Markets:
- Gold rose $1.22 or 0.04% at $2640.00
- US 2-year yield 4.185%, -1.2 basis points
- US 10-year yield 4.203%, +0.9 basis points
- WTI crude oil unchanged at $68.10
- Nikkei 225 +872 points or 2.26%
- Shanghai composite +6.75 points or 0.20%
- Hong Kongs Hang Seng +69.62 points or 0.36%
The US dollar is trading modestly higher. The DXY dollar index is up 0.10%
- EUR, +0.10%
- JPY +0.37%
- GBP, +0.08%
- CHF +0.20%
- CAD +0.04%
- AUD +0.08%
- NZD +0.17%
Fundamentally, New Zealand terms of trade for the quarter increased by 2.4% which was higher than the 1.8% estimate. Australia’s Current Account balance had a larger deficit at -14.1B vs -10.0B estimate. That was the largest deficit since the 2Q of 2018.
New York Fed President John Williams, a voting member of the FOMC, expressed expectations for more interest rate cuts over time, emphasizing that monetary policy remains restrictive for now and decisions will be guided by incoming data.
Williams, a voting member on the Fed, highlighted the high uncertainty surrounding the economic and policy outlook but projected U.S. GDP growth of around 2.5% this year, possibly higher, with unemployment ranging between 4% and 4.25%. Williams foresees inflation at approximately 2.25% in 2024, gradually declining toward the Fed’s 2% target, though progress may be uneven.
William’s also noted the U.S. economy is in a solid position with a balanced labor market that is softer but still robust, and he does not see the job market as a source of higher inflation. He also pointed out that businesses are finding it harder to push through price increases and sees no signs of a U.S. recession. While he acknowledged uncertainty about the neutral rate, he reaffirmed the Fed’s commitment to returning inflation to 2% and indicated the eventual direction of policy will likely involve lower rates over time.
Although he did not explicitly say he favors 25 basis point cut, he is leaning.
The Nikkei took its cue from the US stock market (or so it seems) with a run higher from the get-go. The index opened up aroung 0.6% and is currently up 2.24% on the day. The Hang Seng, Shanghai composite index are also higher after moving lower earlier in the session. China’s CSi300 is unchanged.
Australia’s S&P/ASX index is up 56 points or 0.66% and on pace for a record close.
Gold is also trading near unchanged, as is oil and Bitcoin too (up $74 at $95,933)
Technically speaking:
- USDJPY bounced off the 100 day MA (currently at 148.95) in the US session yesterday and that give the buyers the go-ahead to push hgher. The pair is back above the 150.00 level and testing the broken 38.2% of the move up from the September low at 150.18. Will the sellers lean here? Or will the buyers push back above and continue the upside probing after holding the key 100 day MA level?
- EURUSD fell to the high of a swing area between 1.0448 and 1.0461 and bounced higher. The run to the upside stalled at the 200 hour MA at 1.0509 currently. The price is trading at 1.0483 currently between the swing area below and the 200 hour MA above
- GBPUSD held support at the high of a swing area between 1.2596 and 1.26147 yesterday. The bounce higher moved up to test the 100 hour MA and found willing sellers. That 100 hour MA is now converging with the 100 bar MA on the 4-hour chart at 1.2672. That dynamic increases the levels importance in the European and US sessions today. Move above is more bullish. The price is currently at 1.2642 which put it firmly between the MAs above and the swing area below (down to 1.2596). Ahead of the swing area is the 200 hour MA at 1.2624. Watch that level for close clues in the European session today.
- NZDUSD retested the low from Monday’s trading at 0.5862. That is in the middle of swing area between 0.5859 and 0.58667 on the hourly chart. From the daily chart that support extends down to 0.5848. It would take a move below that level to open the door for more selling momentum. On the topside, if the buyers are to rack up some wins technically, they need to take the price above the 100 bar MA on the 4-hour chart at 0.5886, the 38.2% at 0.5889 and the 100 hour MA at 0.58937.
- AUDUSD held support near the lows from November yesterday between 0.6433 and 0.6442. That area needs to be broken to increase the bearish bias in the European and US session. ON the topside, there is a swing area between 0.6471 to 0.64817 that would give the dip buyers some comfort with more work to do including getting above the 100 hour MA at 0.6493, the 200 hour MA at 0.64967 and the 100 bar MA on the 4-hour chart at 0.65038. Getting above all those and staying above, would give the buyers some amunition for more upside. Absent that and the sellers are more in control.
Good fortune with your trading.
