Market Analysis By FXOpen
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Stock Market Analysis: NVDA Losing Leadership?
Since the start of the week, the S&P-500 Index (US500) is up about 0.58% while NVDA's share price is down about 3.8%. This is a worrying sign for Nvidia stock investors — could it be a sign that NVDA is no longer the market leader?
Dubravko Lakos-Bujas, JPMorgan's chief equity strategist, warned of a potential "surprise" shock to the stock market, Bloomberg reported. He's noticed a trend in recent history where gains in popular momentum stocks like NVDA are often followed by corrections. This situation has repeated itself three times since the 2008 global financial crisis.
“One day this may happen completely unexpectedly. This has happened in the past; we’ve had flash collapses,” Lakos-Bujas said in the webinar. “One large fund starts cutting some positions, a second fund hears this and tries to reposition, a third fund is basically caught off guard, and then, you know, we start to unwind more and more momentum.”
He noted the potential for innovation in artificial intelligence as a major source of surprise, emphasizing that these opportunities are dwindling and risks are growing in the background.
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Commodities and European currencies Test Key Supports
On the eve of the Easter holidays, the main currency pairs have slightly slowed down the development of the main trends and are consolidating near key ranges, the breakdown of which could provoke a change in the vectors of medium-term movements. Thus, the US dollar/loonie currency pair is trading near 1.3600, euro/US dollar sellers are trying to push through the support at 1.0800, and the pound/US dollar pair is once again testing 1.2600.
USD/CAD
Fluctuations in the oil market and the Fed’s indecisiveness regarding changing the vector of monetary policy contributed to the strengthening of the USD/CAD pair to recent extremes at 1.3600. If buyers of the pair manage to gain a foothold above the mentioned level, the price on the usd/cad chart may continue to rise in the direction of 1.4000-1.3800. Otherwise, another price test of 1.3400-1.3300 is possible.Today at 15:30 GMT+3, the publication of Canadian GDP data for January is expected. US GDP data for the fourth quarter will also be published and weekly data on the number of applications for unemployment benefits will be released.
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Market Analysis: Gold Price and Crude Oil Price Gain Bullish Momentum
Gold price started a steady increase above the $2,200 resistance level. Crude oil prices are gaining bullish momentum and might rise toward $85.00.
Important Takeaways for Gold and Oil Prices Analysis Today
· Gold price started a decent increase from the $2,158 zone against the US Dollar.· A connecting bullish trend line is forming with support near $2,218 on the hourly chart of gold at FXOpen.
· Crude oil prices rallied above the $81.60 and $82.00 resistance levels.
· There is a key bullish trend line forming with support at $82.30 on the hourly chart of XTI/USD at FXOpen.
Gold Price Technical Analysis
On the hourly chart of Gold at FXOpen, the price found support near the $2,158 zone. The price formed a base and started a fresh increase above the $2,175 level.There was a decent move above the 50-hour simple moving average and $2,200. The bulls pushed the price above the $2,220 resistance zone. Finally, the bears appeared near $2,235, A high was formed near $2,236.20 and the price is now consolidating gains.
The current price action is positive above the 23.6% Fib retracement level of the upward move from the $2,157 swing low to the $2,236 high. The RSI is still stable near 60 and the price could aim for more gains.
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DOGE Price Increases by 170% in Less Than 2 Months
On February 1, 2024, the DOGE/USD rate was = 0.0783. On the last Friday of March, it rose to 0.2150. The rising price means Dogecoin is now the eighth-largest cryptocurrency in the world by market capitalization, overtaking Cardano (ADA) and Avalanche (AVAX) in recent days.
The reason for the positive sentiment is the support of the token from Elon Musk.
As the Independent writes:
→ Rumors have intensified that Elon will integrate DOGE into his social network X (Twitter), which he planned to make “an app for everything.” Musk's other companies, SpaceX and Tesla, already support payments in Dogecoin.
→ According to Elon, Dogecoin has the potential to become the main online currency due to its ease of use and efficiency.
→ The billionaire also said that DOGE could become the official currency on Mars if SpaceX can establish a permanent human colony there.
→ The price of DOGE/USD is also supported by the general bullish trend in the cryptocurrency market.
The DOGE/USD chart shows that:
→ the price moves within an uptrend (shown in blue);
→ the price of Dogecoin has overcome the psychological level of $0.2 per coin;
→ the price is near the upper border of the channel - the price action on March 28-29 can be interpreted as an attempt to break through this resistance.TO VIEW THE FULL ANALYSIS, VISIT FXOPEN BLOG
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Although UK-100 Index Is Near All-time Highs, UK Economy Slips into Recession
echnically, a national economic recession is defined as two consecutive quarters of contraction, and yesterday's Office for National Statistics data confirmed that this has happened — UK GDP fell in the third and fourth quarters of 2023 by 0.1% and 0.3% respectively.
The Guardian writes that the recession may be deeper than it seems at first glance:
→ Increased government spending (including for the military) masks a deep and persistent decline in production.
→ The economy is shrinking despite population growth;
→ In the fourth quarter of 2023, the deficit widened to £26.3 billion, or 3.9% of GDP, up £5.9 billion from the third quarter.
→ The big problem is the decline in goods exports. Soaring prices for imported raw materials and energy have played a major role in increasing the cost of producing goods in the UK and making it difficult to sell them abroad.However, the price of the UK-100 index (or FTSE-100) is near all-time highs. This is because the Bank of England may ease monetary policy to avoid worsening the recession. And this will be a positive factor for the development of the top 100 companies whose shares are included in the index — this expectation is included in the current quote.
The UK-100 Index chart shows that:
→ today the price of UK-100 is moving within an upward trend (shown by the blue channel);
→ demand forces are active at the lower border of the channel, quickly absorbing all declines (shown by arrows);
→ the bulls confirmed their dominance upon breaking through the 7,800 level, forming a strong cup-and-handle pattern;
→ the psychological level of 8,000 points prevents the bulls from maintaining the growth rate - when approaching it, the bullish candles become narrower. Buyer confidence is waning. This creates difficulties for the price to realize the prospect of reaching the upper boundary of the channel.
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The US Dollar Declines against Major World Currencies
The US dollar is weakening against the euro, yen and pound. In February, the core personal consumption expenditure index fell from 0.5% to 0.3% on a monthly basis and from 2.9% to 2.8% on an annual basis, justifying preliminary estimates. Thus, the slowdown in inflationary pressure continues at a steady pace, convincing investors that the US Federal Reserve will keep interest rates the same in May and begin lowering them in June. In addition, personal income increased by 0.3%, less than expected by 0.4%, and expenses by 0.8%, significantly exceeding the expected 0.5%: this may mean continued risks of rising consumer prices, but for now investors don't pay any attention to these statistics.
EUR/USD
The EUR/USD pair is moving in a narrow range around the 1.0780 level. Immediate resistance can be seen at 1.0860, a break higher could trigger a rise towards 1.0880. On the downside, immediate support is seen at 1.0768, a break below could take the pair towards 1.0750.Market activity is reduced because Friday was a public holiday in most eurozone countries, so financial institutions are closed and investor activity is reduced. However, market participants were monitoring comments from European Central Bank (ECB) officials regarding its future actions. Thus, the head of the Bank of France, François Villeroy de Galhau, said that the regulator will probably start with a moderate reduction in interest rates, but it does not matter much whether this happens in April or June. The official added that after the first cut in borrowing costs, it would not necessarily continue at the next ECB meeting. This position coincides with the expectations of most economists surveyed by Reuters.
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E-mini S&P-500 Start Quarter at Historic Highs
On Friday, data from the Personal Consumption Expenditures (PCE) index was published. According to Trading Economics, the PCE price index report showed that inflation is slowing. On a monthly basis, it grew by 0.3% in February, forecast = 0.4%, a month ago = 0.4%.
Following the release of the PCE index, Jerome Powell stated that:
→ the Fed is in no hurry to cut interest rates;
→ the latest PCE inflation data is in line with what the Fed wants to see.Market participants received a portion of fundamental information positively. And since Friday was a day off on the stock market, the news is taken into account by the price on Monday.
The E-mini S&P-500 opened with a gap this morning, and at a historical peak. The S&P 500 rose 10.2% in the first quarter, its best performance since 2019. The bull run is fueled by both expectations of Fed interest rate cuts and enthusiasm surrounding the adoption of AI.
The S&P 500 chart shows that:
→ The price moves in an ascending channel (shown in blue), demonstrating stable demand.
→ The price has broken through the resistance level of 5,200. It is acceptable to expect that it will act as resistance.
→ The market can be supported by the median line.TO VIEW THE FULL ANALYSIS, VISIT FXOPEN BLOG
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High Hopes for Amazon as Analysts Look at Earnings Call Potential
Amazon, one of the most successful e-commerce businesses in the world, entered its 30th year in 2024 with its relatively humble yet ingenious origins as an online bookseller based out of Jeff Bezos' garage in Washington State, a distant memory.
Today's Amazon is completely unrecognizable. A global giant among Silicon Valley's big-cap internet moguls, dominating the internet services and retail delivery sectors in most markets worldwide.
Not resting on its laurels, Amazon, one of the 'Magnificent 7' tech stocks, has been actively sharpening its remit recently, with a commitment to the development of AI being one of the areas of innovation that the company is now heavily invested in.
Amazon's stock has been doing very well so far this year, and when the US market closed yesterday after its first trading day following a long holiday weekend, trading appeared to continue where it left off on Thursday, March 28, which was the final trading day of the first quarter of this year, with Amazon stock being at its highest value since November 2021 when it spiked to just over $183 per share before climbing down shortly afterwards.
The tech stock doldrums of 2022 ensued, and Amazon, despite its evergreen parcel delivery enterprise being its distinguishing factor from other internet and high technology giants, was not immune. The lull in value during that period was sustained, but as investor appetite for tech stocks came back, Amazon began to grow its share price once again.
This year so far, Amazon stock has been one of the top risers, and according to FXOpen pricing, Amazon closed yesterday at a lofty $180.38, which represents the highest point since it began this particular rally on January 9, at which point it was trading at $127.22. That is a considerable increase within the space of just under two months.
→ The market can be supported by the median line.TO VIEW THE FULL ANALYSIS, VISIT FXOPEN BLOG
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The Dollar Resumes Growth after the Release of Positive Macroeconomic Statistics
Weak market volatility associated with the celebration of Catholic Easter and a strong foundation from the United States contributed to a sharp strengthening of the dollar against commodity and European currencies. Thus, the pound/US dollar currency pair is trading below the key support at 1.2600, euro sellers are preparing to test 1.0700, and the US dollar/yen pair is as close as possible to recent extremes at 152.00.
GBP/USD
The data on the US manufacturing business activity index for March published yesterday was at the level of 50.3 points, which significantly exceeded the analysts' forecast of 48.3 points. The released data reduces the likelihood of a reduction in the base interest rate at the next Fed meeting and naturally leads to strengthening of the American currency in almost all directions.The GBP/USD pair traded between 1.2700 and 1.2600 for about a week. Yesterday, sellers of the pound were stronger than buyers and the pair lost about 100 pp in just a couple of hours. If the current mood in the market continues, the price on the GBP/USD chart may test the low of February of this year at 1.2518. We can consider canceling the downward scenario if we confidently consolidate above 1.2700.
Today at 11:30 GMT+3, we are waiting for data on the volume of consumer lending from the Bank of England for February. Also at the same time, the manufacturing business activity index (PMI) for March will be published.
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US Dollar Strengthens after Strong ISM Manufacturing PMI Report
Yesterday, news was published on the state of the US manufacturing sector, namely the Purchase Manager Index (PMI), which is calculated by The Institute for Supply Management (ISM).
The data turned out to be strong: fact = 50.3, forecast = 48.5, a month earlier = 47.8.
Since readings above 50 indicate manufacturing growth, yesterday's news showed the health of this sector in the US. Consequently, it reduced the pressure on the Fed to cut interest rates.
And since the current tight monetary policy may last longer, the value of the US dollar has increased relative to other financial assets:
→ Regarding currencies. For example, the NZD/USD rate set a minimum of 2024.
→ Regarding cryptocurrencies. The decline in BTC/USD that began yesterday led to the Bitcoin rate dropping to USD 66.5k today.
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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
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Gold Price XAU/USD Sets Another All-time High
The XAU/USD gold chart today indicates that the price of the metal has exceeded USD 2,250 per ounce.
Causes:
→ Geopolitical tensions. Military conflicts in Ukraine and the Middle East do not subside, the threat of terrorist attacks is growing, and new hot spots may appear on the world map.
→ Concerns about a new round of inflation due to rising commodity prices.In both cases, gold acts as a safe-haven asset.
Since the beginning of 2024, the price of XAU/USD has risen by 12%. How much longer can the rally last?
In terms of technical analysis of the gold price, there are two tools to take into account:
→ ascending channel (shown in blue). Today XAU/USD is in its upper half, the price has tested (shown by the arrow) the support of the median line. And from the first days of April it has been demonstrating dynamics that direct it towards the upper border of the channel.
→ Fibonacci proportions. If we take the A→B impulse as 100%, then the decrease in B→C finds support in the zone of levels 0.5-0.618, which confirms the relevance of using proportions. Then the target for impulse price growth from point C may be the level of 1.618.
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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
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Market Analysis: EUR/USD Starts Recovery, USD/CHF Could Extend Gains
EUR/USD is attempting a recovery wave from the 1.0725 zone. USD/CHF climbed higher above 0.9070 and might extend gains in the near term.
Important Takeaways for EUR/USD and USD/CHF Analysis Today
· The Euro declined toward 1.0725 before it started a recovery wave against the US Dollar.· There was a break above a key bearish trend line with resistance at 1.0765 on the hourly chart of EUR/USD at FXOpen.
· USD/CHF climbed higher above the 0.9035 and 0.9070 resistance levels.
· There was a break above a major bearish trend line with resistance at 0.9035 on the hourly chart at FXOpen.
EUR/USD Technical Analysis
On the hourly chart of EUR/USD at FXOpen, the pair extended the decline below the 1.0785 support zone. The Euro even declined below 1.0750 before the bulls appeared against the US Dollar, as mentioned in the previous analysis.The pair traded as low as 1.0724 and recently started a recovery wave. There was a move above the 1.0745 resistance zone. Besides, there was a break above a key bearish trend line with resistance at 1.0765.
The bulls pushed the pair above the 50-hour simple moving average and the 50% Fib retracement level of the downward move from the 1.0805 swing high to the 1.0724 low.
Immediate resistance on the EUR/USD chart is near the 1.0785 zone. It is close to the 76.4% Fib retracement level of the downward move from the 1.0805 swing high to the 1.0724 low. The first major resistance is near the 1.0805 level.
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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
RISK WARNING: Trading on the Forex market involves substantial risks, including complete possible loss of funds and other losses and is not suitable for all members. Clients should make an independent judgement as to whether trading is appropriate for them in the light of their financial condition, investment experience, risk tolerance and other factors -
USD/JPY Analysis: Calm Before the Storm?
The USD/JPY chart today shows that the rate has stabilized at 152 yen per US dollar. But can we say that there is calm in the market?
Hardly.
First, it is important to note that in 2023 there was a sharp reversal of trend around the 152.00 level due to intervention by the Japanese authorities, which supported an excessively weak yen. Therefore, crossing this psychological threshold can serve as a trigger for a new intervention.
Secondly, Reuters writes about a growing volatility premium in the options market, which confirms the growing likelihood of a strong trend in the near future.
According to USD/JPY technical analysis:
→ ADX indicator is near its lows. When this situation was observed at the end of February, 2 sharp movements followed in March: a decline in USD/JPY to 146.6 and a subsequent recovery to 151.6.
→ the price of USD/JPY today is squeezed into a narrowing triangle between the level of 152.0 and the median line of the ascending channel. The price exiting the technical triangle may mean the beginning of a new trend.Today, 2 important news are expected: after the publication of the ISM Services PMI index (at 17:00 GMT+3), a speech by the head of the Federal Reserve is expected (19:10 GMT+3). A piece of fundamental news could change the valuation of the US dollar and lead to a surge in volatility in the USD/JPY market - this should be given special attention, given the arguments presented.
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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
RISK WARNING: Trading on the Forex market involves substantial risks, including complete possible loss of funds and other losses and is not suitable for all members. Clients should make an independent judgement as to whether trading is appropriate for them in the light of their financial condition, investment experience, risk tolerance and other factors -
Brent Oil Price Reaches Its Highest Since October 2023
The Brent oil chart today shows that the price has exceeded USD 89 per barrel — this is the highest level since the end of October 2023.
Reasons for strong demand for oil:
→ The OPEC+ meeting ended this week. Exporting countries maintained their policy of limiting oil production unchanged.
→ Ukrainian drone attacks on oil refineries in Russia.
→ Latest data on the strength of the US economy.
Technical analysis of the Brent market shows that:
→ The price moves within the ascending channel (shown in blue), which originates back in 2023.
→ Increased demand in the spring of 2024 led to the fact that the Brent price rose into the upper half of the blue channel and formed a steeper growth trajectory (shown by black lines).
→ The median line of the blue channel acted as support (shown by arrows).The upper limit of the blue channel is around USD 92 per barrel of Brent and it is possible that the price may reach these values in the next 1-2 months.
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The US Stock Market Awaits the Publication of NFP And Unemployment Data
Important events of this week for investors and traders in the US stock market could be the employment news, which will be published tomorrow at 15:30 GMT+3:
→ non-Farm Payrolls (NFP) report for March. According to CNN, analysts expect nonfarm payrolls to rise by 192,500 in March. NFP for February was 275,000, according to FactSet.
→ data on the unemployment rate (Unemployment Rate). According to ForexFactory, the unemployment rate is expected to remain unchanged at 3.9%.The state of the labour market is under close scrutiny by the Fed and could provide valuable insight into the prospects for interest rate cuts. The release of the unemployment rate and NFP numbers for March could be an example of what is called "bad news is good news" on Wall Street. After all, if the data shows a deterioration in the labour market, then this will be an argument for the Fed to lower interest rates, which in turn could lead to an increase in the stock market.
Indeed, according to CNN, Fed Chairman Jerome Powell said last week that a weakening labour market would be a reason to cut interest rates.
However, the S&P 500 chart shows the price moving within an ascending channel, but showing signs of weakness around the 5,250 level on the 4-hour period:
After a sharp increase in A→B, the price entered a prolonged correction B→C - this may be a sign of a large volume of sell orders near the level of 5,250, which absorbed the bullish impulse A→B.
An attempt to break through the level of 5,250 (price growth to top D) turned out to be a failure, as the price sharply dropped from the upper border of the channel to the lower one. Such progress should be alarming for the bears.
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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
RISK WARNING: Trading on the Forex market involves substantial risks, including complete possible loss of funds and other losses and is not suitable for all members. Clients should make an independent judgement as to whether trading is appropriate for them in the light of their financial condition, investment experience, risk tolerance and other factors -
Analytical EUR to GBP Predictions for 2024 and Beyond
Navigating the dynamic and complex world of currency trading, especially within the EUR/GBP pair, requires a deep dive into economic trends, monetary policy shifts, and geopolitical events. This FXOpen article aims to unravel these intricacies, offering insights into the recent performance and future outlook of the euro against the pound sterling.
Recent Performance of the EUR/GBP Pair
The EUR/GBP exchange rate has experienced strong volatility since the UK decided to leave the European Union in June 2016, causing the pound to fall sharply against the euro. EUR/GBP surged from 0.737 at 2016’s open to a high of 0.93 in October of the same year.
Between 2017 and 2019, the pair ranged between 0.831 and 0.932, reflecting ongoing Brexit negotiations and political uncertainty within the UK and the EU.
However, the official departure of the UK from the EU in January 2020 marked a pivotal moment, with markets forced to contend with this new reality.
Throughout 2020, the COVID-19 pandemic further exacerbated these economic uncertainties. The euro initially strengthened against the pound as investors rushed to the relative safety of the euro, spiking from a low of 0.828 in February 2020 to a high of 0.949 in March before declining. By the end of 2020, the EUR/GBP was priced at 0.893.
2021 was characterised by the economic recovery post-pandemic, with both regions implementing fiscal stimulus measures. The pace of recovery, however, was uneven, as vaccine rollouts and reopening plans varied significantly between the UK and the Eurozone. These disparities led to fluctuations in the EUR/GBP exchange rate, but with a stronger pound ultimately leading the pair to conclude 2021 at 0.84.
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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
RISK WARNING: Trading on the Forex market involves substantial risks, including complete possible loss of funds and other losses and is not suitable for all members. Clients should make an independent judgement as to whether trading is appropriate for them in the light of their financial condition, investment experience, risk tolerance and other factors -
What Are UK Interest Rates Predicted to Be in 2024–2026?
Navigating the complexities of UK interest rates requires insight into current trends and future projections. This article delves into the analysis for 2024, long-term forecasts and speculative outlooks over the next ten years, examining analytical predictions for traders and investors. For those in the UK, understanding these dynamics will be crucial for engaging with the markets effectively in 2024 and beyond.
Current UK Interest Rate Environment
The UK's interest rate landscape has undergone significant transformations over the past few years, culminating in the current rate of 5.25% (as of the time of writing, the 22nd of March, 2024). This figure—the highest in UK interest rates history since 2008—marks a steep ascent from the historic low of 0.1% in December 2021, illustrating the Bank of England (BoE) Monetary Policy Committee's (MPC) aggressive stance against inflationary pressures.The decision to elevate interest rates from near-zero levels was primarily driven by the need to counteract rising inflation, which has emerged as a considerable threat to the UK's economic stability.
The trajectory of UK interest rates from the depths of the COVID-19 pandemic-induced lows to their current levels mirrors the broader effort to stabilise the economy in the face of unprecedented challenges. Initially, in response to the pandemic, borrowing costs were slashed to 0.10% in March 2020, setting a record low aimed at stimulating economic activity. However, as inflation began to surge, largely fueled by recovering demand and supply chain disruptions, the MPC shifted its strategy towards tightening monetary policy.
By 2023, the landscape of interest rate predictions had experienced dramatic revisions. Early forecasts suggesting a rise to as high as 6.5% were recalibrated following a summer of unexpectedly positive inflation data. This adjustment has set the stage for the current environment, where the peak rate of 5.25% is viewed as the maximum in this hiking cycle. However, inflation still remains above the BoE’s target of 2%, currently at 4% as of February 2024.
Inflation's persistence above the target highlights the delicate balance the Bank of England seeks between controlling price increases and fostering economic growth. The current higher interest rate regime impacts mortgages, loans, and savings, directly influencing household and business finances, particularly those with variable rate agreements.
With the UK recently slipping into a technical recession, the BOE is under pressure to cut borrowing costs in 2024. But, given that inflation is still elevated, 2024 base rate predictions in the UK remain relatively uncertain.
Economic Analysis and Interest Rate Forecast for 2024
2024 BoE interest rate predictions are closely tied to a balancing act between combating inflation and stimulating economic recovery amidst a technical recession. The MPC maintained the base rate at 5.25% in March 2024 with a cautious eye on inflation, which, although reduced from its peak, remains above the target of 2% at 3.4% in February 2024.This stubbornly high inflation rate, combined with the UK's recent entry into a technical recession—marked by negative economic growth in the fourth quarter of 2023—presents a complex backdrop for interest rates in the UK in 2024.
The technical recession reflects underlying economic vulnerabilities, including structural weaknesses in the labour market, low productivity growth, and the BoE's hesitance to provide clear forward guidance. This scenario has led to increased speculation about the timing and nature of interest rate adjustments.
The MPC's decision-making process is further complicated by global economic factors, notably slowing growth in major economies such as Germany and China, which indirectly impact the UK through trade and investment channels.
Inflationary pressures, partly attributed to global conflicts and supply chain disruptions, including those exacerbated by the Israel-Hamas conflict and the impact on shipping routes through the Red Sea, present additional challenges for UK interest rate forecasts in 2024. These factors have led to increased shipping insurance costs, potentially fuelling UK inflation further through higher transport costs and final goods prices.
Despite these pressures, there are signs that the BoE might lean towards monetary easing in 2024. Traders have notably adjusted their expected interest rate bets, with a significant shift towards expecting cuts by mid-2024, influenced by steady inflation levels and signals of potential easing in energy bills. The labour market shows resilience, with unemployment dropping to 3.8% in the last quarter of 2023, suggesting that the economy might bear the current interest rate environment a bit longer.
However, the BoE's future actions will heavily depend on forthcoming economic data, particularly in relation to inflation and wage growth. While some interest rate predictions in the UK forecast cuts as early as the second quarter of 2024, these predictions are speculative. They reflect a market consensus that central banks, including the BoE, will begin easing cycles between June and September 2024, continuing into the middle of the next year.
To explore how the UK’s shifting monetary policy might affect British markets, like GBP/USD and the FTSE 100, consider using FXOpen’s free TickTrader platform to analyse real-time charts and data.
UK Interest Rate Predictions for 2024
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Market Analysis: AUD/USD and NZD/USD Remain In Uptrend
AUD/USD is correcting gains from the 0.6620 zone. NZD/USD is also moving lower and might attempt a fresh increase from 0.6000.
Important Takeaways for AUD USD and NZD USD Analysis Today
· The Aussie Dollar started a downside correction from 0.6620 against the US Dollar.· There is a key bullish trend line forming with support at 0.6550 on the hourly chart of AUD/USD at FXOpen.
· NZD/USD is also moving lower below the 0.6030 support zone.
· There is a major bullish trend line forming with support at 0.5995 on the hourly chart of NZD/USD at FXOpen.
AUD/USD Technical Analysis
On the hourly chart of AUD/USD at FXOpen, the pair started a fresh increase from the 0.6480 support. The Aussie Dollar was able to clear the 0.6535 resistance to move into a positive zone against the US Dollar.There was a close above the 0.6550 resistance and the 50-hour simple moving average. Finally, the pair tested the 0.6620 zone. A high was formed near 0.6619 and the pair is now correcting gains.
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How Do Dovish and Hawkish Monetary Policies Affect Markets?
In the intricate dance of global finance, central banks play a leading role, their policies echoing through markets and economies. The terms "dovish" and "hawkish" encapsulate their strategies towards interest rates and money supply, each with profound implications for currency values and investor strategies.
This FXOpen article explores how these stances offer valuable insights for traders in understanding the forex market’s movements and the broader economic landscape.
Understanding Dovish vs Hawkish
In the world of economics, central banks use monetary policy to navigate between stimulating growth and controlling inflation. This delicate balance is often characterised by two primary stances: dovish and hawkish. Understanding these policies is crucial for traders, as they significantly influence domestic economic conditions and the forex market.Dovish Meaning
Central banks take a dovish monetary policy stance, aiming to stimulate the domestic economy. By lowering interest rates or keeping them low, central banks make borrowing cheaper, encouraging both businesses and consumers to take loans, invest, and spend. This increase in spending can lead to economic growth, but there's a catch: if the money supply increases too rapidly, it might outpace the economy's growth potential, leading to inflation.In terms of unemployment, dovish policies can lead to job creation as businesses expand. Credit conditions become more lenient, fostering an environment ripe for economic activity.
Hawkish Meaning
Conversely, a hawkish stance aims to temper inflation and stabilise the economy when it shows signs of overheating. By raising interest rates, central banks make borrowing more expensive, which can cool down excessive spending and investment. This tightening of credit conditions is intended to prevent inflation from rising too high, too quickly.While higher interest rates can attract foreign investment due to the promise of higher returns, leading to an appreciation of the domestic currency in the forex market, they can also dampen economic growth and increase unemployment rates as financing becomes costlier for businesses. Likewise, a stronger currency can affect exports by making them more expensive for foreign buyers, which is a critical consideration for traders analysing trade-heavy economies.
Capital Flows and the Forex Market
The interplay between these monetary policies and capital flows is a critical aspect for forex traders.All else being equal, dovish policies, while boosting local economies, can lead to capital outflows as investors search for higher yields, causing the domestic currency to depreciate against its counterparts. However, a dovish policy can increase the attractiveness of investing in local stock markets due to cheaper borrowing costs.
On the other hand, hawkish policies attract foreign capital, appreciating the domestic currency, but potentially at the cost of slowing domestic economic growth.
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TSLA Analysis: Price Recovers after Disastrous Report
We previously wrote that lower vehicle deliveries could lower TSLA's stock price.
And as it became known on Tuesday, Tesla, led by Elon Musk, delivered just 386,810 cars in the first three months of 2024 - 14% below analysts' forecasts, according to Bloomberg. As a result, Tesla shares fell 4.9% that day, extending their 2024 decline to 33%, the worst performance in the Nasdaq 100 Index.
What is the market outlook?
Bullish arguments:
→ After a strong disappointment on Tuesday, the price of TSLA showed signs of stability on Wednesday and Thursday. Since these were bullish candles, and the market was recovering despite the non-bearish gap on Tuesday, this can be interpreted as a sign of demand.
→ From the point of view of technical analysis, the market is supported by the lower border of the downward channel (shown in red). The price forms rebounds from this border, as shown by the arrows.
→ Bloomberg writes about a decrease in the number of short positions after the report on Tuesday. This could be a sign that short position holders do not see any further decline in the price of TSLA and are taking profits.Bearish arguments:
→ TSLA price is still in the lower half of the downward channel, despite the bullish sentiment in the stock market.
→ Resistance may come from the level of USD 183 per share and the median line of the descending channel.
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Disclaimer: This article represents the opinion of the Companies operating under the FXOpen brand only (excluding FXOpen EU). It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
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