Daily Forex News

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GBP/USD sees buying interest above mid-1.2500s before UK job, US inflation data

The GBP/USD currency pair, representing the exchange rate between the British Pound and the US Dollar, is showing signs of recovery in the early Asian trading session on Tuesday. This resurgence comes as the pair trades around 1.2565, marking a modest gain of 0.07% for the day. The week ahead is packed with pivotal economic events, with the spotlight firmly on the impending interest rate decisions from both the US Federal Reserve (Fed) and the Bank of England (BoE).

The Federal Open Market Committee (FOMC) is set to commence its two-day meeting on Tuesday, with the financial markets keenly awaiting the interest rate verdict on Wednesday. Market consensus widely anticipates the FOMC to maintain the interest rates at a steady range of 5.25–5.50%, consistent with its previous two meetings. Furthermore, there is a growing expectation that the FOMC might not only cease increasing rates but also potentially commence rate cuts as early as March 2024.

In a similar vein, investors and traders are eyeing the BoE’s stance. The general anticipation is for the BoE to keep rates steady at 5.25%, continuing its narrative of maintaining higher rates for an extended period. However, market forecasts suggest that the BoE might initiate rate reductions next year, albeit at a more gradual pace compared to both the Fed and the European Central Bank (ECB).

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Gold Hits New Multi-Week Low, Awaits 50-Day SMA Test Before Fed Verdict

Gold prices have dipped to a multi-week nadir as the market braces for the upcoming Federal Reserve decision. For the fourth consecutive day, the precious metal traded lower, touching levels near $1,974 per ounce during the European trading session. This downward trajectory aligns with recent U.S. economic data, which indicated an unexpected rise in consumer prices in November, defying anticipations and potentially altering the Federal Reserve’s monetary easing roadmap.

The stronger-than-anticipated U.S. jobs report released last Friday has also played a part in dampening the outlook for gold, traditionally a non-yielding asset, as it suggests a more robust U.S. economy, which could delay any monetary policy easing by the Fed. Meanwhile, investors are also gauging the impact of China’s economic stimulus measures, which typically provide a boost to gold prices during times of market uncertainty or economic downturns.

With the global economy’s eyes on China’s growth figures, geopolitical tensions further cloud the investment climate, offering a mixed bag of influences on gold’s value. These uncertainties might typically bolster gold’s appeal as a safe haven; however, the current conditions have led to a cautious approach among traders. Many are opting to sideline aggressive bets against the precious metal until the Federal Open Market Committee (FOMC) releases its monetary policy statement and updated economic projections, including the influential “dot plot.”

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USD/CHF Falls to 0.8670 Amid Dovish Fed, Awaits SNB Decision

In the current financial climate, the USD/CHF currency pair has sustained its downward trajectory for the fourth consecutive day, hovering around the 0.8670 mark during Thursday’s Asian trading hours. This comes as the market braces for the Swiss National Bank’s (SNB) impending Interest Rate Decision. Consensus among economists, as per recent surveys by Reuters, suggests the SNB will likely hold its key interest rate steady at least until the third quarter of the next year.

The context for the SNB’s upcoming decision is framed by Swiss inflation rates, which, while showing a modest deceleration in price escalation, are still expected to average at a steady 1.5% in 2024 and 1.3% in 2025. This forecasted dip from the current 2.2% inflation rate, if realized, could set the stage for the SNB to implement rate reductions following the lead of the US Federal Reserve—which, as per a separate Reuters poll, is predicted to maintain its rates at least until July.

Amid these financial forecasts, SNB Chairman Thomas Jordan has indicated a readiness to reinforce monetary policy tightening if the situation warrants it, notwithstanding the inflation’s downward trend. The SNB’s steadfast approach towards enduringly higher interest rates could, theoretically, bolster the Swiss Franc against the US Dollar. On the other side of the Atlantic, the Federal Reserve’s recent decision to maintain interest rates at 5.5% was widely anticipated and has contributed to the downward pressure on the USD/CHF currency pair.

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USD/CAD Drops Below 1.3400 Amid Weak Dollar and Rising Oil Prices, Awaiting US PMI Data

In recent sessions, the USD/CAD currency pair has continued its downward trajectory for the third consecutive day. The pair was seen hovering around the 1.3390 mark during Friday’s Asian trading hours. The depreciation of the pair is largely due to the softening of the US Dollar, which is reflected in the lowered US Treasury yields, raising concerns among investors and market analysts alike.

The softened Dollar comes as market participants eagerly await the scheduled appearance of the Bank of Canada (BoC) Governor Tiff Macklem. This highly anticipated event is expected to shed light on the Canadian economic outlook and monetary policy, potentially imparting significant movement in the currency markets. Investors are poised to parse through Governor Macklem’s discourse for any nuanced insights that could signal future policy directions and economic health.

In tandem with these events, the price of West Texas Intermediate (WTI) oil has been trading at approximately $72.30 per barrel. The upswing in oil prices is propelled by the projected demand for the commodity in the year 2024, coupled with the present weakness of the US Dollar. Canada’s role as a preeminent oil exporter to the United States accentuates the correlation between WTI price dynamics and the strength of the Canadian Dollar (CAD). The uptick in oil prices is likely to bolster the CAD, offering it support in its exchange rate against the USD.

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Alphabet’s Stock Surges Due to AI

Alphabet Inc., the parent company of the search engine behemoth Google, has been making headlines with its stock (NASDAQ: GOOGL)(NASDAQ: GOOG) experiencing a notable surge, closing Monday’s trading session with a 2.4% increase, as reported by S&P Global Market Intelligence. This uptick is part of a larger trend within the technology sector, particularly among companies heavily invested in artificial intelligence (AI) technologies. Alphabet’s recent gains are a testament to the growing confidence among investors in the AI sphere, and 2023 has been a year of significant progress for the company’s stock value.
With AI becoming increasingly central to technological advancement and economic growth, Alphabet’s role as a forerunner in web-search services has positioned it to capitalize on these developments significantly. The integration of AI into its search and digital advertising mechanisms has been instrumental in boosting the company’s market performance. However, Alphabet’s potential in AI extends far beyond Google’s search capabilities.

Alphabet’s diverse portfolio, which includes leadership in mobile operating system software with Android, cloud infrastructure services, and video streaming via platforms like YouTube, provides a multitude of avenues through which the company can harness AI. This broad spectrum of products and services not only fortifies Alphabet’s market presence but also presents numerous opportunities for AI integration, enhancing efficiency and creating new user experiences.

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EUR/GBP Regains Ground, Nearing Mid-0.8600 Range in Response to UK Inflation Data

The European currency pair EUR/GBP witnessed a modest rebound in the early hours of the European market session on Wednesday, as it climbed towards the mid-0.8600 territory, a notable recovery from its recent slump. The upswing in the pair was primarily fueled by a weaker-than-expected set of inflation figures from the UK, which put downward pressure on the British Pound and conversely offered a boost to the EUR/GBP exchange rate. As trading progressed, the pair was observed to be exchanging hands near 0.8645, marking an increase of 0.21% within the day’s trading activities.

In a surprising turn, the UK’s latest inflation report, disseminated by the Office for National Statistics (ONS), recorded a month-over-month (MoM) Consumer Price Index (CPI) decline of 0.2% in November, deviating from the flat rate previously reported and falling short of the modest 0.1% rise forecasted. On an annual basis, inflation climbed by 3.9%, a significant drop from the preceding value of 4.6% and below the anticipated consensus of 4.4%. A more focused view on the Core CPI, which strips out the more volatile components such as food and energy prices, reflected a deceleration to 5.1% in November from October’s 5.7%, not aligning with the market’s projected figure of 5.6%. This softer inflation outlook led to the Sterling losing ground against the Euro, providing momentum for the EUR/GBP currency pair.

Further complicating the monetary landscape, Sarah Breeden, Deputy Governor of the Bank of England (BoE), conveyed on Tuesday that the institution had not charted a fixed trajectory for interest rate adjustments, emphasizing the need for a continued restrictive policy stance to manage inflationary pressures effectively.

Adding to the broader economic context, data published by Eurostat revealed that the Eurozone experienced weaker inflation in November, attributed mainly to declining energy prices. Despite this easing, Christine Lagarde, President of the European Central Bank (ECB), cautioned that inflationary pressures could intensify in December, spurred by colder weather conditions leading to increased energy demand and higher prices. The ECB also acknowledged that the evolving challenges posed by climate change would inevitably complicate the monetary policy framework.

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Decline in Asian Stock Markets as Wall Street Pullback Concludes Historic Surge

The recent downturn in Asian stock markets marks a significant shift from the record highs that Wall Street had been experiencing, signaling a more cautious stance from investors. The pullback reflects a recalibration of expectations following a series of less-than-stellar corporate earnings reports and growing concerns that the market’s accelerated growth might not be sustainable.

In Japan, the Nikkei 225 index suffered a 1.6% decline, closing at 33,140.47. The downward trend was led by Toyota, the prominent Japanese automaker, which witnessed a drop of up to 4% in its stock value. This decline was, in part, a reaction to the company’s announcement of a major recall involving 1 million vehicles due to a malfunctioning airbag issue, which increased the potential risk of injuries to passengers.

This news was compounded by revelations that Daihatsu, a subsidiary of Toyota specializing in small cars, had halted vehicle shipments both domestically and internationally. An investigation had uncovered inadequate safety testing for 64 car models, some of which were manufactured for other major brands like Mazda and Subaru. The seriousness of the situation was underscored by a raid conducted by Japanese transport ministry officials on Daihatsu’s offices.

Read More : https://bitly.ws/36MiP

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GBP/USD Remains Over 1.2800 as USD Weakens, Eyes on US Jobless Claims

The British Pound (GBP) maintains its strength against the US Dollar (USD), persistently trading above the pivotal 1.2800 level amidst a period of USD softening, with market participants keenly awaiting the release of US jobless claims data for further direction.

During the Asian trading session on Thursday, the GBP/USD currency pair saw a continued ascendancy beyond the 1.2800 threshold. A combination of reduced inflationary pressures within the American economy and the Federal Reserve’s (Fed) dovish stance has contributed to the depreciation of the US Dollar, thus favoring a rise in the GBP/USD exchange rate. At the time of this update, the pair is valued at 1.2810, marking a slight increase of 0.09% from the previous close.

Investor sentiment towards the Greenback is currently subdued, with the market largely convinced that the Fed is on the brink of implementing rate cuts. The CME Fedwatch tool evidences this belief, showing a more than 88% likelihood of rate reductions commencing in March 2024, and anticipates over 150 basis points in cuts throughout the next calendar year.

Conversely, the Bank of England (BoE) has signaled that rate decreases are not imminent within the United Kingdom. The BoE has upheld its interest rate at the current 5.25% during three consecutive meetings, suggesting a more cautious approach to monetary policy adjustments. Despite the central bank’s stance that discussions of rate cuts are premature, financial markets are betting on a potential reduction in rates by May of the following year.

Read More : https://bitly.ws/37EIg

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Stock Futures Creep Upward in 2023’s Final Trading Session as S&P 500 Nears Record High

As the final trading day of 2023 dawned, stock futures edged higher, signaling a potentially strong year-end close with the S&P 500 flirting with a record high. S&P 500 futures climbed by 0.1%, with a similar modest increase seen in the Nasdaq-100 futures. The Dow Jones Industrial Average futures inched up 28 points, reflecting a subdued optimism in the market. The S&P 500, less than 0.5% away from a new record, hinted at a year capped by a robust rally, particularly reinforced in the year’s final months.

This year has been marked by a remarkable recovery and resilience in stock markets. The Federal Reserve’s indication of a halt in rate hikes and the potential for rate cuts in the upcoming year catalyzed a shift in sentiment. This was evidenced by the 10-year Treasury yield’s significant drop from over 5% to under 3.9%. The prospect of a ‘soft landing’ for the U.S. economy, averting a recession, has further buoyed investors’ confidence, contributing to a broadening market rally in the fourth quarter.

December has been notably strong for smaller companies, with the Russell 2000 index surging nearly 14%, setting it on course for its best month since November 2020. This broadening rally is not just confined to small caps; the industrial-heavy Dow has also been hitting a series of record highs. According to Ryan Detrick, chief market strategist at Carson Group, a surge of 10% or more in the final two months historically suggests a bullish outlook for stocks into the new year.

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EUR/GBP Stays Near 0.8670 Before German Employment Data Release

During the early European trading hours on Wednesday, the EUR/GBP pair is exhibiting a narrow trading pattern, oscillating between 0.8665 and 0.8675. Market participants are keenly awaiting the release of German employment statistics for December, with the unemployment rate projected to stabilize at 5.9%. As of the current moment, the pair is hovering around 0.8670, marking a slight decline of 0.02% for the day.

This comes against the backdrop of a weakening UK manufacturing sector. In December 2023, the UK’s S&P Global Purchasing Managers’ Index (PMI) recorded a downturn, registering at 46.2, a slight drop from its previous 46.4 and falling short of market expectations. This downturn is part of a broader negative sentiment surrounding the British economy, amid concerns of a looming technical recession. Such economic pressures have exerted selling momentum on the British Pound (GBP), providing a comparative advantage to the EUR/GBP pair.

Conversely, the Eurozone has shown a marginally positive trend in its manufacturing sector. The HCOB Manufacturing PMI for the region slightly increased to 44.4 in December 2023, up from November’s 44.2, surpassing the anticipated figures. Similarly, the German Manufacturing PMI demonstrated an unexpected rise, reaching 43.3 in December, improving from the prior 43.1. These indicators suggest a relative strengthening in the Eurozone’s manufacturing activities, contributing positively to the Euro’s performance against the GBP.

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