MCK Daily Financial Markets Analysis 18.09.2024
Marios C.Kyriakou
Senior Dealer at XS.com | MSc Economist | CySEC Advanced | Dealing | Financial Markets Analysis - Training Employees and Clients | FX, CFD, MQL | Certified HRDA Trainer | Public Speaker | Founder at HCPro Academy
TITLE:? Canada’s annual Inflation drops and reaches 2% target, US retail sales stronger beating estimates, Gold retraced,? the US dollar strengthened ahead of the Fed’s meeting,??
______________________________________________________________________
PREVIOUS DAY REVIEW: IMPORTANT EVENTS (17.09.2024)
Canada's annual inflation rate reached the central bank's 2% target in August, raising expectations for a 50-basis-point interest rate cut by the BOC next month. Consumer prices fell 0.2% on a month-on-month basis.
"We expect central bankers to slash their policy rate by 50 basis points next month in an effort to expedite the return to a more neutral setting," Royce Mendes, head of macro strategy at Desjardins Group, wrote in a report.
At the Bank of Canada's monetary policy decision announcement earlier this month, Governor Tiff Macklem said the central bank had to increasingly guard against the risk that inflation could fall below its target as economic growth was weak.
The BoC has reduced its key policy rate three times in a row, cutting it by a cumulative 75 basis points to 4.25%.
U.S. retail sales unexpectedly rose in August suggesting that the economy remained on solid footing through much of the third quarter. The report showed retail sales were a bit stronger than initially thought in July.
"There does not appear to be any reason for Fed officials to start out with a larger 50 basis points rate cut because whatever stress there is in the labor market, it isn't translating into weaker economic demand," said Christopher Rupkey, chief economist at FWDBONDS. "If this is an economy on the brink of recession, consumers certainly don't see it."
Retail sales increased 0.1% last month after an upwardly revised 1.1% surge in July.
Retail sales increased 2.1% on a year-on-year basis in August. Online store sales rebounded 1.4% after falling 0.4% in July. Sales at gasoline stations dropped 1.2%, reflecting lower prices at the pump. Cheaper gasoline is likely freeing money for other spending.
These so-called core retail sales were previously reported to have gained 0.3% in July.?
Source:
______________________________________________________________________
WINNERS VS LOSERS?
Popular Assets Moves
AUD pairs (AUD as base) still on the top of the week’s list with AUDJPY having 1.02% gains so far. Gold is leading for this month with 2.74% performance. The JPY is gaining strength quite rapidly today since the early hours, during the Asian session. Despite some correction yesterday, the dollar remains stable ahead of the Fed’s decision on rate cuts.??
?
_____________________________________________________________________________________________
NEWS AND ECONOMIC DATA MONITORING?
Previous Trading Day: Review Analysis (17.09.2024)
Time zone EEST (GMT+3:00) Athens
Midnight > Night Session (Asian)
No important announcements, no special scheduled releases.
Morning > Day Session (European and N. American Session)
Canada’s CPI monthly change figure saw a decline, beating expectations of no change. The deceleration in headline inflation in August was due, in part, to lower prices for gasoline, due to a combination of lower prices and a base-year effect. The annual CPI reached 2%, down from 2.5%.
The USDCAD saw a jump near 30 pips at the time of the CPI data release for Canada due to the CAD depreciation. The pair found strong resistance at near 1.36175 and retraced with a full reversal taking place eventually soon after the report release. The pair remained on the sideways around the 30-period MA until the end of the trading day.
?
US Retail sales figure releases took place at the same time. Retail sales showed growth instead of the expected decline signalling resilience. investors keep a close eye on any signs of a slowdown in consumer spending and orders since the Fed is about to cut interest rates in response to economic growth data slowdown and inflation cooling. Obviously stronger than expected retail sales caused USD appreciation. At the time of the release the USD gained strength causing the dollar index to move to the upside, correcting moderately from the downtrend and finding resistance close to the 101.05 level. Despite light retracement, back to the 30-period MA it continued upwards to test the resistance again. The next day on the 18th though it opened with a gap downwards as the market participants anticipated the cuts highly.?
News Impact, Technical Insights and Views:
FOREX
US Dollar Index H1 Chart
The dollar index was experiencing a downward trend recently, driven by the decision of market participants to sell the US dollar as they expect its weakening due to the upcoming US interest rate cuts. The index experienced a slowdown while approaching the 16th Sept. The RSI had also turned to the upside (higher lows) signalling the end of the downtrend. On the 17th it experienced a retracement after breaking out of the triangle formation, as depicted on the chart, reaching the 61.8 Fibo. Why the recent upside path? A priced-in rate cut decision plus risk avoidance probably. Additionally, there are uncertainty based pressures now and the index will potentially remain on a sideways path until the decision at 21:00.
USDJPY H1 Chart?
领英推荐
USDJPY has been experiencing a downward path mainly driven by the recent USD weakening. The pair has been experiencing high volatility due to the fact that the JPY is also affected by recent events, including statements from the BOJ. On the 17th a USDJPY jump occurred, driven by the USD, mainly, that appreciated due to the stronger than expected retail sales figures, released for the US. The pair reached the resistance at near 142.4 without retracement. On the 18th though, the JPY started to gain significantly during the Asian session causing the USDJPY to reverse to the downside. The BOJ hiked its policy rate on the 31st July and is expected to keep it steady this week at the meeting on the 20th Sept.
CRYPTO:
BTCUSD H1 Chart?
On the 15th Sept, Bitcoin broke a triangle formation as depicted on the chart and dropped to the important support area near 58,000 USD. The drop then extended to the area near 57,500 USD but retracement took place, back to the 30-period MA. On the 17th it experienced an unusual reversal to the upside. The push came after Canada’s inflation release and the US retail sales figures releases. The jump ended after Bitcoin reached the resistance near 61,300 USD. Retracement followed with the price coming back to the 61.8 Fibo and settling to the 60,000 USD level.
METALS:
XAUUSD H1 Chart
Gold jumped on the 12th Sept as the USD experienced strong weakening. The path was upwards until the 16th Sept when the price finally entered in consolidation. The RSI indicated a bearish divergence with its lower highs. After reaching 2,590 USD, Gold retraced eventually to the 2,560 USD/oz as per my forecast in the previous analysis. At the time of the rate decision a shock is expected and traders should probably consider the support 2,560 USD/oz and resistance 2,590/oz for potential breakout opportunities.
ENERGY:?
Crude Oil (WTI) Cash H1 Chart
On the 12th Sept the price of Crude started to move to the upside steadily. An upward wedge was visible on the chart. On the 17th September the price jumped after 15:30 during the retail sales figure releases for the US and a breakout of the upward wedge occurred. Instead of a further rapid movement to the upside post breakout, the price eventually found resistance near 70.6 USD before retracement, back to the 30-period MA.
US STOCKS:
S&P500 H1 Chart?
On the 11th Sept, stocks have already experienced a strong demand. With rate cuts approaching for the US, the risk-on mood was turned on already. The index has seen a rapid rise since the 11th Sept. Remember that at the same time the USD suffered weakening. Currently things have changed as the risk-on mood is relaxed. The retail sales figures released on the 17th caused the USD to appreciate and in general stabilise. The stocks on the same day dropped after the stock market opening. The S&P500 found support near 5,620 USD before retracing back to the 30-period MA and remained on the sideways path.?
_____________________________________________________________________________________________
NEWS AND ECONOMIC DATA MONITORING?
Today: Preview Analysis (18.09.2024)
Time zone EEST (GMT+3:00) Athens
Midnight > Night Session (Asian)
No important announcements, no special scheduled releases.
Morning > Day Session (European and N. American Session)
At 9:00 the CPI data for the UK were released showing that prices increased as expected with a 2.2% rate. On a monthly basis, CPIH rose by 0.4% in August 2024, the same rate as in August 2023. The GBP appreciated causing the GBPUSD to experience a 20 pips jump at the time of the release.
Crude oil inventories report takes place at 17:30, probably affecting the price of oil at that time. The FOMC takes place at 21:00 with the Fed deciding on interest rates and the world expecting a cut. There is a near 60% chance that the cut will be 50 basis points according to the CME’s Fedwatch tool:?
General Impact
Forex:?
EURUSD is experiencing movement, volatility, but remains sideways. The USD remains unaffected for now.
Crypto:
Bitcoin is moving sideways as well.
Metals:
Gold is quite volatile and tests the intraday lows.
Energy:?
Crude oil is heading downwards steadily.
U.S. Stocks:
US Indices are steady but leaning more to the upside.
__________________________________
Marios C. Kyriakou MSc – Economist, Market Analyst
_____________________________________________________________________________________________
*Risk Warning: Trading is highly speculative and carries a high level of risk. It is possible to lose all your invested capital. CFDs are highly leveraged over-the-counter derivatives and due to their degree of complexity, trading CFDs carries a high level of risk and may not be suitable for all investors. Please be aware that this educational and research material does not constitute investment advice and does not take into account your investment objectives, financial situation or specific needs. This content is for educational purposes only and we accept no liability whatsoever for losses or damages resulting either directly or indirectly from the use of the information provided through this session. You take responsibility for your own trading decisions.