USDSGD Forecast: Noisy Behavior Ahead (21 June 2024)

• The US dollar has rallied rather significantly against the Singapore dollar during the trading session on Thursday, as we have used the 50-Day EMA as a bit of a springboard.
• At this point in time, we need to pay close attention to the resistance level above though, as the 1.3550 level has been a bit difficult to overcome.
• However, you should also keep in mind that the US dollar has been strong against almost everything during the session, so it does make a certain amount of sense that the Singapore dollar would continue to struggle against it.
• Because of this, the market is likely to continue to see a lot of noisy behavior.

Safety Versus Safety

These are both safety currencies, so you need to pay close attention to risk appetite but at the end of the day, the world prefers US dollars over Singapore dollar is when it comes to trying to find safety. Furthermore, the Swiss National Bank cut rates during the early hours of the session, and therefore it has created a little bit of a “knock on effect” in the US dollar as traders continue to focus on the fact that the Federal Reserve is likely to stay tight for the time being. This makes the US dollar much more attractive because it offers more yield than most other currencies, and the massive interest rate differential between the United States and Singapore continues to have people looking to the greenback to get paid.

All things being equal, we are still very much in the consolidation area see you do need to be cautious about the idea of trying to get too aggressive, but ultimately, I think you have to recognize the fact that eventually we will break out of the very clearly defined 100 point range, and once we do it opens up the possibility of a bigger move. The question now is whether or not the United States dollar is going to continue to see a lot of inflows, or if fear subsides?

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USDMXN Forecast:# USDollar Continues to Struggle Against #Mexican# Peso (6 May 2024)

• The US dollar initially fell during trading on Tuesday only to turn around and show signs of life again against the Mexican peso.
• However, it’s obvious that we are in a strong downtrend, and it does make a certain amount of sense considering that the market has seen so much of a selloff over the last several months.
• Yes, we recently had a spike higher, but we have turned around and almost completely wiped the entire thing out.

The US dollar has a stronger than usual interest rate backing it, but at the end of the day, it is still not anywhere near strong as the Mexican peso. You still get paid to hold the peso at the moment, and I think that’s something that a lot of institutional traders will be paying close attention to. With this, the downtrend is still going to be very much intact unless of course we get some type of major “risk off” type of move in the currency markets overall.

Technical Analysis

The 50-Day EMA is near the 16.85 level and is starting to drop. This is an area where traders will continue to struggle to break above there, so therefore I think you’ve got a situation where you have to be very cautious, but you do have to recognize that any move in that area probably invites selling pressure. On the other hand, if we were to break down below the 16.50 pesos level, then the 16.33 pesos level almost certainly come into play. If we break down below there, then the 16 peso level is the next target, and that is an area that if you look at the monthly charts, is massive support.

All things being equal, this is a market that I think continues to be very noisy, and you will have to be cognizant of the fact that it is much easier to short this pair that it is to buy it, due to the interest rate differential. In fact, if you start to see the US dollar really take off to the upside against the Mexican peso, I would postulate that you might actually do better buying the US dollar against other currencies that don’t yield as much.

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MARKET UPDATE: #Saudi #Arabia Wholesale #Inflation Ticks Down (15 May 2024)

The annual wholesale price inflation in Saudi Arabia edged down to 3.4% in April 2024 from 3.8% in the previous month.

Prices slowed for other transportable goods except metal products, machinery & equipment (8.1% vs 9.2% in March), while remained unchanged for food products, beverages, and tobacco & textiles (2.4% vs 2.4%) and agriculture & fishery products (0.2% vs 0.2%).

Additionally, costs dropped for metal products, machinery & equipment (-0.6% vs -0.7%) and ores & minerals (-2.2% vs -2.2%). On a monthly basis, wholesale prices decreased by 0.4% in April, after a 0.4% rise in March.

Saudi Arabia Wholesale Inflation Advances in March

The annual wholesale price inflation in Saudi Arabia advanced 3.8% in March 2024, up from 3.1% rise in the previous month, driven by a faster increase in the prices of other transportable goods except metal products, machinery & equipment (9.2% vs 7.5% in February).

At the same time, costs continued to rise for food products, beverages, and tobacco & textiles (2.4% vs 2%). In contrast, prices slowed for agriculture & fishery products (0.2% vs 0.6%), while declined further for ores & minerals (-2.2% vs -2%) and metal products, machinery & equipment (-0.7% vs -0.6%). On a monthly basis, wholesale prices rose 0.4% in March, rebounding from a 1.2% fall in the prior month

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Hong Kong 50 Forecast: Likely to Continue Higher (13 May 2024)

• The Hong Kong 50 index is likely to continue going higher after we have seen a very bullish Friday.
• We are currently hanging around the HK$19,000 level, but more importantly, we have broken out of a bullish flag, and it looks like we are going to continue to see upward momentum come into this market.

This plays out quite nicely with other indices around the world as it looks like traders are starting to bet on loose monetary policy to help stocks overall. Keep in mind that the Hong Kong dollar is pegged to the US dollar and is therefore manipulated by the Hong Kong Monetary Authority. In other words, the Hang Seng and the Hong Kong 50 index by extension will quite often follow Federal Reserve policy more than anything else.

Furthermore, it’s probably easier to invest in Hong Kong then it is mainland China for most of you, so this is an index that you want to use as an opportunity to take advantage of China perhaps turning the corner when it comes to economics. Short-term pullbacks at this point in time should end up being a nice buying opportunity, and I believe at this point the HK$18,000 level is going to end up being a massive support level, not only due to previous action, but the fact that the psychology attached to a number like that is something worth watching.

HK$20,000 possible

Looking at the longer-term charts, it makes quite a bit of sense that we would see short-term pullbacks as buying opportunities and therefore I think you have to little look at the potential resistance barriers above as a target going forward. Ultimately, I think this is a market that could go all the way to the HK$20,000 level, which obviously has a lot of psychology itself and therefore people will be paying close attention. However, it’s also worth noting that there are a few other minor levels between here and there so that should continue to be a situation where occasionally get a pullback in which to add more to your position.

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Canadian #Dollar Dips as Retail Sales Disappoint (22 March 2024)

The Canadian dollar has extended its losses on Friday. USD/CAD is trading at 1.3569 in the North American session, up 0.29%.

Canada’s retail sales slip in January

Canada’s retail sales fell 0.3% m/m in January, revised from the earlier estimate of -0.4% and well off the 0.9% gain in December. The decline was driven by a sharp drop in motor vehicles and parts dealers (-2.4%).

The silver lining was that six of nine sub-categories showed an increase, which points to some strength in consumer spending. The estimate for February retail sales stands at 0.1%. Year-to-year, retail sales rose 0.9% in January, shy of the forecast of 2.5% and well off the December gain of 2.9%.

The retail sales data comes on the heels of the inflation report for February, in which inflation fell to 2.8% y/y. This was better than expected and the lowest rate since June 2023.
Core CPI, which excludes energy and food and is considered a better indicator of inflation trends, fell to 2.1% in February, which was lower than expected and the lowest level since March 2021.

With inflation continuing to fall toward the 2% target, pressure is growing on the Bank of Canada to lower rates and provide some relief to households, which are feeling the squeeze from elevated interest rates and the high cost of living.

The Bank of Canada has maintained the cash rate of 5.0% for six straight times and rates have likely peaked, although the BoC hasn’t signaled that it plans to lower rates.

The markets have priced in a rate cut in June at around 70% and other major central banks are moving in the direction of lowering rates. There is a 70% probability that the Fed will lower rates, according to the CME FedWatch tool, and the Swiss National Bank surprised with a rate cut on Thursday, the first major central bank to lower interest rates.

USD/CAD Technical

• USD/CAD tested resistance at 1.3577 earlier. Above, there is resistance at 1.3611
• 1.3518 and 1.3484 are providing support

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GBPUSD Analysis: Crucial Session- Direction at Stake (20 March 2024)

GBP/USD sways pre-BoE & Fed events, as Goldman Sachs ups forecasts; eyes on inflation & Fed’s stance. Key levels: 1.2600 bearish, 1.2885 bullish, amid varying central bank actions.

• Ahead of important events and data, the GBP/USD currency pair is under selling pressure.
• This pushed it to the support level of 1.2667 yesterday before stabilizing around 1.2720 at the time of writing the analysis.

Despite the performance of the pound sterling, Goldman Sachs has raised its forecast for the pound against the US dollar. In this regard, the title “Reputation of the pound sterling” appeared in a new report issued by Goldman Sachs, in which it announces raising its expectations for the exchange rate of the pound against the dollar. The memo states: “The pound sterling has been the best performer in the G10 since the beginning of the year, benefiting from the recent positive cyclical repricing in the markets. We still believe that the pound sterling has room to rise.”

Also, Wall Street analysts say that the pound sterling has benefited from slightly more flexible global financial conditions and better growth rates. If these conditions continue, the gains could extend. Ultimately, the memo comes the same week that the Bank of England presents its latest policy decisions and guidance, and Goldman Sachs analysts add that they do not expect any major policy changes.

Instead, the risks in the near term for the pound will come from other global central banks: “With investor focus in the foreign exchange market on the Japanese yen and the Swiss franc, we expect the Bank of Japan and the Swiss National Bank to attract more attention compared to the Bank of England this week, in addition to the new expectations for the US Federal Reserve. A more hawkish message from the Federal Reserve could risk damaging the latest outlook. Rising growth rates have led to some underperformance of the pound sterling in recent times.”

However, if the current supportive global backdrop continues, Goldman Sachs expects the British pound to remain supported in the future. With the pound sterling now trading around the investment bank’s initial target, it raises its expectations to 1.30, 1.33, and 1.35 in 3, 6, and 12 months (from 1.28, 1.30, and 1.35 previously).

GBPUSD Expectations and Analysis Today:

The British inflation figures and the path of the US Federal Reserve’s policy will determine the reaction for the future of the GBP/USD exchange rate for the remainder of this week and even for the next week. So far, based on the performance on the daily chart, the GBP/USD pair is undergoing a downward correction, and breaking the crucial support at 1.2600 could change the outlook to bearish. This could happen if the British inflation figures weaken, and the tone of the US Federal Reserve’s policy statement is more hawkish. In fact, a stronger downward momentum could occur from this level. Currently, the nearest support levels for the trend are 1.2655, 1.2580, and 1.2500, respectively. On the other hand, during the same time period, movement towards the resistance level of 1.2885 is possible if the British inflation figures come out stronger and the tone of the US Federal Reserve is less hawkish than expected.

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US #Inflation Rises Unexpectedly to 3.2%

US inflation for February climbed at an annualized rate of 3.2%. This was higher than expected and the US Dollar is showing considerable volatility following the inflation release.

• The US consumer price index (CPI) climbed 3.2% year-on-year in February, up from 3.1% in January and above the market estimate of 3.1%.
• On a monthly basis, CPI rose 0.4%, above the January gain of 0.3% and matching the market estimate of 0.4%.
• The increase in inflation was mainly due to energy costs, such as gasoline, falling less than expected.

Core CPI, which excludes food and energy and is considered a more reliable gauge of inflation trends, ticked lower to 3.8% year-on-year in February, lower than the 3.9% gain in January but overshooting the market estimate of 3.7%. Monthly, core CPI remained steady at 0.4%, above the market estimate of 0.3%. The indices which increased included shelter, clothing and recreation.

The inflation report is significant in that the Federal Reserve meets next week. It’s a virtual certainty that the Fed will hold the benchmark rate at 5%-5.25% for a fifth straight meeting and the burning question is when the Fed will start to lower rates. The markets have priced in an initial rate cut in June at around a 70% probability, with the Fed and the markets currently in sync in projecting three rate cuts by the end of 2024.

In January, the markets had priced in six rate cuts this year, beginning in March, but the surprisingly strong US economy and pushback from the Fed has forced investors to slash rate cut expectations.

The Fed can be expected to remain cautious about lowering rates, if no other reason than that inflation remains well above the Fed’s 2% target. Although the Fed’s steep rate tightening has done a good job of taming inflation, there is the constant concern that lowering rates too soon could allow inflation to rebound, which would then require raising rates yet again – a scenario that Fed policymakers are keen to avoid.

US Dollar Volatile, Stock Markets Edge Higher After Inflation Report

The US dollar is showing strong volatility against all the major currencies in the aftermath of today’s inflation release. The EUR/USD currency pair swung as much as 0.40%, the GBP/USD currency pair moved 0.49% and the AUD/USD currency pair swung 0.80%. We could see continuing volatility in today’s North American session.

The US stock market is in positive territory following today’s inflation report. The Nasdaq 100 Index is up 68 points (0.38%) at 18,017 and the S&P 500 Index is up 17 points (0.25%) at 5131.

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ECB Maintains Interest Rates, Revises Lower Inflation Forecast (8 March 2024)

In the aftermath of the ECB rate decision, the Euro has shown a limited response. The euro dipped lower against the United States Dollar and the British Pound immediately after the rate decision but has since recovered most of those losses.

There was no surprise from the European Central Bank as it kept its deposit rate unchanged at 4.0% for a fourth straight time. The ECB revised lower its inflation and growth projections for 2024, as expected. ECB President Christine Lagarde is holding a press conference at the time of writing and we could see some stronger movement from the Euro in response to her comments.

ECB Revises Lower Inflation and Growth Forecasts

The ECB statement noted that inflation had declined since the last meeting in January and the ECB has revised down its inflation projection. For 2024, the central bank currently expects the headline Consumer Price Index (CPI) to ease to 2.3% and core CPI, which excludes food and energy is projected to fall to 2.6%. At the same time, the statement noted that the ECB remains concerned about high inflation, in part due to strong growth in wages. The ECB also revised lower its growth forecast to 0.6% for 2024.

The ECB has been reluctant to lower rates due to concerns that the battle against inflation is not over and if it lets down its guard in the form of lower rates, inflation could rebound higher. CPI has fallen to 2.6% year-on-year in the eurozone, but core CPI is at 3.1% and service inflation is running around 4%, which means that the ECB still has its work cut out before it reaches its inflation target of 2%.

Higher interest rates have pushed down inflation but could also tip the weak eurozone economy into a recession. The ECB thus faces a dilemma over its interest rate path and has decided to pause and not lower rates until it sees strong evidence that inflation will continue on a downward path. ECB President Lagarde warned in January that rate hikes remained on the table, but this seems very unlikely as inflation has been falling and the economy remains weak.

Euro Pares Losses and European Stock Markets Rise After ECB Decision

In the aftermath of the ECB rate decision, the Euro has shown a limited response. The euro dipped lower against the United States Dollar and the British Pound immediately after the rate decision but has since recovered most of those losses. In the European session, EUR/USD is trading at 1.0897, down 0.01% and EUR/GBP is at 0.8545, down 0.17%.

Stock market reaction has been positive, with the German DAX at 17,796.15, up 72.50 points (0.42%).

The French CAC 40 Index is at 8,010, up 55.33 points (0.70%).

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