The US dollar index recouped some of Wednesday’s losses and is now tapping 106, whilst the US 2-year yields considers a break above 5%.
By :Matt Simpson, Market Analyst
- FOMC member Bostic said on Thursday that a rate cut is not likely until the end of the year. This makes sense given the strength of US data with elevated interest rates, and likely lands conveniently after the election that the Fed do not want to be seen interfering with by changing policy a couple of months before it.
- Backing up the sentiment, Kashkari said that “once inflation is heading back to 2%, we can cut rates”.
- The ECB continued to prime markets for a June cut, with Kazaks saying “the path for rates in down” and “the probability of a June rate cut is quite high”.
- Just in case someone out there may be expecting any monetary policy excitement from the BOJ this year, Noguchi said “it’s short-term policy rate adjustment is likely to be slow”.
- The US, Japan and Korea released their first trilateral dialogue on Wednesday and agreed to consult closely on FX markets following the rapid depreciation of the Japanese yen and Korean won.
- Australia’s unemployment rose to 3.8% and 28.5k jobs were added in March, which likely changes nothing in regards to the RBA likely retaining their cash rate at 4.35% over the foreseeable future
- Morgan Stanley are retaining their call that the Bank of England (BOE) could begin cutting rates in May, which is against the consensus of September among other banks.
- US yields were higher on Thursday, sending the US 2-year just below 5% within a potential bullish pennant pattern
- Higher yields allowed the US dollar to recoup some of Wednesday’s ‘bearish engulfing day’ losses and retrace to 106, a key level for bulls and bears to scrap over today.
- I noted in yesterday’s report that US bonds are nearing support levels on the weekly chart which could cap yields in the coming weeks, but that still allows for some bullish wriggle room over the near term.
Economic events (times in AEST)
- 09:30 – Japan’s inflation report
- 16:00 – UK retail sales
- 16:00 – German PPI
- 19:00 – IMF meetings
- 00:15 – BOE Breeden speaks, MOC member Ramsden speaks
- 00:30 – Fed member Goolsbee speaks
Click the website link below to get our exclusive Guide to gold trading in 2024.
https://www.forex.com/en-us/market-outlook/
Gold technical analysis:
Gold is currently on track for a fifth consecutive bullish week, and at current level it would close at a record high on the weekly chart (even though it trades beneath last week’s high). However, it is also on track for an inside week, which shows a loss of momentum from the bull camp. A bullish inside day also formed on Thursday, further suggesting gold remains rangebound between 2355 – 2400 with diminishing volatility. And looking at the calendar there is a reasonable chance gold could remain rangebound today.
– Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.