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Gold drops amid eased tensions, eyeing potential boosts from a wavering dollar around the $2320 level. Silver faces a crucial resistance, outlining future directions for metals as safe-haven demand wanes. Source: Getty Forex Shares Commodities Gold Market trend Risk Written by: Richard Snow | Analyst, DailyFX, Johannesburg Publication date: Friday 26 April 2024 06:45 Gold bulls looks for inspiration in the dollar after tensions subside Implied gold volatility (GVZ) has experienced a notable drop now that the risk of a broader conflict in the Middle East has subsided massively. As a natural result, gold prices have pulled back, but remain at elevated levels. Gold bulls may be looking to a slightly weaker dollar in anticipation of a bullish continuation for the metal, but in recent weeks, gold has appeared detached from its usual inverse relationship with the greenback as the two have risen together. Gold 30-day implied volatility Source: TradingView Gold attempts to lift off support at $2320 Gold, after spending a significant amount of time in overbought territory, has cooled and declined towards the $2320 level, where it has oscillated. With a reduced safe haven appeal, the gold market appears to be in search of the next bullish, or even bearish, catalyst. US data has revealed early signs of vulnerability, which could affect US yields and the dollar if major data points follow suit. But for now, the dollar remains strong, with rate cut bets being pushed further and further out. At this level, $2320 may offer a launchpad for gold if price action unfolds in a similar way to what developed back in March after printing a new all-time high; and consolidating along $2146.80 (prior all-time high) before the next leg higher. However, should bears take over from here, $2222 appears as the nearest level of support before the 50-day simple moving average (SMA) emerges around $2200 flat. Today’s GDP miss and the disappointing flash PMIs have opened the door to weaker US data. Something to keep an eye on in the future. Gold daily chart Source: TradingView Silver (XAG/USD) tests Fibonacci level currently acting as resistance Silver, similarly, to gold, has also dropped sharply as risk sentiment recovered. The rise in risk tolerance provided an opportunity for Indices and high-beta currencies like the Aussie dollar and the pound to claw back losses. Speaking of risky assets, Meta’s forward guidance sent the S&P 500 lower but the magnitude is of the drop is unlikely to prompt a panicked switch to safer assets like gold and silver. Silver hovers around the 78.6% Fibonacci retracement of the 2021 to 2022 decline at $27.40, with the level appearing to provide resistance to a possible bullish continuation. A move to the downside from here would highlight the 61.8% Fib level at $25.30 (coinciding with the 50 day SMA). Silver daily chart Source: TradingView This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. -
AUD/USD rises on inflation optimism, testing resistance around 0.6502-0.6533 with sights on 0.6650. Meanwhile, AUD/JPY reaches a decade high, albeit in overbought territory, as market eyes Bank of Japan's next moves. Source: Getty Forex Shares Australian dollar AUD/JPY Bank of Japan Market sentiment Written by: Nick Cawley | Analyst, DailyFX, London Publication date: Friday 26 April 2024 07:21 The Australian dollar has turned higher against its US counterpart over the week as a positive risk sentiment backdrop, and higher-than-forecast domestic inflation gave the currency a boost. This week’s rally has now run into resistance off a cluster of simple moving averages, currently between 0.6502 and 0.6533 and these will need to be cleared to allow the pair to move higher. The recent move has produced five higher lows and higher highs in a row, a bullish setup, while the CCI indicator shows this week’s move has taken the pair into neutral territory, from a heavily oversold position. A move higher - above the three moving averages - opens the way to 0.6650. Support at just under 0.6350 and then between 0.6270 and 0.6287. AUD/USD daily price chart Source: TradingView AUD/USD: traders remain bullish, but recent shifts suggest potential reversal Retail trader data reveals that 61.56% of traders are currently net-long on AUD/USD, with a ratio of 1.60 long positions for every short position. This indicates a bullish sentiment among traders. However, the number of net-long traders has decreased by 6.42% since yesterday and 27.26% since last week. In contrast, net-short positions have increased by 9.77% and 66.35% over the same timeframes. While the contrarian view suggests that the net-long position could lead to further price declines, the recent shifts in sentiment signal that a potential reversal to the upside may be on the horizon for AUD/USD, despite traders remaining net-long. The Bank of Japan (BoJ) will announce its latest policy decision overnight, and while all monetary settings are set to remain untouched, the accompanying Quarterly Report may well give some hints to future policy moves. The Japanese yen remains weak and will remain that way until the market is convinced that BoJ is going to move in and prop up the currency with actions, not words. AUD/JPY is back at levels last seen in November 2014, and the daily chart shows a year-long pattern of higher highs and higher lows as the yen wilts against a robust Australian dollar. The CCI indicator shows the pair in extreme overbought territory and this may temper any further short-term move higher. Unless the BoJ makes a stance, AUD/JPY is set to move higher. AUD/JPY: traders remain bearish, but recent shifts strengthen bullish contrarian view Retail trader data reveals that only 18.85% of traders are currently net-long on AUD/JPY, with a short-to-long ratio of 4.30 to 1. This indicates a strong bearish sentiment among traders. However, the number of net-long traders has decreased by 18.81% since yesterday and 49.69% since last week. In contrast, net-short positions have increased by 9.29% and 22.15% over the same timeframes. As contrarian investors, this net-short position suggests that AUD/JPY prices may continue to rise. The increase in net-short positions and the decrease in net-long positions further strengthen our AUD/JPY-bullish contrarian trading bias. AUD/JPY daily price chart Source: TradingView This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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The Nasdaq seems on track to recover all of its overnight losses, supported by a 4.4% after-market gain in Microsoft’s share price and an 11.5% after-market surge in Alphabet’s share price. Source: Getty Shares Microsoft Cloud computing Price Share price Revenue Written by: Yeap Jun Rong | Market Strategist, Singapore Publication date: Friday 26 April 2024 04:32 Alphabet and Microsoft’s share price surged post-results Following the initial jitters around Meta’s results, after-market earnings from Alphabet and Microsoft offered Wall Street a lifeline, with US equity futures pointing to a recovery in risk sentiments. The Nasdaq seems on track to recover all of its overnight losses, supported by a 4.4% after-market gain in Microsoft’s share price and an 11.5% after-market surge in Alphabet’s share price. The other Magnificent Seven stocks seem set for a positive open as well, with Nvidia up 2.4% and Amazon up 3.1%. Microsoft’s 4Q 2024 round-up Source: Refinitiv Microsoft’s 4Q 2024 results delivered both a top and bottom-line beat. Revenue was 1.8% higher than consensus at $61.9 billion, up 17% year-on-year. Earnings per share (EPS) has beaten expectations by 4.3%, coming in at $2.94 and up 20% from the $2.45 a year ago. Net profit margin improved from last year as well, coming in at 35.5% versus the previous 34.6%. Stronger cloud performance offered reassurances Notably, markets took comfort with the further growth in its cloud division. Revenue from Azure and other cloud services grew stronger-than-expected at 31% versus the 30% prior, which is on track to outpace its top competitors – Google Cloud and Amazon Web Services. Other segments continue to hold up as well, with a 17.5% year-on-year in its ‘More Personal Computing’ segment showing further recovery in consumer demand for personal computers (PCs) after a lacklustre year. Its productivity software has been very much stable as well, with the segment growing 11.8%. Forward guidance was net-positive overall Revenue guidance for 4Q 2024 was a tad lower-than-expected at $64 billion versus the $64.5 billion consensus, but markets may be more forgiving given the company’s positive outlook around artificial intelligence (AI) demand moving forward. “Currently, near-term AI demand is a bit higher than our available capacity” While capital expenditures will continue to increase to keep up with the tech race, Microsoft expects its FY2025 operating margin to decline "only one point year-over-year, even with its significant cloud and AI investments". This offers reassurances that heavy spending on infrastructure will pay off in the near term in terms of higher revenue and will not be an expensive long-term bet. Technical analysis: Microsoft’s share price defending daily cloud support The after-market surge in Microsoft’s share price may suggest that buyers have successfully defended the lower edge of its daily Ichimoku Cloud support at the US$398.40 level, which may likely keep the broader upward trend intact. This marked a key support confluence, which held prices up on at least three occasions since the start of the year. Its daily relative strength index (RSI) is back to retest the key 50 level after breaking below the mid-point to its lowest level September 2023. Any reversion back above the level will bode well for the upward trend to continue. The US$398.40 level will serve as key support to hold, while on the upside, its record high at the US$430 level will be on watch as key resistance to overcome. 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You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer. Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
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