Market Update by Solidecn.com

[Solid ECN]

Canadian Dollar Rises Amid Eased Global Tensions


Solid ECN – The Canadian dollar surged beyond 1.37 against the USD this April, bouncing back from its five-month nadir of 1.382 on April 16th. This improvement came as concerns about global risks eased with resolving tensions in the Middle East, and unimpressive US economic data weakened support for the US dollar.

In Canada, the prices of industrial products increased by 0.8% in March, aligning with forecasts and a slight dip from the prior month’s revised increase of 1.1%. Furthermore, new house prices in March held steady, defying expectations of a slight rise, with the annual change in the New Housing Price Index showing a decline of 0.4%. In the US, demand for the dollar as a safe-haven asset declined following assurances from Iran of no retaliatory strikes against Israel, coupled with a slowdown in the US manufacturing and services industries that heightened anticipation of interest rate reductions.

For further clues, the focus now shifts to upcoming US economic reports, including the GDP data on Thursday and the Federal Reserve’s PCE price index on Friday.

[Solid ECN]

Japanese Yen Hits 34-Year Low as BOJ Meets


Solid ECN – On Thursday, the Japanese yen fell below 155 per dollar, reaching its lowest point in 34 years. This happened as the Bank of Japan (BOJ) began a two-day meeting to discuss its monetary policy. Although the BOJ stopped using negative interest rates in March, rates are not expected to change now.

However, investors are looking for signs that the bank might take action because the yen has weakened significantly. This weakness has hit a critical point that many believed would cause officials in Tokyo to step in.

BOJ Governor Kazuo Ueda mentioned at last week’s G20 summit that the bank might increase interest rates again if the yen’s drop continues to push up prices by making imports more expensive. He reiterated this possibility this week, stating that rates could rise if inflation trends towards the 2% target as predicted. On the other hand, Japan’s Finance Minister Shunichi Suzuki chose not to comment on the currency levels.

[Solid ECN]

Gold Prices Stable as Investors Eye US Economic Data


Solid ECN – Gold prices remained stable at around $2,320 per ounce last Thursday. Investors focused on upcoming U.S. economic updates to get more precise insights into the Federal Reserve's future actions. This interest grew after recent economic reports were reviewed. Orders for long-lasting goods slightly exceeded forecasts in March. However, data released on Tuesday showed a slowdown in growth in the U.S. private sector.

Now, traders are looking forward to the first quarter's GDP report and the March personal consumption expenditures (PCE) data, which will be released on Friday. These reports follow a period of higher-than-expected consumer inflation, which has altered the expectations for interest rate reductions. Federal Reserve officials have recently indicated no immediate plans to lower rates, with most market participants expecting a rate cut in September at the earliest.

As interest rates stay elevated, the appeal of gold, which does not yield interest, diminishes. Additionally, decreasing tensions in the Middle East have led investors to opt for riskier assets, further affecting gold prices.

[Solid ECN]

WTI Crude Oil Prices Stay High Amid Falling US Stocks


Solid ECN – WTI crude oil prices stayed over $82 per barrel on Wednesday, following a near 2% increase the day before. This rise came unexpectedly due to a drop in U.S. crude oil supplies, suggesting strong demand. According to the Energy Information Administration, U.S. crude stocks fell by 6.368 million barrels last week, marking the most significant decline in three months.

This decrease contrasted with predictions of a 1.6 million barrel increase. Confirmatory government data aligned with previous industry reports from the American Petroleum Institute. Additionally, weaker U.S. business activity hints at possible interest rate cuts by the Federal Reserve, further boosting demand prospects.

Meanwhile, investors are also keeping an eye on tensions in the Middle East, particularly as Israel intensifies its actions in Gaza. Despite robust PMI data in Europe, expectations are growing that the UK and EU may soon reduce their economic stimulus.

[Solid ECN]

NZ Dollar Rises as US Dollar Weakens, Inflation Drops


Solid ECN – The New Zealand dollar has recently seen a slight increase, trading just over $0.594, due to improved market confidence and a slight weakening of the US dollar. Investors feel more optimistic, moving away from last week's urgent rush to safer investments, fueled by expectations that the tensions between Iran and Israel won't escalate further.

Additionally, the Kiwi gained from a dip in the US dollar after recent figures indicated a decrease in US manufacturing and a slowdown in service sector growth, which could support lowering interest rates. In New Zealand, the Reserve Bank maintained the official cash rate at 5.5% for the month, stating that a tight monetary policy is necessary to bring inflation back within the target range of 1-3%.

The nation's annual inflation rate has dropped to 4% for the first quarter of 2024, marking the lowest rate since the second quarter of 2021.

[Solid ECN]

Australian Dollar Peaks as Inflation Surprises


Solid ECN – Recently, the Australian dollar climbed above $0.65, reaching its highest point in nearly two weeks. This increase came after unexpectedly strong inflation data within Australia, suggesting that the Reserve Bank of Australia might keep interest rates stable. In the first quarter, Australia's consumer price index dropped to 3.6% from 4.1% in the previous quarter. Although this marks the fifth consecutive quarterly decline, it was still higher than the predicted 3.4%.

Additionally, Australia's monthly CPI rate rose to 3.5% in March, up from 3.4% in February, which was surprising as analysts expected it to remain unchanged. Earlier in the week, new data revealed that Australia's private sector growth hit a two-year high in April, driven by near-stable manufacturing and continued service growth.

Meanwhile, the Australian dollar also gained from a weakening US dollar, which fell as business activity in the US slowed in April, pointing towards a less aggressive monetary policy by the Federal Reserve.

[Solid ECN]

UK Pound Near Low as Investors Eye Rate Cut Soon



Solid ECN – The British pound has traded just above $1.24, hovering near its lowest level since mid-November. This comes as investors process robust UK PMI data and consider how it might influence future economic policies.

The most recent data shows a significant boost in British business activity in April, the highest since May 2023, primarily due to a surge in services output. Regarding monetary policy, expectations have shifted, predicting an initial decrease in borrowing costs as early as August, sooner than the earlier forecast of September.

This shift followed comments from Deputy Governor Dave Ramsden, who noted a decreased risk of persistently high British inflation and the possibility that it could drop below the Bank of England's latest projections.

Conversely, Chief Economist Huw Pill acknowledged that the new economic reports suggest an impending rate cut, though he cautioned that it might still be some distance away.

[Solid ECN]

Euro Gains Amid Strong Europe PMI Data


Solid ECN – The euro's value increased to over $1.065, though it stayed near its lowest point since the beginning of November. This movement came as investors evaluated surprisingly strong preliminary PMI data from some of Europe's biggest economies. Recent surveys showed that business activity in the Eurozone increased more in April than in almost a year.

Germany saw economic growth for the first time in nine months. Regarding monetary policy, European Central Bank (ECB) officials indicated a readiness to start lowering borrowing costs possibly by June, with some predicting up to three rate cuts by the end of 2024. However, the overall market mood has changed slightly.

Expectations for rate reductions by the ECB and the U.S. Federal Reserve have lessened this year, driven by ongoing high inflation and signs of a sturdy economy in the U.S.

[Solid ECN]

U.S. Oil Eyes $87 High as Bullish Trends Hold


Solid ECN Blog – Yesterday, U.S. Crude oil prices formed a bullish long-wick candlestick pattern, as depicted in the daily chart above. This development occurred near the 50% Fibonacci retracement level, coinciding with the 50-day Exponential Moving Average (EMA 50).

The Relative Strength Index (RSI) is poised to rise above 50, signaling a potential uptrend continuation.

From a technical perspective, U.S. Oil remains in an uptrend, supported by the EMA 50. As long as this level holds, the outlook remains bullish, with the next target potentially being the March high of $87.0.

Conversely, should prices fall below the EMA 50, the bullish scenario would be invalidated, potentially leading to a decline toward the lower flag band at the $78 threshold.

[Solid ECN]

GBPJPY Tests Resistance: Potential Bullish Breakout


Solid ECN – The GBPJPY currency pair rebounded from the lower band of the bullish flag today and is now testing the 192.8 barrier.

The technical indicators are bullish, and the pair will likely break out. If this scenario plays out, it would allow GBP buyers to reach the upper band of the flag against the Japanese Yen.