting but will likely reiterate that it will not rule out a further rate hike if inflation picks up. Last week, RBA Governor Michele Bullock said she would not hesitate if inflation picks up but noted that the risks to rates and inflation are currently balanced.

S&P 500 (US500) 5,421.03 +45.71 (+0.85%)

Dow Jones (US30) 38,712.21 −35.21 (−0.09%)

DAX (DE40) 18,630.86 +260.92 (+1.42%)

FTSE 100 (UK100) 8,215.48 +67.67 (+0.83%)

USD Index 104.70 −0.53 (−0.56%)

Important events today:
  • – Australia Unemployment Rate (m/m) at 04:30 (GMT+3);
  • – Eurozone Industrial Production (m/m) at 09:00 (GMT+3);
  • – Switzerland Producer Price Index (m/m) at 09:30 (GMT+3);
  • – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
  • – US Producer Price Index (m/m) at 15:30 (GMT+3);
  • – US Natural Gas Storage (w/w) at 17:30 (GMT+3);
  • – US FOMC Williams Speaks at 19:00 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
12 Jun

Euro hits monthly low amid political instability in France

By RoboForex Analytical Department

The EUR/USD pair declined to 1.0740 on Wednesday, nearing the month’s low. This downward movement is primarily driven by the political instability in France following the significant developments in the European Parliament elections.

French President Emmanuel Macron has called for early legislative elections after the far-right party’s strong showing. While Macron retains the presidency and maintains control over foreign policy and defence, the election results could hinder his ability to implement new domestic policies and appoint ministers. There are growing concerns about Macron’s potential loss in the forthcoming elections, adding to worries about France’s financial stability.

The European Central Bank (ECB) met last week and decided to lower interest rates for the first time in five years. Despite this, the ECB adopted a cautious approach towards further monetary easing, contributing to the current economic outlook.

Attention is also focused on the ongoing US Federal Reserve meeting. While no changes in interest rates are expected, the market is eagerly awaiting the Fed’s latest economic assessment and guidance. If signalled, the timing of potential interest rate cuts could substantially impact market movements.

EUR/USD technical analysis

On the H4 chart, the EUR/USD is forming a consolidation range around the 1.0750 level. A potential decline to 1.0700 is considered, after which a rebound to 1.0750 may occur, a test from below. Further declines could target the 1.0660 level, possibly continuing to 1.0600. The MACD indicator supports this bearish outlook, with its signal line below zero and directed downwards.

On the H1 chart, the consolidation range has expanded between 1.0773 and 1.0717. A movement towards 1.0750 is anticipated, with a forming trend continuation pattern suggesting a further drop. Exiting this range on the downside could initiate a movement towards 1.0600. The Stochastic oscillator, currently below 80, is expected to fall to 20, aligning with the potential for further declines.

Market outlook

Investors are advised to watch monetary policy developments in Europe and the US. Additionally, political events in France, which could significantly impact the EUR/USD trajectory in the near term, should be monitored closely.

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Financial News Forex and Currency News
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