Jump to content

MongiIG

Administrators
  • Posts

    9,794
  • Joined

  • Last visited

  • Days Won

    41

Posts posted by MongiIG

  1. Australian shares hit new record highs as weaker-than-expected domestic inflation brought forward rate cut expectations while those in China and Hong Kong also advanced. In Europe and the U.S. stock indices also rallied with the DAX 40 and S&P 500 hitting new record highs despite hawkish comments by Fed member Waller who stated that the central bank is in "no rush" to cut rates. The U.S. dollar appreciated slightly with all eyes now on tomorrow's US PCE data release, the Fed's preferred inflation gauge, and Fed Chair Jerome Powell's speech at 7.30pm on Friday which may provide volatility in thinly traded markets due to the Easter break.

     

    Morning call.png

  2. 3 hours ago, Agarwal said:

    EURGBP has been quite the talk of the town lately, especially with its recent movements. For over a month, it seemed content trading within a large horizontal range on a daily basis, not giving traders much to chew on. But as they say, all good things must come to an end, and last week, EURGBP decided to break free from its shackles.

    Thanks for sharing @Agarwal

    image.png

  3. Bitcoin's recent 12% surge eyes a record high pre-halving, as Ethereum lags. Coinbase shares soar, mirroring crypto market's upbeat momentum.

     

    original-size.webpSource: Bloomberg

     

    Written by: Nick Cawley | Analyst, DailyFX, London
     
    Publication date: 

    Bitcoin has rallied by around 12% since Sunday’s opening print, as demand for the largest cryptocurrency by market cap continues to increase prices. A technical, bullish, break of a short-term descending channel now suggests that Bitcoin will attempt to make a fresh record high in the near-term and likely ahead of next month’s halving event.

    Any pullbacks will find initial support around $69k before just under $65k comes into focus. The Average True Range (ATR) reading is at a multi-month high, while the CCI indicator shows Bitcoin nearing overbought territory. The chart set-up suggests Bitcoin will move higher over the coming days but a short-term turn lower cannot be discounted.

    Bitcoin daily price chart

     

    original-size.webpSource: TradingView

    Ethereum is also pushing higher but continues to lag Bitcoin. While Bitcoin has already made a new ATH, Ethereum remains around 30% its peak and is struggling to regain its mid-March multi-month high of around $4,100. The proposed Ethereum spot ETFs look like they will not be approved by May 23rd – the Van Eck ETF deadline date – and this is weighing on the cash Ethereum price. With the ETF potential approval being pushed further out, Ethereum may struggle to match Bitcoin’s performance over the coming weeks. Any further move higher will likely be kept in check by the mid-March high.

    Ethereum daily price chart

     

    original-size.webpSource: TradingView

    Coinbase, the largest cryptocurrency exchange in the US continues to benefit from the increased interest, and turnover, in the space. Coinbase shares are back at highs last seen in December 2021 and remain a proxy for overall crypto-market performance. Coinbase is trading around the 61.8% Fibonacci retracement of the May 2021 – January 2023 sell-off and targets the 78.6% retracement level at $343. Support on the weekly chart is seen at the 50% retracement level at $230.

    Coinbase weekly price chart

     

    original-size.webpSource: 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.

  4. Explore the latest market trends and sentiment indicators for the Japanese yen against major currencies. Unravel the intricacies of EUR/JPY, GBP/JPY, and AUD/JPY.

     

    original-size.webpSource: Bloomberg

     

    Written by: Diego Colman | Market Analyst, New York
     
    Publication date: 

    In the world of trading, it's easy to get swept up in the herd mentality, buying when everyone else is buying and selling in a frenzy of fear. But savvy traders understand the potential of contrarian thinking. Indicators like IG client sentiment offer a unique window into market psychology, revealing when excessive optimism or pessimism may create ripe opportunities to go against the prevailing trend.

    Of course, contrarian indicators aren't a magical crystal ball. They're best used as a valuable tool within a well-rounded trading strategy. By blending contrarian insights with robust technical and fundamental analysis, traders gain a richer understanding of market dynamics that may be overlooked by the crowd. Let's explore this concept further by examining how IG client sentiment can shed light on the Japanese yen's potential.

    EUR/JPY technical analysis

    IG client data highlights the retail crowd is overwhelmingly bearish on EUR/JPY, with 71.61% of traders holding net-short positions. This translates to a short-to-long ratio of 2.52 to 1. While this net-short positioning aligns with our typical contrarian approach (suggesting potential for a price rise), recent shifts in sentiment create a more nuanced picture.

    Compared to yesterday, traders are slightly less bearish, with the number of net-long positions up 3.88%. Yet, looking back to last week, the number of net-long positions has surged by 60.67%, indicating a substantial increase in bets in favor of the euro over that timeframe.

    This combination of factors—current net-short positioning alongside a recent easing of bearish sentiment— brings ambiguity to our contrarian analysis of EUR/JPY, leading to a mixed outlook. That said, the market may still have room to push higher, but traders should exercise caution.

    Key takeaway: Even reliable tools like contrarian indicators can sometimes produce conflicting signals. In these situations, it's essential to prioritize a holistic approach, utilizing technical analysis and fundamental factors alongside sentiment data to gain a clearer understanding of potential price movements.

    EUR/JPY daily chart

     

    original-size.webpSource: IG

    GBP/JPY technical analysis

    IG client sentiment data reveals a net-short bias towards the GBP/JPY, with 64.9% of retail traders holding bearish positions. This translates into a short-to-long ratio of 1.85 to 1. In our contrarian framework, this typically implies there may be room for GBP/JPY to climb further. However, recent sentiment shifts complicate this outlook.

    The number of net-long positions has increased significantly compared to yesterday (15.22%) and even more dramatically compared to last week (68.79%). This suggests growing bullishness among retail traders, despite the overall net-short positioning.

    This weakening of the bearish sentiment introduces uncertainty. While the GBP/JPY may continue its upward trek, the shift could foreshadow a potential reversal. The market might be losing its conviction, making the contrarian signal less reliable.

    Key takeaway: Contrarian indicators are most powerful when market sentiment is strongly skewed in one direction. The recent changes in GBP/JPY sentiment cloud the picture, suggesting increased caution. It's advisable to incorporate thorough technical analysis and monitor key fundamental drivers impacting price action before relying solely on the contrarian signal.

     

    original-size.webpSource: IG

    AUD/JPY technical analysis

    IG client sentiment data paints a complex picture for the AUD/JPY. While a majority of retail traders (58.88%) remain net-short, this figure represents a decrease compared to both yesterday and last week. The ratio of short to long positions currently stands at 1.43 to 1.

    Typically, we view heavy net-short positioning as a contrarian indicator, implying the potential for a price rise. In this case, AUD/JPY may have room to run a little higher. However, the recent weakening of bearish positioning introduces an element of uncertainty and can be tentatively foreshadowing a reversal.

    Key takeaway: It's crucial to recognize that contrarian signals, while valuable, aren't infallible. The AUD/JPY situation highlights the importance of combining contrarian insights with technical analysis, fundamental drivers, and overall market context. This multifaceted approach will provide a more robust understanding of the potential price direction.

    AUD/JPY daily chart

     

    original-size.webpSource: IG

     

     

     

    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.

  5. US dollar remains rangebound ahead of key events; Friday's PCE data and Powell's speech set to influence markets amid anticipated thin liquidity due to Bank holiday.

     

    original-size.webpSource: Bloomberg

     

    Written by: Diego Colman | Market Analyst, New York
     
    Publication date: 

    The US dollar, as measured by the DXY index, moved within a narrow range on Tuesday, displaying a lack of clear direction, but ultimately managed to eke out tiny gains. Mixed US Treasury yields and a sense of caution among market participants contributed to the muted price action, with traders adopting a wait-and-see approach ahead of high-impact events on the US economic calendar later this week.

    DXY index

     

    original-size.webpSource: TradingView

    The release of core PCE data on Friday, the FOMC’s preferred inflation gauge, holds particular significance. This data point will provide fresh insights into the trajectory of consumer prices, which policymakers are watching carefully to guide their next move. Additionally, a speech by Fed Chair Powell on the same day will be closely scrutinized for any clues about the timing of the first rate cut of 2024.

    However, here's the wrinkle: Friday falls on a bank holiday. In addition, some countries in Europe observe Easter Monday. This means the true market reaction to these events might be delayed until the following week. This extended period of anticipation could further add to a sense of hesitancy among investors, dissuading many from making large directional bets until a clearer picture emerges.

    Holiday trading: managing forex volatility and key levels for EUR/USD, USD/JPY, GBP/USD

    While Forex trading will continue, but it won't be business as usual. Reduced liquidity, a hallmark of holidays, can amplify price swings at times. Even seemingly routine trades can upset the delicate balance between supply and demand, with fewer traders around to absorb buy and sell orders. Hence, exercising caution is highly recommended for those planning to trade in the upcoming days.

    Fundamentals aside now, the next portion of this article will revolve around examining the technical outlook for three key currency pairs: EUR/USD, USD/JPY and GBP/USD. Here, we'll dissect critical price thresholds that can act as support or resistance in the upcoming sessions – levels that can offer valuable insights for risk management and strategic decision-making when building positions.

    US economic calendar

     

    original-size.webpSource: DailyFX

    EUR/USD technical analysis

    EUR/USD remained relatively unchanged on Tuesday, failing to capitalize on the previous session's rebound and stalling at confluence resistance at 1.0835-1.0850. Should prices face rejection at current levels, a retracement towards the 1.0800 mark might be anticipated. On continued weakness, the focus will be on 1.0725.

    On the flip side, if EUR/USD resumes its advance and successfully takes out the 1.0835-1.0850 range, bullish sentiment could make a comeback, ushering a move towards 1.0890 in the near term. Additional gains beyond this juncture could reinforce buying interest, paving the way for a climb towards trendline resistance at 1.0925.

    EUR/USD price action chart

     

    original-size.webpSource: TradingView

    USD/JPY technical analysis

    USD/JPY displayed rangebound behavior on Tuesday, consolidating after last week's rally and hovering below critical resistance at 152.00. This key level warrants close attention as a breakout could prompt the Japanese government to step in to support the yen. In this scenario, we could see a pullback towards 150.90, followed by 149.75. On further losses, all eyes will be on the 50-day simple moving average.

    In the event that USD/JPY breaches the 152.00 mark and Tokyo refrains from intervening to let markets find a new balance, bulls may feel emboldened to initiate a bullish attack on 154.50, a key barrier defined by the upper boundary of an ascending channel that has been in place since December of the previous year.

    USD/JPY price action chart

     

    original-size.webpSource: TradingView

    GBP/USD technical analysis

    GBP/USD also failed to build on Monday’s rebound, edging downwards after an unsuccessful push above both trendline resistance and the 50-day simple moving average at 1.2675. Should this rejection be validated in the upcoming days, a retest of the 1.2600 level may be imminent. Further losses from this point onward could prompt a descent towards 1.2510.

    Conversely, if buyers return and propel cable higher, confluence resistance looms at 1.2675 and then at 1.2700, a key psychological threshold. Overcoming this technical ceiling might be tricky and could present challenges; however, a decisive breakout could reinforce upward impetus, potentially setting the stage for a rally towards 1.2830.

    GBP/USD price action chart

     

    original-size.webpSource: 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.

  6. The Japanese yen has weakened to nearly 152 against the dollar, a level not seen since 1990. This has prompted warnings from Japan's finance minister about taking "decisive steps" to address "disorderly" currency moves, hinting at potential intervention by the central bank as occurred late last year when similar language was used. The yen's recent depreciation may have been triggered by comments from a Bank of Japan board member advocating a slow pace of policy normalization after last week's first rate hike since 2007. With several central bankers making public remarks during the day, including from the Fed, ECB and SNB, the potential for further market-moving comments remains. The Swedish Riksbank is expected to leave rates unchanged but traders hope for clues on prospects for future cuts. Meanwhile, choppy and directionless trading persists in stock markets ahead of the quarter-end, a key U.S. inflation report, and a speech by the Fed chair on Good Friday when many markets are closed for holidays. U.S. equity futures are indicating a potential up day in Europe while Asian markets were mixed.

     

    Morning call.png

  7. Markets are cautious ahead of the US inflation data release, with Asian stocks and the yuan slipping slightly on Tuesday, while the yen held steady around 151 per dollar amid warnings of potential intervention. South Korean stocks lead Asian markets higher, though gains in other indices were limited. US futures point to a higher open after a recovery from Monday's lows for tech stocks. US durable goods orders and consumer confidence populate the calendar, though it looks like Monday's quiet session will continue into today.  

     

    Morning call.png

  8. Earnings season begins in April, and is expected to see a third consecutive quarter of growth in earnings, helping to support the S&P 500 at record highs.

    ChartsSource: Bloomberg
     

    Written by: Chris Beauchamp | Chief Market Analyst, London
     
    Publication date: 

    For the first quarter (Q1) of 2024, S&P 500 companies are expected to report earnings growth of 3.4% year-over-year and revenue growth of 3.6%. This marks the third consecutive quarter that the index is projected to report year-over-year earnings growth.

    While the overall earnings growth forecast is positive, analysts have lowered their Q1 earnings estimates by 2.6% since December 31st. This downward revision is below the historical average cut to estimates, which ranges from 3.4% over the last 10 years to 3.9% over the past 20 years.

    However, companies themselves have been more pessimistic in their earnings outlooks. At this point, 70% of the S&P 500 companies that have issued Q1 earnings guidance provided negative guidance, which is above the 5-year and 10-year averages.

    Strength in IT & consumer discretionary, weakness in energy

    Breaking it down by sectors, six of the eleven sectors are expected to report year-over-year earnings growth in Q1, led by the Utilities, Information Technology, Communication Services, and Consumer Discretionary sectors.

    On the other hand, four sectors are predicted to report a year-over-year decline in earnings, with the Energy and Materials sectors seeing the largest declines at -27.1% and -23.4% respectively. The Industrials sector is expected to report flat earnings growth of 0%.

    Looking further ahead, analysts are forecasting earnings growth of 9.3% for Q2 2024, 8.4% for Q3 2024, and a robust 17.4% for Q4 2024.

    Valuation remains above average

    The forward 12-month price-to-earnings (P/E) ratio for the S&P 500 currently stands at 20.9, which is above the 5-year average of 19.0 and the 10-year average of 17.7. This elevated valuation ratio reflects the strong price performance of the index.

    Despite historically overestimating gains, industry analysts are projecting the S&P 500 price will increase by 7.0% over the next 12 months based on their target prices for individual stocks. This projected increase is supported by the positive earnings growth forecasts for the coming quarters.

     

     

    This information has been prepared by IG, a trading name of IG Markets Limited. 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. See full non-independent research disclaimer and quarterly summary.

  9. On 23/03/2024 at 11:25, Boobiwoobi said:

    Hi, i`m new here too!

    Hi @Boobiwoobi

    Welcome to the community,

    We are happy to have you here. We are here to answer every question you may have and please don't hesitate to engage in forum posts by other members.

    Thanks,

    MongiIG

  10. Post-FOMC, US stocks rose sharply. With diverging Fed views and upcoming Core PCE data, market volatility looms. Key indices show strong support.

     

    original-size.webpSource: Bloomberg

     

    Written by: Tony Sycamore | Market Analyst, Australia
     
    Publication date: 

    US equity markets locked in robust gains last week, aided by a dovish FOMC meeting. For the week, the Nasdaq finished 2.98% higher, the S&P 500 added 2.29%, and the Dow Jones added 761 points (+1.97%).

    While there were concerns that after a run of firmer data, the Fed might signal it expected just two rate cuts in 2024, the Fed Chair noted that firmer inflationary data had not changed its overall trend lower and that the path of inflation towards its 2% target will be a “bumpy road”.

    In theory, this reduces the importance of this week's Core PCE inflation data, which is the Fed's preferred measure of inflation. However, at the end of last week, there were signs of some disagreement within the Fed's ranks.

    On Friday night, Atlanta Fed President Bostic said he now expects just one rate cut this year (from two previously) based on the US economy's resilience. This suggests there might be less tolerance for an upside surprise in this week's Core PCE inflation number.

    What is expected from Core PCE inflation (Thursday, 21 March at 5am)

    Both headline and core PCE price inflation has moved lower since September 2022. In January, headline inflation eased to 2.4% from 2.6%. Core inflation eased to 2.8% down from 2.9%. On a monthly basis, core PCE prices increased by 0.4%, accelerating from the 0.1% increase in December.

    In February headline is expected to come in at 0.3% month-on-month, which would see the headline rate remain stable at 2.4%. The Core PCE price index is expected to rise by 0.3% MoM, to leave the annual core rate of inflation at 2.8%.

    Annual core PCE inflation chart.

     

    original-size.webpSource: TradingEconomics

    S&P 500 technical analysis

    The signs of a "loss of momentum" noted in recent weeks were negated as the S&P 500 failed to provide any downside follow-through last week, before exploding to new highs.

    Providing the S&P 500 cash, doesn’t see a sustained break of March’s low’s 5055/5040 area, expect dips to be well supported at 5180 and again at 5100 before a push towards 5350 in the coming weeks.

    Aware that if the S&P 500 were to see a sustained break of support at 5055/5040, it would warn that a short-term high is likely in place and that a deeper pullback towards 4800 is underway.

    S&P 500 daily chart

     

    original-size.webpSource: TradingView

    Nasdaq technical analysis

    The signs of a "loss of momentum" noted in recent weeks were negated as the Nasdaq failed to provide any further downside follow-through last week before exploding to new highs.

    Providing the Nasdaq cash doesn’t see a sustained break of March’s low’s 17,750/00 area, expect dips to be well supported at 18,200 and again at 18,000 before a push towards 18.750 in the coming weeks.

    Aware that if the Nasdaq were to see a sustained break of support at 17,750/00, it would warn that a short-term high is likely in place and that a deeper pullback towards 17,000 is underway.

    Nasdaq daily chart

     

    original-size.webpSource: TradingView

    • Source: TradingView. The figures stated are as of 25 March 2024. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.

     

     

    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.

  11. Central bank moves sparked AUD/USD volatility, ending the week lower. Upcoming consumer and CPI data may steer its next trend.

     

    original-size.webpSource: Bloomberg

     

    Written by: Tony Sycamore | Market Analyst, Australia
     
    Publication date: 

    Last week's central bank meetings triggered a roller coaster ride for the AUD/USD, closing down 0.70% at .6514.

    The main culprits behind the AUD/USD's wild ride last week were:

    • The RBA's dovish tilt at its board meeting on Tuesday.
    • Thursday's FOMC meeting, which pointed to a shallow Fed easing cycle.
    • A surprise rate cut by the Swiss National Bank on Thursday evening.
    • Chinese authorities set a weaker-than-expected USD/CNY fix on Friday, which saw the 7.20 level give way for the first time in 2024.

    Whether the AUD/USD can find a trend this week will depend on a data-rich local calendar. It starts with the Westpac Consumer Confidence survey on Tuesday; and rolls into the Monthly CPI indicator on Wednesday before culminating in retail sales data for February, which will be released on Thursday.

    What is expected from the monthly CPI indicator (Wednesday, 27 March at 11.30am)

    In January, the monthly CPI indicator rose by 3.4% YoY, unchanged from December and below market forecasts of 3.6%. Core inflation, which excludes volatile items, rose by 4.1% YoY easing from 4.2% in December. Annual trimmed mean inflation fell to 3.8% from 4% in December.

    The data showed inflation inching towards the RBA's target, but January's CPI, marking the new quarter's start, primarily reflected goods prices, with fewer services costs included.Sticky services inflation has been a key concern and focus for central banks and was highlighted again at this week's RBA board meeting.

    "The headline monthly CPI indicator was steady at 3.4 per cent over the year to January, with momentum easing over recent months, driven by moderating goods inflation. Services inflation remains elevated, and is moderating at a more gradual pace," the board said

    In February, the monthly CPI indicator is expected to increase to 3.6% YoY due to higher petrol and housing prices; and the unwinding of electricity rebates. This is in line with the RBA's expectations of 3.5% year over year over the quarter.

    CPI monthly indicator chart

     

    original-size.webpSource: RBA

    AUD/USD technical analysis

    As viewed on the weekly chart below, the AUD/USD continues its choppy sideways price action within a contracting multi month bearish triangle. Downtrend resistance from the January 2023 .7158 high is at .6795c, and uptrend support from the October 2022 .6170 low is at .6320c. The middle of that range, where the price action would be expected to be most choppy, is at .6557, 20 pips above the current price.

    AUD/USD weekly chart

     

    original-size.webpSource: TradingView

    On the daily chart below, the AUD/USD reversed sharply lower from Thursday's .6634 high before testing uptrend support at .6500c, from the October 2023 .6270 low.

    For the week ahead, traders will be watching for a break of support at .6500c as an initial indication that the AUD/USD is set to test the year-to-date low of .6442 before a move towards .6320.

    On the upside, the 200-day moving average at .6553 will provide short-term resistance, with a sustained break above here needed to open up a move towards the next layer of resistance at .6625/35.

    AUD/USD daily chart

     

    original-size.webpSource: TradingView

    • Source:TradingView. The figures stated are as of 25 March 2024. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.

     

     

     

    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.

  12. This holiday-shortened week will see the release of the closely watched US core PCE inflation data on Friday, with any higher-than-expected reading potentially dashing hopes for a Fed rate cut in June. Markets are currently pricing in a 75% chance of a June cut and 3-4 rate reductions for the year. Central bank speakers from the Fed, ECB, and BoE will also provide guidance amid expectations of future rate cuts. Meanwhile, the surprise SNB move last week has raised uncertainties, while China's central bank pushed back against a sharp yuan depreciation beyond 7.2 per dollar. Overall, inflation data and central bank rhetoric will drive market movements in a quieter trading week. Sterling watchers will want to keep an eye out for a speech at 2.15pm by noted BoE hawk Catherine Mann, which might push back against the expectations of an imminent rate cut at the BoE.

     

    Morning call.png

  13. European traders may face a sell-off on Friday as equity markets in Asia declined, with investors adjusting their expectations for fewer and later Federal Reserve rate cuts this year. Declines were steeper in markets like Hong Kong and South Korea, over 1%, compared to a 0.3% drop on Wall Street yesterday. Japan's tech sector was the only declining sector, but its chip giants' heavy weighting led the Nikkei index to a 0.3% loss. With many markets near all-time highs, and having rallied so strongly, there remains the potential for short-term weakness. The focus remains on Fed rate cut timing speculation, with US producer price data overnight following hot consumer inflation, eroding expectations of a June cut. The Fed's dot plot after next week's meeting will be crucial for gauging their cautiousness. Other central banks like the BoE, SNB and especially the BoJ, with a potential stimulus exit, also meet next week. US Empire State manufacturing and the preliminary Michigan confidence survey are released today.

     

    image.png

  14. DAX and S&P 500 moving higher, while Nikkei 225 pullback pauses

    The Dax has hit a new record high today, and the S&P 500 isn’t too far behind, while the Nikkei 225’s retreat from its peak has paused for now.

    original-size.webpSource: Bloomberg
    Written by: Chris Beauchamp | Chief Market Analyst, London
     
    Publication date: 

    DAX hits a new peak

    The index hit a new record high in early trading on Thursday, extending its rally and widening the gap with the 50-day simple moving average (SMA). For the moment, it seems like the Dax’s steady progression higher will continue. In the short-term, trendline support from mid-February is close by, and then comes trendline support from October. A move back to the 50-day SMA would mark a 5% drop from current levels, and would feel like a dramatic event given the current gentle rally.

    original-size.webpSource: ProRealTime

    S&P 500 targets new highs

    Early trading has seen futures push back to record highs for the index, as the quiet rally continues once more. Indeed, this has been the case all year, and those hoping for a pullback have been continually disappointed. This will not go on for ever, but as yet there is no sign of a pullback. The price continues to trade above trendline support from both early January and the October low. If these are broken, then a pullback may develop.

    original-size.webpSource: ProRealTime

    Nikkei 225 pullback halted

    The pullback from the highs has been stayed for now, buyers entering around 38,300. A close back above Tuesday’s high at 39,220 might help to suggest that the pullback has run its course, though with the Bank of Japan decision next week some skittishness may persist.

    original-size.webpSource: ProRealTime
  15. Silver and WTI crude prices rally, while natural gas price struggles

    While silver and WTI have made gains, the former to a three-month high, natural gas prices remain under pressure.

    original-size.webpSource: Bloomberg
    Written by: Chris Beauchamp | Chief Market Analyst, London
     
    Publication date: 

    Silver at new three-month high

    Silver surged yesterday, rallying to its highest level since early December and continuing the bounce from the low at the end of February. December’s peak at $25.77 continues to be the next upside target, now that the price has breached the late December high around $24.55.

    original-size.webpSource: ProRealTime

    Natural Gas keeps falling

    Renewed losses on Wednesday maintained the bearish view here, targeting the lows from the middle of February around 1600. If the price can manage a close back above 1800 then a short-term positive view might emerge, especially if a higher low can be established. Then the price may target the early March high at 2000, and then on to the 50-day simple moving average (SMA).

    original-size.webpSource: ProRealTime

    WTI rallies through $80

    After a strong up day yesterday, the price has made further gains in early trading this morning. This put it above the $80 level, which has marked resistance since November. Additional upside targets $81 and then $83.40. A short-term rally since early February has seen any weakness towards $76.50 met by buying.

    original-size.webpSource: ProRealTime
  16. The Nikkei 225 continued to lose ground overnight, while Chinese markets made further strong gains, in a change from the prevailing trend earlier in the year. Investors are keenly watching today's US economic data releases, including the producer price index (PPI) and retail sales numbers on Thursday, for fresh clues on the direction of Federal Reserve rate policy. Economists expect a rebound in February retail sales after a surprise drop in January. The PPI data feeds into the Fed's preferred inflation gauge. Strong consumer spending and inflation could reduce pressure on the Fed to cut rates soon. Bond market moves suggest expectations for higher rates to persist, though the dollar has weakened. 

     

    image.png

  17. Gold price and natural gas price falls back but Brent crude moves higher

    Gold’s huge rally has finally stalled, while natural gas is also falling once more. Meanwhile, Brent crude is attempting to clear the 200-day moving average again.

    original-size.webpSource: Bloomberg
    Written by: Chris Beauchamp | Chief Market Analyst, London
     
    Publication date: 

    Gold’s rally finally hits a bump

    Gold prices finally fell back yesterday after a huge rally from the February low that carried them to a record high. In the short-term, the price may drop back towards the previous record high at $2121. Below this comes the late December high at $2088.

    original-size.webpSource: ProRealTime

    Natural Gas heads lower

    Losses have continued here, with yesterday’s price action seeing the price ending up near the lows of the day. Additional declines now take the price on towards the late February lows around 1600. It would require a close back above last week’s highs at 2000 to suggest a new attempt to push higher.

    original-size.webpSource: ProRealTime

    Brent edges higher around 200-day moving average

    The price continues to struggle around the 200-day SMA, with an indecisive day yesterday giving way to fresh gains in early trading today. Once more a dip towards $80 has found buyers, but a longer-term move to the upside would need a close above $84.

    original-size.webpSource: ProRealTime
  18. The US CPI data came in hotter than expected for the second straight month, proving that there is still some persistence in pricing pressures.

    USSource: Bloomberg
     

    Written by: Yeap Jun Rong | Market Strategist, Singapore
     
    Publication date: 

    Market Recap

    The US consumer price index (CPI) data came in hotter than expected for the second straight month, proving that there is still some persistence in pricing pressures and that the final stretch of bringing inflation to the 2% Federal Reserve (Fed)'s target remains a challenging process. The US headline inflation came in higher at 3.2% versus previous 3.1%, while the core aspect was down to 3.8% from previous 3.9%, but lacks the progress expected by markets (3.7% consensus). Month-on-month, the core inflation rose 0.4%.

    The data will support the view for the Fed to exercise more patience in its rate-cut process, but Wall Street stood unfazed, potentially with the firm belief that its previous recalibration for the Fed’s first rate cut to be in June will suffice. Growth sectors recovered from its last Friday’s losses, with the S&P 500 delivering yet another record close. The Magnificent Seven stocks are once again the heavy-lifters for market gains, with notable performance in Nvidia (+7.2%), Microsoft (+2.7%), Meta (+3.3%) and Amazon (+2.0%).

    Treasury yields reacted higher to the stronger inflation print, with the US two-year yields briefly touching the 4.6% handle, while the US dollar firmed slightly (+0.1%), albeit a lacklustre reaction to the high-for-longer rate narrative. That is sufficient to trigger a downside move in gold prices (-1.1%) however, with the profit-taking amplified by its extreme near-term overbought technical conditions.

     

     

    Look-ahead: PPI data on Thursday, FOMC meeting next week

    We will have the US producer price index (PPI) release coming Thursday, but with markets being so forgiving for the February CPI data, there is a possibility that any higher-than-expected read in producer prices may be shrugged off as well.

    The key risk to watch may be the upcoming Federal Open Market Committee (FOMC) meeting next week, where the odds are surely raised for policymakers to revisit their dot plot projections. A potential revision to two cuts this year from the initial three cuts could be likely, as persistence in pricing pressures could feed into higher inflation forecast in its Summary of Economic Projections.

    If that plays out, market rate expectations may be due for some recalibration once more, as current pricing still leans towards three to four 25 basis point (bp) rate cuts by the end of this year.

    What to watch: US dollar sees more muted response to hotter-than-expected CPI

    Initial gains in the US dollar in reaction to the hotter-than-expected CPI were pared throughout the overnight trading session, with the US dollar still hovering around the lower edge of its daily Ichimoku cloud support. Failure to defend the cloud support could reinforce the current downward bias, potentially paving the way to retest the 101.80 level next.

    For now, its daily relative strength index (RSI) has dipped below the key 50 level for the first time since January this year, which puts sellers in broader control. On the upside, a move above yesterday’s high may pave the way for some near-term relief to retest the 103.63 level next.

     

    US Dollar BasketSource: IG charts

     

     

    This information has been prepared by IG, a trading name of IG Markets Limited. 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. See full non-independent research disclaimer and quarterly summary.

  19. FTSE 100 at three month highs, while Dow and Nasdaq 100 move higher despite hotter US inflation

    The FTSE 100 has enjoyed a solid start to the week, while even a hotter US inflation reading has not been able to stop the rally in US markets.

    original-size.webpSource: Bloomberg
    Written by: Chris Beauchamp | Chief Market Analyst, London
     
    Publication date: 

    FTSE 100 back at December highs

    Two days of gains have carried the price back towards the 7770 highs from December. The past two weeks have seen the index rally off 7600, establishing a higher low. The index may now continue to push higher, with a near-term target being 7800.

    original-size.webpSource: ProRealTime

    Dow moves higher despite US inflation data

    The stronger-than-expected US CPI reading failed to halt the Dow’s advance, with the price breaking through trendline resistance from the February highs. This could now set the stage for a move back to those record highs, and potentially higher. Support has appeared around 38,500, while below this the 50-day simple moving average has yet to be tested.

    original-size.webpSource: ProRealTime

    Nasdaq 100 moves back above 18,000

    The price has pushed back above 18,000, and a move to a new record seems likely. The move comes despite a higher CPI figure than expected. For the moment support from early January continues to provide an underpinning for further gains.

    original-size.webpSource: ProRealTime
  20. Tuesday's robust U.S. CPI data sends USD/JPY soaring, sparking speculation on interest rate shifts. Will the momentum continue? Expert analysis and technical insights reveal potential trading opportunities ahead.

     

    original-size.webpSource: Bloomberg

     

    Written by: Diego Colman | Market Analyst, New York
     
    Publication date: 

    USD/JPY, already on an upward trajectory Tuesday morning, accelerated higher after February’s US consumer price index figures surpassed projections, an event that boosted US Treasury yields across the curve. For context, both headline and core CPI beat forecasts, with the former coming in at 3.2% y-o-y and the latter at 3.8% y-o-y, one-tenth of a percent above estimates in both instances.

     

    original-size.webpSource: DailyFX

    While Tuesday’s data failed to materially alter the odds of the first FOMC rate cut arriving in June, the report unearthed a troubling revelation: inflationary pressures are proving highly resistant and are running well above pre-Covid trends. This will not give the Fed the confidence it necessitates to begin policy easing. Markets may not agree with this assessment right now, but they have been wrong many times.

     

    original-size.webpSource: CME Group

    For further clarity on the outlook for consumer prices, it is important to keep an eye on Thursday's PPI numbers. Another upside surprise like today's could be the wake-up call Wall Street needs to recognise it has been underestimating inflation risks. This could fuel a hawkish repricing of interest rate expectations, propelling bond yields and the US dollar upwards in the process.

     

    original-size.webpSource: DailyFX

    USD/JPY technical analysis

    USD/JPY rebounded on Tuesday, pushing past resistance around the 147.50 level. If this breakout is confirmed on the daily candle, prices could start consolidating higher over the coming days, setting the stage for a possible move toward 148.90. On further strength, the spotlight will be on 149.70.

    On the other hand, if sellers return and drive the exchange rate back below 147.50, the pair could slowly head back towards confluence support spanning from 146.50 to 146.00. Below this technical zone, all eyes will be on the 145.00 handle.

    USD/JPY price action chart

     

    original-size.webpSource: 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.

  21. Amidst fluctuating market sentiments, gold's net-short bias hints at potential upside, while silver's bullish trend faces scrutiny. Explore insights on oil, equities, and EUR/USD forecasts to grasp the pulse of financial markets.

     

    original-size.webpSource: Bloomberg

     
     
    Written by: Diego Colman | Market Analyst, New York
     
    Publication date: 

    Gold price forecast

    Retail trading activity reveals a net-short bias towards gold, with the ratio of bearish to bullish positions currently sitting at 1.47 to 1 as of late afternoon on Tuesday.

    In aggregate, bullish bets on the precious metal are 9.67% lower than yesterday and 12.80% below prevailing levels one week ago. Meanwhile, bearish wagers are 0.31% down compared to the previous session and 13.15% higher from last week.

    Our analysis often adopts a contrarian stance on crowd sentiment. With that in mind, the current net-short positioning suggests continued upward potential for gold prices in the near term.

     

    original-size.webpSource: IG

    Silver forecast

    Retail trader data shows 81.60% of traders are net-long silver, with the ratio of long to short at 4.44 to 1.

    The number of traders net-long is 7.08% lower than yesterday and 12.23% lower than last week, while the number of traders net-short is 6.86% higher than yesterday and 21.81% higher than last week.

    From a contrarian perspective to crowd sentiment, silver's overwhelmingly bullish positioning among retail investors raises the possibility that prices will soon begin a downward trajectory.

     

    original-size.webpSource: IG

    US crude oil forecast

    IG proprietary client data from today shows that 69.87% of retail investors are net-long US crude oil, with the ratio of bullish to bearish positions currently standing at 2.32 to 1.

    Upon further examination, the number of traders net-long has decreased by 8.58% compared to yesterday and 17.45% relative to last week. Meanwhile, net-short positions have increased by 17.58% from the previous session, though they have fallen slightly by 0.48% from last week’s levels.

    We often adopt a contrarian stance towards crowd sentiment, and the prevailing net-long position among traders hints at a possible decline in oil prices in the near future. This observation underscores the importance of leveraging market insights to navigate potential market movements effectively.

     

    original-size.webpSource: IG

    S&P 500 forecast

    Retail trader data shows 33.09% of traders are net-short, resulting in a bearish to bullish ratio of 2.02 to 1. Comparatively, the number of traders holding net-short positions has increased by 4.42% since yesterday but has slightly decreased by 0.03% from last week.

    On the other side of the coin, the number of traders holding net-long positions has risen by 2.89% since yesterday and by 4.76% compared to last week.

    Taking a contrarian approach to prevailing sentiment, the current net-short stance of among the retail crowd implies that there might be room for S&P 500 to continue their upward trajectory.

     

    original-size.webpSource: IG

    EUR/USD forecast

    IG retail client data from today shows 43.27% of traders are net-short, with the present ratio of bullish to bearish bets standing at 1.31 to 1.

    Taken together, bullish positioning is down 0.73% versus the previous session and 19.44% lower than levels registered last week. Meanwhile, the number of traders net-short is 2.10% lower than yesterday and 0.28% higher than last week.

    Our strategy often diverges from prevailing sentiment, and the current net-short positioning of traders indicates that EUR/USD may encounter minimal resistance on the upside.

     

    original-size.webpSource: IG

     

     
     

     

    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.

×
×
  • Create New...
us