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Japan's Prime Minister Fumio Kishida spoke at a press conference on Thursday in Tokyo. Kishida stated that it was appropriate for the Bank of Japan (BoJ) to maintain accommodative monetary conditions, per Reuters. 

Key quotes

Market reaction

As of writing, the USD/JPY pair was up 0.05% on the day at 151.45.

The headline Tokyo Consumer Price Index (CPI) for March rose 2.6% YoY following a 2.6% rise in the previous reading, the Statistics Bureau of Japan showed on Friday. Meanwhile, the Tokyo CPI ex Fresh Food, Energy climbed 2.9% YoY, down from a 3.1% increase in February. 

Additionally, Tokyo CPI ex Fresh Food rose 2.4% for the said month, in line with the market expectation.

Market reaction

As of writing, the USD/JPY pair was up 0.04% on the day at 151.43.

• GBP/USD trades on a flat note near 1.2622 in Friday’s early Asian session.  
• The UK GDP contracted by 0.3% QoQ in Q4 2023, unchanged from preliminary estimates. 
• The final US Q4 GDP expanded 3.4% against the previous estimate of 3.2%, better than expected. 
• The US February Core PCE will be the highlight on Friday.

The GBP/USD pair trades sideways around 1.2622 during the early Asian session on Friday. The market is likely to be mute in light trading on Good Friday. Later in the day, the US Core Personal Consumption Expenditures (PCE) Price Index will be released. The Fed’s preferred inflation gauge is estimated to remain stable at 2.8% YoY.

The Pound Sterling (GBP) remains under some selling pressure after the economic data showed that the UK economy went into recession in the second half of 2023. The nation’s Gross Domestic Product (GDP) contracted by 0.3% QoQ in the fourth quarter, unchanged from preliminary estimates. However, the GDP numbers did not impact expectations for monetary policy, as investors already factored in a mild recession late last year. 

Additionally, the higher speculation that the Bank of England (BoE) will begin three quarter-point reductions in rates this year undermines the GBP. The BoE Governor Andrew Bailey said that interest rate cuts will be ‘in play’ at future BoE policy meetings.

On the other hand, the US economy remained robust in the fourth quarter of last year. This, in turn, provides some support to the Greenback and drags the GBP/USD pair lower. The final US Q4 GDP came in better than expected, growing 3.4% from the previous 3.2% estimate. Meanwhile, the weekly Initial Jobless Claims for the week ended March 22 were at 210K from the previous reading of 212K. Finally, the March Michigan Consumer Sentiment Index was upwardly revised to 79.4, above the preliminary estimate of 76.5. 

• GBP/JPY hovers around 191.00, reflecting market caution ahead of Japanese unemployment and industrial production updates.
• Wall Street ends Q1 on a mixed note, with UK's recession confirmation and vigilance over JPY's weakness influencing sentiment.
• Technical analysis suggests potential for movement if GBP/JPY breaches key levels, with 192.00 and 193.00 as notable targets.

The GBP/JPY barely moved on Thursday amid thin liquidity conditions and is hovering around 191.00, virtually unchanged as Friday’s Asian session begins.

Wall Street posted a stellar first quarter of 2024, with the S&P 500 and the Dow Jones finishing in the green. The outlier was the Nasdaq Composite, which dropped 0.12% in the last trading day of Q1.

In addition, economic data from the UK showed that Britain’s economy hit a technical recession, as expected by the market consensus. In Japan, authorities remain vigilant about the Japanese Yen's (JPY) weakness, which sent the USD/JPY rallying near 152.00.

As the Asian session begins, the Japanese economic docket will reveal the unemployment rate for February, which is expected to remain at 2.4%. At the same time, Industrial Production figures for the same month are expected to rise from -6.7% MoM to 1.4%, while Retail Sales are foreseen to expand by 3%.

GBP/JPY Price Analysis: Technical outlook

The GBP/JPY is subdued as liquidity conditions tumble. If buyers regain control, they must push prices above the Tenkan-Sen level at 191.57, which could open the door to challenge 192.00. Further upside is seen at 193.00, followed by the year-to-date (YTD) high at 193.53

On the flip side, if the pair drops below 191.00, that would pave the way for further losses. The next support would be the Kijuin-Sen at 190.74, followed by the 190.00 mark.

GBP/JPY Price Action – Daily Chart

• Daily chart signals rising selling traction with the pair now below the key level of 90.50.
• Hourly chart indicators depict a potential consolidation period with indicators somewhat flat.
• The last hope for the cross is now the 200-day SMA.

In Thursday's session, the NZD/JPY declined to 90.40, with a decline of 0.43%. Bears are in control after successfully conquering the 100-day Simple Moving Average (SMA) while the selling momentum seems to have flattened on the hourly time frame.

On the daily chart, the NZD/JPY pair exhibits a faltering momentum. Despite intermittent upticks, the Relative Strength Index (RSI) has spent much of the last sessions in negative territory, indicating a dominance of sellers. The Moving Average Convergence Divergence (MACD) complements this view as it showcases rising red bars, pointing toward an increase in negative momentum.

NZD/JPY daily chart

Switching to the hourly chart, RSI values are mildly oscillating in the negative territory with the latest reading clocked at 42. The hourly MACD histogram adds to the complexity as it reveals green bars that suggest the downward momentum might be slowing. Comparing the daily and hourly charts, contrasting signals hint at a period of consolidation for NZD/JPY before a clearer direction emerges.

NZD/JPY hourly chart

On a larger scale, the pair resides now below the 20 and 100-day Simple Moving Averages (SMAs), indicating bearishness. Yet, its position above the 200-day SMA adds a hint of bullish potential. However, as bearish momentum is growing, the sellers might attack the longer moving average to confirm the negative trend.

• EUR/USD faces downward pressure after ECB’s Villeroy highlights the necessity of rate cuts to achieve inflation targets.
• Strong US economic performance, highlighted by revised GDP growth and sustained labor market tightness, supports the Dollar.
• Market anticipation grows for the upcoming US Core PCE price index, with potential implications for Fed's monetary policy.

The Euro extends its losses against the US Dollar, with the major diving below the 1.0800 figure, following dovish comments by European Central Bank (ECB) policymaker Francois Villeroy. The EUR/USD trades at 1.0787, down 0.37%.

EUR/USD fails pressured by ECB’s rate cut hints

ECB’s Villeroy comments increased EUR/USD sellers’ momentum late in the North American session. He said that core inflation decline is rapid but still high. He added that the 2% ECB inflation goal is within reach, while he saw increasing downside risks if the ECB didn’t cut rates. On the data front in the Eurozone, German Retail Sales plunged below estimates.

Recent data from the United States (US) showed the economy remains resilient after the Gross Domestic Product (GDP) for Q4 2023 was revised from 3.2% to 3.4%. Other data showed that the number of Americans filing for unemployment benefits was below estimates, and the previous week’s data, for the fourth consecutive week, an indication of the tightness of the labor market.

Further data revealed that the University of Michigan Consumer Sentiment hit its highest level since 2021, coming at 79.4, above the preliminary estimate of 76.5. Meanwhile, Pending Home Sales were up 1.6% Month over Month in February, beating expectations.

Given the backdrop, along with hawkish comments by Federal Reserve Governor Christopher Waller, were the drivers behind US Dollar bulls, which stepped in ahead of the release of the US Core Personal Consumption Expenditures (PCE) price index data.

EUR/USD Price Analysis: Technical outlook

After diving below the 200-day moving average (DMA), the EUR/USD has resumed to the downside, breaching below the February 29 cycle low of 1.0794 and sliding towards the 1.0780 area. If the pairs post a daily close below 1.0800, that will exacerbate the challenge of the February 14 low of 1.0694, ahead of 1.0600.

In another scenario, if EUR/USD buyers lift the pair above 1.0800, that could pave the way to test the 200-DMA at 1.0835.

• RBNZ Governor Orr was seen dovish, which seems to be applying pressure to the NZD.
• GDP and Initial Jobless Claims cushion the USD. Weak Chicago PMI figures limit the upside.
• Markets adjusted their expectations for a June rate cut which also adds strength to the USD.

The NZD/USD is currently traded at 0.5977, reflecting a decrease of 0.43%. The pair's movement was influenced by somewhat dovish comments from the Reserve Bank of New Zealand (RBNZ) Governor Orr and by mixed data from the US. Ahead of Friday’s session, markets await Personal Consumption Expenditures (PCE) data from the US from February.

RBNZ Governor Orr commented that inflation is normalizing while aggregate demand is slowing which would lead to a low and stable inflation on the horizon in hand with normalized interest rates. As a reaction markets are betting on 75 bps of easing in 2024, while the RBNZ hinted that the first cut would come in 2025 and as long as markets underestimate the bank, the NZD may suffer additional losses.

On the USD side, The recent release of Initial Jobless Claims data showed figures slightly below the consensus, with 210K reported against the anticipated 215K for the week ending on March 23. Additionally, the Q4 Gross Domestic Product (GDP) was revised upwards, showcasing a yearly growth of 3.4%. However, not all economic indicators were positive; the March Chicago Purchasing Managers Index (PMI) data from the Institute for Supply Management fell short of expectations, coming in at 41.4 against the forecasted 46 and previous 44.

Regarding the Federal Reserve (Fed) expectations, the probability of a rate cut in June has decreased to 66% from 85% earlier in the week, providing some support to the Greenback. That being said, the release of the headline Personal Consumption Expenditures (PCE) on Friday, will likely fuel volatility markets as investors may readjust their bets on the Fed.

NZD/USD technical analysis

On the daily chart, the NZD/USD pair's Relative Strength Index (RSI) is notably fixated within negative territory. The latest RSI reading swings back to a negative trend, marking a score of 33 which suggests a strong bearish sentiment in the market. Concurrently, the Moving Average Convergence Divergence (MACD) histogram prints red bars, evidencing a negative momentum that further reinforces the downward pressure on this currency pair.

Moving to the Simple Moving Average (SMA) analysis, the pair is trading below the respective 20, 100, and 200-day Simple Moving Averages (SMAs), supporting the continuing negative trend.

NZD/USD daily chart

What you need to take care of on  Friday, March 28:

The US Dollar surged on Thursday, helped by hawkish comments from Federal Reserve (Fed) official Waller, who suggested the central bank may keep rates at current restrictive levels for longer. Near-term bond yields advanced, while stock markets also maintained the positive momentum.

European Central Bank (ECB) Board member Fabio Panetta repeated that the risks to price stability in the Euro Zone are diminishing, materializing the conditions for starting to ease monetary policy. Several ECB officials have hinted at a rate cut in June, aligned with President Christine Lagarde.

United States (US) data was generally encouraging. The final estimate of the Q4 Gross Domestic Product (GDP) was upwardly revised to 3.4% from the previous 3.2% estimate. Additionally, the country released Initial Jobless Claims for the week ended March 22, which came in better than anticipated at 210K. Finally, the March Michigan Consumer Sentiment Index was upwardly revised to 79.4, much better than the preliminary estimate of 76.5, while Pending Home Sales were up 1.6% MoM in February, beating expectations.

Most markets will remain closed on Friday amid the Easter Holiday, although Japanese markets will operate normally. Later in the day, the US will publish the core Personal Consumption Expenditures (PCE) Price Index, the Fed’s favorite inflation figure, expected to remain stable at 2.8% YoY.

The Euro was among the worst performers, with EUR/USD settling below the 1.0800 threshold.

GBP/USD ended the day with modest losses after the Gross Domestic Product was confirmed at -0.2% YoY in the last quarter of 2023.

Commodity-linked currencies trade unevenly, with AUD/USD posting a modest decline and settling around 0.6514 amid tepid Australian data, but the USD/CAD falling towards 1.3520, helped by the good performance of stock markets.

Gold was the best performer, and flirts with record highs, with XAU/USD trading around $2,220. 

• Gold price soars to all-time high of $2,225, defying rising Treasury yields and a robust US Dollar.
• Fed Governor Waller's hawkish comments and upbeat US data were no excuse for the advance in Gold and the US Dollar.
• Market anticipation builds for the upcoming release of the Fed’s Core PCE index.

Gold price rallied during the North American session on Thursday and hit a new all-time high of $2,225 in the mid-North American session. Precious metal prices are trending higher even though US Treasury yields are advancing, underpinning the Greenback. Hawkish comments by a Federal Reserve (Fed) policymaker and solid economic data from the United States (US) keep the US Dollar and Gold prices bid. XAU/USD trades at $2,221 and gains more than 1.20%.

Christopher Waller, a Fed Governor, noted the US central bank is in no rush to cut rates, even though he expects the beginning of the easing cycle. However, he needs to see a couple of months’ evidence that inflation is curbing toward the Fed’s 2% goal.

Data-wise, the US economy grew faster than expected. Meanwhile, according to the Initial Jobless Claims (IJC) report, the jobs market remains tight. Further data showed that consumer sentiment improved, according to a poll from the University of Michigan, while Pending Home Sales in February ticked higher than in January.

Ahead in the week, Gold traders are eyeing the release of the Fed’s preferred gauge for inflation, the Core Personal Consumption Expenditure (PCE) price index for the month of February.

Daily digest market movers: Gold price advances in tandem with the US Dollar

• Gold prices seem to be rallying based on speculation of a lower February inflation report in the US. The Core PCE is expected to slow from 0.4% to 0.3% MoM, while the headline PCE is expected to edge higher from 0.3% to 0.4% MoM.
• The US GDP rose by 3.4%, exceeding the preliminary reading of 3.2%, an indication of a strong economy. The Core Personal Consumption Expenditure (PCE) for Q4 2023 hit the Fed’s target of 2% QoQ.
• Initial Jobless Claims for the week ending March 23 increased by 210K, less than the consensus projection of 215K and lower than the previous week. The data could prevent the Fed from cutting rates sooner than market participants estimate.
• The University of Michigan Consumer Sentiment Index rose to its highest level since July 2021, climbing to 79.4, exceeding estimates of 76.5. Pending Home Sales recovered in February, increasing 1.6% MoM after plunging -4.7% in January and above the consensus of 1.5%.
• Money market traders predict a 63% chance that the Fed will slash rates by a quarter of a percentage point in June, lower than Wednesday's 70% odds.

Technical analysis: Gold price pushes above $2,200 as buyers remain in charge

Gold’s uptrend remains intact, although the Relative Strength Index (RSI) is turning overbought as XAU/USD pierces the March 21 high of $2,223. When an asset experiences a significant uptrend, its RSI typically surpasses the 70 mark, signaling that bullish momentum is accumulating. An RSI reading above 80 is often considered indicative of an extreme overbought condition. Therefore, further upside is seen if buyers keep the yellow metal spot price above the latter, paving the way for challenging $2,300.

On the other hand, if XAU/USD dives below $2,200, look for a pullback toward the December 4 high, which turned support at $2,146, that could exacerbate a sell-off and send XAU/USD prices diving toward $2,100. The next support would be the December 28 high at $2,088.

• Even though daily chart indicators reveal weakening momentum, the overall trend remains positive.
• In the hourly chart, the RSI deep in the negative area implies sellers are in charge during the day's trading.
• To maintain momentum, the bulls need to defend the 20-day SMA.

In Thursday's session, the EUR/JPY pair is trading at around 163.40, experiencing a minor loss. The broader perspective leans in favor of the bulls, indicating buying strength that keeps the pair above its 20, 100, and 200-day Simple Moving Averages (SMAs). Despite this, there is evidence of mounting selling pressure on the daily chart.

On the daily chart, the Relative Strength Index (RSI) descended from nearing overbought conditions last week towards 54. The MACD histogram also indicates that buyer momentum might be waning, as inferred from the flat green bars. These market indicators suggest potential near-term volatility in the pair's direction.

EUR/JPY daily chart

Transitioning to the hourly chart, RSI readings convey a more negative sentiment. The latest value stands at 44, signaling sellers as dominant in the short-term movements. The MACD histogram, however, prints green bars which adds neutrality to the intraday outlook.

EUR/JPY hourly chart

In conclusion, despite the negative sentiment on the hourly chart, the daily and broader metrics suggest that bulls maintain control of the bigger picture. The main task fo the buyers is to defend the 20-day SMA at around 163.00 and as long as the pair remains above this level, the outlook will be positive.

• Mexican Peso slips from multi-year lows, reacting to optimistic US growth figures and labor market resilience.
• Strong US GDP growth in Q4 2023 and a robust labor market boosted the US Dollar, a headwind for the Mexican currency.
• Fed’s Waller remains hawkish, adhering to the “higher for longer” mantra.

The Mexican Peso was on the defensive against the US Dollar on Thursday, with buyers capitalizing on the exotic pair's dip toward an over eight-year low of 16.51. Hawkish comments by Federal Reserve (Fed) Governor Christopher Waller and an absent Mexican economic docket sponsored a leg up in the USD/MXN. At the time of writing, the pair trades at 16.62, up  0.50%.

In addition to Fed speeches, US economic data has been the main driver of price action. The US Bureau of Economic Analysis (BEA) revealed that the US economy grew above estimates in the last quarter of 2023, as measured by the Gross Domestic Product (GDP). At the same time, a report by the US Bureau of Labor Statistics (BLS) portrayed a tight labor market, with fewer Americans applying for unemployment benefits.

Further data showed an improvement in the housing market as Pending Home Sales recovered in February from January.

Daily digest market movers: Mexican Peso weighed by hawkish comments of Fed’s Waller

• On Monday, Banxico Governor Victoria Rodriguez Ceja remained dovish via an interview with El Financiero. Governor Rodriguez commented that the battle against inflation hasn’t been concluded, though adding that it would discuss further rate cuts to the main reference rate in upcoming meetings. “When macroeconomic conditions and the inflationary outlook allow us to make additional adjustments to the reference rate to the one we already have, I consider that they would be gradual.”
• Banxico revealed that international reserves grew to $216.9 billion, adding $411 million in US Dollars through March 22.
• Mexico’s Balance of Trade in February printed a deficit of $-0.5 billion, lower than the $-4.31 billion in January but missing expectations of $-0.2 billion. Other data showed that the Unemployment Rate in February dropped from 2.9% to 2.5%, which is below the consensus of 2.8%.
• Mexico’s Indicator of General Economic Activity flashed signs of contraction in January, justifying Banxico’s 25-basis-point rate cut on March 21.
• Fed Governor Christopher Waller delivered hawkish remarks on Wednesday, said that rates need to be higher for longer than expected and that more inflation progress is needed before supporting a rate cut. He sees the beginning of the easing cycle in 2024, though he suggests that back-to-back months of inflation data heading to 2% are needed.
• The GDP in the US rose by 3.4%, exceeding the preliminary reading of 3.2%, an indication of a strong economy. The Core Personal Consumption Expenditure (PCE) for Q4 2023 hit the Fed’s target of 2% QoQ.
• Initial Jobless Claims for the week ending March 23 rose to 210K, below market expectations of 215K and lower than the previous week. The data shows that the labor market remains tight, which could deter the Fed from cutting rates.
• The University of Michigan Consumer Sentiment index rose to its highest level since July 2021, climbing to 79.4, exceeding estimates of 76.5. Pending Home Sales recovered in February, increasing 1.6% MoM after plunging -4.7% in January and above the consensus of 1.5%.

Technical analysis: Mexican Peso is on the backfoot as USD/MXN edges toward the 16.60 region

The USD/MXN posted a reversal after dropping to a multi-year low of 16.51, with buyers emerging at around those levels, lifting the exchange rate to the 16.60 region. Nevertheless, they’re facing strong resistance at the previous year's low of 16.62, which turned resistance. A breach of the latter will expose January’s monthly low of 16.78, followed by the March 19 high at 16.94. Up next would be the 50-day Simple Moving Average (SMA) at 16.97.

On the other hand, if the pair dives below 16.51, look for a test of October’s 2015 low of 16.32, ahead of the 16.00 psychological figure.

USD/MXN Price Action – Daily Chart

• The Pound finds support above 1.2580 but it remains unable to extend gains beyond 1.2670.
• Soft UK data and hawkish comments from Fed speakers are weighing on the Sterling.
• The USD has failed to capitalize on better-than-expected US GDP and Jobless Claims figures

The Sterling found support at the 1.2580 area earlier today, before bouncing up, favoured by a somewhat softer US Dollar during Thursday’s US Session. The pair, however, remains capped below 1.2665, which leaves the broader bearish trend unchanged.

The pair has been trading back and forth within a 100-pip horizontal channel, consolidating losses following a decline from Year-To-Date highs near 1.2900 in early March.

Soft UK data and hawkish Fedspeak weighing on the GBP

UK macroeconomic figures have weighed on the Sterling. The quarterly GDP revealed that the country entered recession in the last months of 2023 and inflation has cooled faster than expected, boosting hopes that the BoE could start cutting rates at the same time as the Fed, if not earlier.

In the US, Fed Governor Waller suggested that the Fed might keep interest rates higher for longer, which provided a fresh boost to the US Dollar. Investors are now looking at Friday’s PCE Prices Index to reassess the chances  of a June rate cut

Macroeconomic data released on Thursday revealed that the US economy grew at a faster-than-expected pace in the fourth quarter while Weekly Jobless Claims declined, adding to the evidence of the strong US labour market. The impact on the US Dollar, however, has been minor.

GBP/USD Technical levels to watch

• Dow Jones is trading near opening levels with Wall Street looking for direction in the last trading day of the quarter. 
• Real Estate and Energy shares are leading gains with the Tech sector lagging on portfolio adjustment moves.
• Investors’ focus is on Friday’s PCE Prices Index data and Fed Powell’s speech.

The Dow Jones Industrial Average (DJIA) is trading less than 0.1% higher on Thursday with the main Wall Street indices looking for direction in the last trading day of the quarter.

The Dow Jones Index is trading nearly 0.01% higher at 39,766 on track to close the quarter with more than a 6% gain. Equity markets have been boosted by hopes of lower borrowing costs coupled with a strong economic momentum and investors’ optimism about the potential of Artificial Intelligence. 

The benchmark S&P 500 is 0.1% higher, at 5,254, while the NASDAQ Composite trades practically at opening levels at 16,404.

Dow Jones news

The Energy and Real Estate sectors are leading gains in the Dow Jones on Thursday with advances of 0.65% and 0.56%, respectively, while the Communication Services, 0.42% down, and the Technology sector, 0.13% lower, are lagging behind.

Walt Disney (DIS) is the best performer, up 1.46% at $122.79, followed by Intel (INTC), which has risen 1.30% to $44.37. The big tech companies are leading losses, probably due to end-of-quarter portfolio adjustments,  which leaves Apple (AAPL) as the biggest loser, down 1.24% to $171.17, followed by Home Depot (HD) with a 0.6% decline to $383.58.

Earlier on Thursday, US Q4 Gross Domestic Product has been upwardly revised to a 0.6% growth from the 0.4% previously estimated. Beyond that, weekly Jobless Claims declined to 210,000 from 212,000 in the week of March 22, against market expectations of an incremental move to 215,000.

The focus now is on Friday’s PCE Prices Index, which is expected to provide further clues on the Federal Reserve’s monetary policy, and the Fed Chair speech due shortly afterward.
 

Dow Jones technical outlook

The Dow Jones Index remains bullish, standing comfortably above previous highs, and the 4-hour 50 Simple Moving Average (SMA), at 39,250. Below here, the next downside targets lie at the 39,000 level and the trendline support at 38,775. 

On the upside, resistances at the 39,900 previous high and the 40,000 psychological level are likely to offer significant pushback for bulls.

Dow Jones Industrial Average 4-Hour Chart

• Canadian Dollar is regaining lost ground after upbeat Canadian GDP data.
• US Dollar looks weak despite good US Jobless claims, upward revision of Q4 GDP.
• The focus is now on Friday’s PCE Prices Index and Fed Powell’s speech.

The Canadian Dollar (CAD) is trading higher for the fourth consecutive day on Thursday, yet with price action contained within previous ranges. Canada’s Gross Domestic Product bounced up strongly in January with preliminary estimations for February pointing to further economic expansion. These figures have restored confidence in Canada’s economic outlook, cooling off market expectations of imminent BoC rate cuts.

In The US, the larger-than-expected decline in US Weekly Jobless Claims and the upwardly revised Q4 Gross Domestic Product have been unable to provide a meaningful impact to the US Dollar. The Greenback is paring previous gains after having opened Thursday on a strong note, following hawkish remarks from Fed Governor Waller.

The US Dollar Index, which measures the value of the USD against a basket of the most traded currencies, is practically unchanged on the daily chart at the US session opening time. Investors are showing caution with all eyes on Friday’s US PCE Prices Index and a speech by Federal Reserve (Fed) Chair Jerome Powell at a monetary policy conference in San Francisco. Traders are looking for further clues about the central bank’s monetary policy plans.

Daily digest market movers: USD/CAD pulls back on improving Canadian economic outlook

• The Canadian Dollar is moderately bullish on its way to complete a four-day winning streak, favoured by upbeat Canadian data.
• Canadian GDP expanded at a 0.6% pace in January, beating expectations of 0.4% growth and following a 0.1% contraction in December.
   
• US Jobless Claims declined to 210K in the week of March 22 from 212K in the previous week against market expectations of an increase to 215K.
   
• Continuous Jobless claims have increased to 1.189M from 1.795M in the previous week, offsetting the impact of the upbeat headline reading.
   
• The final reading of the Q4 US GDP has been revised to a 3.4% growth from the 3.2% expansion previously estimated.
   
• Futures markets are pricing a 55% chance that the Fed will start cutting rates in June, down from levels above 60% on Wednesday, CME Group FedWatch Tool shows.
   
• Fed Governor Christopher Waller warned that there is no rush to start cutting rates, which has poured some cold water on the market consensus of three rate cuts in 2024.
   
• The highlight of the week is that the core PCE Prices Index is expected to have risen at a 2.8% yearly pace and 0.4% on the monthly rate in February, from 2.8% and 0.3%, respectively, in January.

• The Q4 US GDP was revised higher to 3.4%, while Initial Jobless Claims came strong.
• The March Chicago PMI came in lower than expected.
• US Treasury yields stand mixed and limit the upside for the USD.

The US Dollar Index (DXY) initially soared to 104.70 but then stabilized at 104.50. On the positive side, Gross Domestic Product (GDP) revision and strong weekly Initial Jobless Claims figures from the US benefited the Greenback. But the weaker-than-expected Chicago PMI seems to have brought down the USD’s momentum.

The US economy appears steady with the Federal Reserve’s (Fed) stance treading a cautious path. Despite upward revisions in inflation projections, the Fed, under Powell's guidance, refrains from overreacting to short-term spikes in inflation. The speculated start of an easing cycle in June remains dependent on incoming data. 

Daily digest market movers: DXY fails to hold its rally to highs since February, eyes on PCE

• Unemployment data came in slightly below consensus at 210K against the anticipated 215K for the week ending on March 23.
•  Q4 Gross Domestic Product (GDP) was revised higher to a yearly growth of 3.4%.
• On the negative side, the March Chicago Purchasing Managers Index (PMI) data released by the Institute for Supply Management was below expectations at 41.4, against the forecasted 46 and previous 44.
• US Treasury bond yields show mixed results with the 2-year yield at 4.60%, 5-year yield at 4.20%, and 10-year yield at 4.19%.
• The probability of a rate cut in June has dropped to 66% compared to 85% at the beginning of the week, which seems to be cushioning the Greenback.
• The week’s highlight will be the headline Personal Consumption Expenditures (PCE) due on Friday, which is expected to have risen by 2.5% YoY, while the core measure is seen coming in at 2.8%. 
• The outcome of the Fed’s preferred gauge of inflation will dictate the pace of the USD for the short term.

DXY technical analysis: DXY bulls are in command, but struggle to make a significant upward move

The Relative Strength Index (RSI) is mildly up around 60, while the Moving Average Convergence Divergence (MACD) manifests green bars that suggest a presence of bullish momentum. Yet it remains to be seen if the current buying traction can spur the DXY to higher levels as the MACD is also hinting at limited upward potential.

Looking broadly, the DXY sits comfortably above the 20, 100 and 200-day Simple Moving Averages (SMAs), indicating that the buying momentum is stronger in a larger context. This suggests that despite short-term bearish undertones, the bulls have a firmer grip in the long run.

Despite their dominance, the bulls are currently steady but seem to be struggling to gain more ground, which can impact the short-term dynamic of the DXY. 

The Fed’s preferred inflation gauge, the Core Personal Consumption Expenditure (PCE), will be released by the US Bureau of Economic Analysis (BEA) on Friday, March 29 at 12:30 GMT and as we get closer to the release time, here are the forecasts of economists and researchers of seven major banks.

The US core PCE Price Index is expected to remain steady at 2.8% year-on-year. The monthly underlying inflation data is forecasted to have increased by 0.3%, slowing from January’s 0.4% advance. 

Commerzbank

ING

TDS

NBF

SocGen

CIBC

Citi

• USD/JPY hovers at 151.28, with traders wary of potential Japanese market intervention to support the Yen.
• US Q4 GDP growth surpasses expectations at 3.4%, while jobless claims and consumer sentiment indicate a robust economy.
• Fed Governor Waller's hawkish stance underscores the need for sustained inflation progress, influencing rate cut expectations.

The USD/JPY remains subdued during the North American session, trading at 151.28, almost flat, amid renewed fears of Japan’s intervening in the markets to cap the Japanese Yen (JPY) weakness.

USD/JPY trades cautiously with US economic growth and job data in focus, alongside Japan's intervention warnings

Market sentiment is mixed amid thin liquidity trading as the year's first quarter ends. US economic data revealed the country grew 3.4% in the last quarter of 2023, exceeding the preliminary reading of 3.2%, according to the Bureau of Economic Analysis.  In the meantime, inflation measures on a quarterly basis hit the Federal Reserve’s (Fed) objective of 2%,

Other data showed that Initial Jobless Claims for the week ending March 23 were below market expectations of a 215K increase and came to 210K, lower than the previous week. The data shows that the labor market remains tight, which could deter the Fed from cutting rates.

At the same time, the University of Michigan Consumer Sentiment index rose to its highest level since July 2021, climbing to 79.4, exceeding estimates of 76.5. Pending Home Sales recovered in February, increasing 1.6% MoM after plunging -4.7% in January and above the consensus of 1.5%.

On Wednesday, the Fed’s Governor Christopher Waller delivered hawkish remarks. He said that rates need to be higher for longer than expected and that more inflation progress is needed before supporting a rate cut. He sees the beginning of the easing cycle in 2024, though he suggests that back-to-back months of inflation data heading to 2% are needed.

On the Japanese front, the Bank of Japan Summary of Opinions revealed that members said that Yield Curve Control, negative interest rates, and other measures of stimulus accomplished their roles.  Meanwhile, Japanese authorities' verbal intervention deterred traders from opening fresh long bets in the USD/JPY pair as intervention threats loom.

USD/JPY Price Analysis: Technical outlook

The daily chart suggests the USD/JPY has peaked at around the 151.20/151.90 area, although the bullish bias remains. A clear break above 152.00, could pave the way for challenging 153.00. On the other hand, a pullback is seen if sellers push the exchange rate below 151.00, with the Tenkan/Sen seen as first support at 150.44, followed by 150.00 and the Senkou Span A at 149.84.

The Mexican Peso (MXN) has now delivered year-to-date total returns of 5.36% against the mighty US Dollar (USD). Economists at ING analyze MXN outlook.

The total return hero

Gold prices have been scaling new highs in March. Economists at ANZ Bank analyze the yellow metal’s outlook.

A retracement looks likely in the short term

See – Gold Price Forecast: Push back in rate cut expectations from March to June may cap XAU/USD rally – ANZ

• AUD/USD finds a temporary support near 0.6500 though downside remains favored.
• RBA’s high interest rates have deepened Australia’s cost of living crisis.
• The US Dollar retreats from a six-week high despite upwardly revised Q4 GDP estimates.

The AUD/USD pair finds support slightly below the psychological support of 0.6500 in the early American session on Thursday. The Aussie asset discovers some buying interest as the US Dollar retreats after refreshing six-week high. However, the broader appeal of the Aussie asset is still downbeat as investors remain uncertain ahead of the United States core Personal Consumption Expenditure Price Index (PCE) data for February, which will be published on Friday.

The core PCE will provide cues about when the Federal Reserve (Fed) will begin reducing interest rates. The annual underlying inflation data is estimated to have grown steadily by 2.8%, with monthly growth declining to 0.3% from 0.4% in January.

The US Dollar Index failed to sustain six-week highs near 104.72 despite the final estimate from the US Bureau of Economic Analysis (BEA) for the final quarter of 2023 showing that the economy grew by 3.4%. As per the preliminary estimates, the economy expanded by 3.2%.

Meanwhile, the Australian Dollar broadly remains on the backfoot as the Reserve Bank of Australia's (RBA) higher Official Cash Rate (OCR) has deepened the cost-of-living crisis. The Australian Bureau of Statistics reported that monthly Retail Sales grew at a slower pace of 0.3% in February, against expectations of 0.4% and the former reading of 1.1%.

AUD/USD is expected to test the breakdown of the Ascending Triangle chart pattern near 0.6520 formed on a four-hour timeframe. The upward-sloping border of the aforementioned pattern is plotted from February 13 low at 0.6442 while the horizontal resistance is placed from January 30 high at 0.6626.

Downward-sloping 20- and 50-period Exponential Moving Averages (EMAs) at 0.6525 and 0.6538, respectively, indicate that near-term demand is weak.

The 14-period Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, indicating indecisiveness among market participants.

Investors might build fresh shorts after a pullback move near 0.6530. Profits on shorts would be booked near the psychological support of 0.6500 and February 13 low near 0.6440.

On the contrary, a sharp recovery move above March 26 high at 0.6560 will drive the asset toward the round-level resistance of 0.6600, followed by March 12 high at 0.6640.

AUD/USD four-hour chart

USD rally is gaining traction. Economists at Scotiabank analyze Greenback’s outlook.

USD firms after Waller says “no rush” on rates

USD/CAD has edged slightly higher to retest the 1.3600+ area. Economists at Scotiabank analyze the pair’s outlook.

USD’s latest push above the 1.3600 area appears to have stalled out again

• Silver price continues falling after touching the top of its range and forming a Bearish Engulfing candlestick pattern. 
• The MACD has crossed its signal line giving a sell signal. 
• Silver price will probably fall towards a cluster of MAs in the $23.000s
   

Silver price (XAG/USD) is trading in the $24.580s on Friday. It has just reversed after touching the top of a multi-month range. 

Silver rallied up during the first half of March until it reached the ceiling of a long-term range at around $25.750. At that point it reversed and formed a Bearish Engulfing Japanese candlestick pattern on the following day, Mar 21 (circled). 

A Bearish Engulfing is an indicator of a short-term reversal in price. It forms when a red candlestick’s whole daily range completely encloses, or “engulfs”, the previous day’s range. The appearance of the pattern adds a further bearish hue to the picture. 

Silver versus US Dollar: Daily chart 

The Moving Average Convergence/ Divergence (MACD) momentum indicator has crossed below its signal line, giving a sell signal. The MACD is an especially reliable indicator within range-bound markets and adds credence to the bearish view. 

The pair will probably continue south to a potential target at the cluster of major moving averages, in the lower $23.000s. The topmost is the 100-day Simple Moving Average (SMA) at $23.550. 

A break below the $24.320 levels of March 27 would provide more bearish confidence of a move lower.  

Alternatively if bulls take back control, a break back above the $25.770 highs of Thursday would probably indicate an extension of the uptrend. 

A decisive break above the range highs would indicate more upside. Such a move would be expected to then reach a conservative target at the 0.618 Fibonacci extrapolation of the height of the range from the breakout point higher, and a target at $28.524.

A decisive break is one in which a level is breached by a long green candlestick which closes near its high, or three green candlesticks that break above the level.

• US GDP growth for Q4 is revised higher to 3.4% from 3.2%.
• US Dollar Index stays in positive territory above 104.50.

The United States' Gross Domestic Product (GDP) grew at an annual rate of 3.4% in the fourth quarter, the US Bureau of Economic Analysis (BEA) said in its final estimate on Thursday. The BEA reported in its previous estimate that the real GDP growth was 3.2%.

"The update primarily reflected upward revisions to consumer spending and nonresidential fixed investment that were partly offset by a downward revision to private inventory investment," the BEA explained in the press release. 

Market reaction

The US Dollar Index (DXY) showed no immediate reaction and was last seen rising 0.25% on the day at 104.55.

• Initial Jobless Claims in the US decreased by 2,000 in the week ending March 23.
• US Dollar Index clings to modest daily gains above 104.50.

There were 210,000 initial jobless claims in the week ending March 23, the weekly data published by the US Department of Labor (DOL) showed on Thursday. This print followed the previous week's print of 212,000 (revised from 210,000) and came in better than the market expectation of 215,000.

Further details of the publication revealed that the advance seasonally adjusted insured unemployment rate was 1.2% and the 4-week moving average stood at 211,000, a decrease of 750 from the previous week's revised average.

"The advance number for seasonally adjusted insured unemployment during the week ending March 16 was 1,819,000, an increase of 24,000 from the previous week's revised level," the publication read.

Market reaction

The US Dollar Index clings to modest daily gains above 104.50 in the early American session.

GBP/USD holds support below 1.2600. Economists at Scotiabank analyze the pair’s outlook.

Cable based around 1.2590/1.2600

• The New Zealand Dollar weakens in its most traded pairs after weak consumer confidence data. 
• The New Zealand economy suffers from the twin evils of high inflation and weak growth, further weighing on NZD. 
• The NZD/USD chart is showing a bearish pattern underway with new lows probably on the radar. 

The New Zealand Dollar (NZD) is weakening across the board on Thursday, after a leading indicator of consumer confidence in New Zealand deteriorated sharply in February. 

The currency is further hampered by an economy that is suffering from the twin evils of high inflation and low growth, leaving the central bank with little room for maneuver. 

New Zealand Dollar undermined by a weak Roy Morgan 

The New Zealand Dollar has depreciated after a sharp fall in the Roy Morgan Consumer Confidence indicator, a leading index that measures the “level of consumer confidence in economic activity.” 

The data released overnight showed the index falling to 86.4 in February from 94.5 in January, the lowest level since July 2023, according to ANZ bank. 

Roy Morgan Consumer Confidence: Monthly

New Zealand fell into a technical recession in Q4 of 2023, following two quarters of negative economic growth.

Inflation, as measured by the Consumer Price Index, remains relatively high at 4.7% in Q4 after falling from 5.6% in Q3. The largest contributor was Housing and Housing Utilities, which showed a 4.8% rise and accounts for the largest share of the basket. 

The poor economic data suggests the Reserve Bank of New Zealand (RBNZ) is trapped: it must keep interest rates high at 5.5% in order to bring down inflation but would probably prefer to reduce interest rates to stimulate growth. This is probably a further factor weighing on the NZD. 

The structural problem of a tight labor market due to insufficient workers limits growth and keeps wages relatively high. 

Technical Analysis: New Zealand Dollar in bearish pattern against USD

NZD/USD price, which measures the buying power of one New Zealand Dollar in US Dollar (USD) terms, is falling in a bearish three-wave pattern, known as a Measured Move. 

The pattern consists of three waves, usually labeled ABC, in which wave A and C are usually of the same length. 

 New Zealand Dollar versus US Dollar: 4-hour chart

Assuming the pattern unfolds as expected, the pair is likely to continue its decline until it reaches the target for the end of wave C, located at 0.5847. 

NZD/USD has already broken below the conservative target for the pattern at 0.5988, measured as wave C ending at the 0.618 Fibonacci ratio of the length of wave A. 

The pair is in a short-term downtrend which, according to the adage that “the trend is your friend,” is likely to continue. 

The Relative Strength Index (RSI) momentum indicator is converging slightly with price, which is a mildly bullish significator. Convergence occurs when price falls to lower lows but RSI fails to reflect this. In the case of NZD/USD, the RSI is not as low as it was on March 19 even though the price is. 

This could indicate the possibility of an upside correction occurring, although the dominant downtrend would still be expected to resume once the correction was complete.

• The US Dollar extends its rally to a three-day winning streak. 
• Traders are diving into the Greenback on Fed’s Waller hawkish tilt. 
• The US Dollar Index jumps to a new high for March. 

The US Dollar (USD) rallies and rejoices with the return of King Dollar after Fed Board Member Christopher Waller has pulled the plug on a June interest-rate cut. The Greenback is rolling through the markets and is up against every major G20 peer. Markets are heading into the direction of fewer and later rate cuts while the economy and inflation flair up.

A very chubby calendar is ahead on Thursday, although many data are finalreadings from preliminary estimates and thus have less potential to move markets. Examples of these are the US Gross Domestic Product reading for Q4 and the University of Michigan numbers for March. Rather look for the Jobless Claims and the Chicago Purchasing Managers Index (PMI) to trigger a bit of follow-through in the US Dollar strength this Thursday. 

Daily digest market movers: Cherry picking in the data

• The first batch of data is due at 12:30 GMT, and can be cut into two pieces:
  • The US Gross Domestic Product final reading for Q4 will be released:
    • Headline GDP is expected to remain unchanged from the prior estimate at 3.2%.
    • The GDP Price Index  is set to remain at 1.7%.
    • Core Personal Consumption Expenditures is expected at 2.1%.
  • This week’s Jobless Claims:
    • Initial Claims are expected to come out at 215,000, a touch higher from last week’s 210,000.
    • Continuing Claims should remain stable at 1.807 million.
• The Chicago Purchasing Manager Index for March is expected to head from 44 to 46 at 13:45 GMT.
• At 14:00 GMT, the final reading for the University of Michigan for March will come out:
• Consumer Sentiment is expected to remain unchanged at 76.5.
• Consumer Inflation expectations will remain stable as well at 2.9%.
• The Kansas Fed Manufacturing Index for March will be released at 15:00 GMT, and was previously at 3. No forecast is available.
• Equities are mildly in the green in the European trading session. US Equity futures look rather flat ahead of the opening bell. 
• According to the CME Group’s FedWatch Tool, expectations for the Fed’s May 1 meeting are at 94.8% for keeping the fed funds rate unchanged, while chances of a rate cut are at 5.2%.
• The benchmark 10-year US Treasury Note trades around 4.21%, up from 4.18% earlier this week. 

US Dollar Index Technical Analysis: Choke holding doves

The US Dollar Index (DXY) got fired up by Fed’s Waller overnight after the official pushed back against June rate cut expectations and obliterated any hopes for cuts from the US Federal Reserve before the summer. US Dollar bulls chased the DXY higher on the back of it, which results in a fresh high for March and the February highs are coming into reach now. Should the Personal Consumption Expenditures (PCE) Price Index bear a red hot inflation label again, expect for the DXY to quickly reach 105.00 and higher. 

That first pivotal level for the DXY at 104.60 has been broken, where last week’s rally peaked.  Further up, 104.96 remains the level to beat in order to tackle 105.00. Once above there, 105.12 is the last resistance point for now before the Relative Strength Index (RSI) will trade in overbought levels. 

Support from the 200-day Simple Moving Average (SMA) at 103.75, the 100-day SMA at 103.48, and the 55-day SMA at 103.72 are unable to show their importance as support because traders didn’t wait for a drop to those levels for a turnaround. The 103.00 big figure looks to remain unchallenged for longer, after the decline in the wake of the Fed meeting last week got turned around way before reaching it. 

• Natural Gas prices extend losses on Thursday after falling more than 3% on Wednesday. 
• Traders are selling Gas contracts with a stronger US Dollar killing off global economic recovery. 
• The US Dollar Index snaps March’s peak and rallies to test February’s highs. 

Natural Gas (XNG/USD) sank below $1.80 on Thursday after prices already slid by more than 3% on Wednesday. The move came in tandem with a stronger US Dollar after US Federal Reserve official Christopher Waller pushed back against the possibility of interest-rate cuts for June. This came as a cold shower to markets, which were counting on that June rate cut for a boost in the economy and thus a boost in demand. 

The DXY US Dollar Index jumped on the back of these comments to a fresh high for March. The 104.60 level, which was a line in the sand, was broken on Thursday ahead of US Gross Domestic Product’s final reading for Q4 and the Personal Consumption Expenditures Price Index (PCE) on Friday. 

Natural Gas is trading at $1.77 per MMBtu at the time of writing.  

Natural Gas news and market movers: Global demand drops

• A decline in China’s LNG inventories is becoming rather bad news for Gas prices, with Chinese buyers commenting to Bloomberg that they are awaiting a further decline in prices before considering refilling current drawdown levels.
• Japanese electricity generator Jera Co. is conducting planned outages at its gas-fueled plants in an effort to conserve liquefied natural gas after bad weather causes delays in LNG deliveries in the Tokyo Bay area. 
• ANZ Bank revised its outlook for European gas prices to a further uprising with ongoing attacks between Russia and Ukraine on gas storage facilities creating the ideal situation for an energy crunch. 
• The Energy Information Administration (EIA) will release around 14:30 GMT the weekly gas storage numbers. Previous was a build of 7 billion cubic feet, and a draw of 28 billion cubic feet is expected for this week. 
•  

Natural Gas Technical Analysis: Steps reversed

Natural Gas prices are taking a turn for the worse, sinking below $1.80 after a mixture of elements quickly made sentiment turn 180 degrees after the uprising on Tuesday. It was Fed’s Waller though who confirmed what markets were already thinking: those anticipated rate cuts are not going to come that quickly. This dampens hopes for a quick economic recovery and more growth potential, with thus demand being capped and even being revised to the downside. Further downside pressure is possible with the heating season ending and the summer lull in Gas markets ahead. 

On the upside, the key $1.97 level needs to be regained first, with the 55-day Simple Moving Average (SMA) coming in as well. The next key mark is the historic pivotal point at $2.13. Should Gas prices pop up in that region, a broad area opens up with the first cap at the red descending trend line near $2.21.

On the downside, multi-year lows are still nearby with $1.65 as the first line in the sand. This year’s low at $1.60 needs to be kept an eye on as well. Once a new low for the year is printed, traders should look at $1.53 as the next supportive area. 

Natural Gas: Daily Chart

EUR/USD is edging off its intraday low open but remains below 1.0800. Economists at Scotiabank analyze the pair’s outlook.

Resistance is seen at 1.0845/1.0855

• USD/JPY trades back and forth above 151.00 ahead of the Fed’s preferred inflation gauge.
• Risk-perceived currencies are facing the heat of uncertainty ahead of the US core PCE for February.
• Investors need more clarity about BoJ’s intervention to support the Japanese Yen.

The USD/JPY pair trades sideways in a narrow range around 151.30 in the London session on Thursday. The asset is expected to remain stuck in a tight range as investors are expected to build fresh positions after getting more clarity on the Bank of Japan’s stealth intervention plans in the FX domain to support weakening Japanese Yen. Also, the United States core Personal Consumption Expenditure Price Index (CPE) data, which will be published on Friday, is expected to keep investors on the sidelines.

The annual inflation gauge is expected to have grown at a steady pace of 2.8%. The monthly underlying inflation data is forecasted to have increased slowly by 0.3% from January’s reading of 0.4%. Investors will keenly focus on the inflation data to gauge when the Federal Reserve (Fed) may begin trimming interest rates.

An asset-specific action is observed in global markets as risk-sensitive currencies have been hit hard amid uncertainty ahead of US core PCE for February. While S&P 500 futures are unchanged. The US Dollar Index (DXY) refreshes six-week high at 104.72. 10-year US Treasury yields have rebounded to 4.23%.

The US Dollar strengthens as Fed Governor Christopher Waller’s commentary on the interest guidance negatively impacts Fed expectations for rate cuts in the June meeting. Fed Waller said there is no need to rush for policy rate cuts due to sticky price pressures and a strong economic outlook. Waller added, “Further progress expected on lowering inflation "will make it appropriate" for the Fed to begin reducing the target range for the federal funds rate this year," reported Reuters.

The expectations for BoJ’s intervention in the FX domain have increased as investors lack confidence that Japan’s central bank will not be able to move forward with positive interest rates due to an uncertain wage growth outlook. However, the summary of opinions at the BoJ's March meeting, released on Thursday, showed that many policymakers saw the need to go slow in phasing out ultra-loose monetary policy, Reuters reported.

Speculation over Japanese FX intervention remains high. Economists at ING analyze the USD/JPY outlook after the pair touched a multi-decade high near 152.00 on Wednesday.

Higher US rates and low volatility weigh

• Gold price hovers around $2,200, exhibiting strength ahead of US core PCE Price Index data.
• The US Dollar refreshes to a six-week high amid cautious market sentiment.
• 10-year US bond yields rise as Fed rate cut bets for June have dropped.

Gold price (XAU/USD) holds onto gains near $2,200 in Thursday’s European session. The precious metal exhibits firm footing ahead of the United States core Personal Consumption Expenditure (PCE) Price Index data for February, which will be published on Friday. 

The Federal Reserve (Fed) could dial back rate cut expectations if the underlying inflation data suggests price pressures persist. Such a scenario would lead to an increase in yields on interest-bearing assets, such as Treasury bonds, whose appeal strengthens in a high-inflation environment. On the contrary, softer-than-expected inflation could boost expectations for a Fed rate cut in the June meeting, and support the broad narrative of three rate cuts for overall 2024. 

The Fed is expected to maintain a cautious approach to rate cuts as initiating them too soon or lowering them too much could reinforce price pressures again.  Meanwhile, a delay in cutting interest rates could result in unnecessary pressure on the labor market and the economy.

The US Dollar Index (DXY), which measures the US Dollar’s value against six major currencies, refreshes to a six-week high at 104.72 amid dismal market sentiment ahead of the release of the Fed’s preferred inflation gauge.

Daily digest market movers: Gold price rises slightly while US Dollar refreshes six-week high

• Gold price holds gains slightly below $2,200 ahead of the US core PCE Price Index data for February. The Federal Reserve’s preferred inflation gauge is expected to have grown at a steady pace of 2.8% on year. The monthly underlying inflation data is forecasted to have increased by 0.3%, slowing from January’s 0.4% advance. Investors will keenly focus on the inflation data to gauge when the Fed may begin trimming interest rates.
• Stubborn inflation data could allow the Fed to maintain a hawkish rhetoric. Fed policymakers have been reiterating that rate cuts are only appropriate when they are convinced that inflation will return sustainably to the 2% target. Sticky price pressures, in turn, would weaken the Gold’s appeal as it would increase the opportunity cost of investing in it. 
• According to the CME FedWatch tool, traders are pricing in a 60% chance that a rate cut will be announced in June. The chances for Fed pivoting to rate cuts in June have dropped from 70% on Thursday after a slightly hawkish guidance from Fed Governor Christopher Waller.
• Christopher Waller said in a speech at an Economic Club of New York on Wednesday that the Fed needs not to rush for rate cuts. However, he keeps hopes of rate cuts alive saying, “Further progress expected on lowering inflation will make it appropriate for the Fed to begin reducing the target range for the federal funds rate this year," reported Reuters.

Technical Analysis: Gold hovers close to $2,200 resistance

Gold price trades close to the crucial resistance of $2,200. The precious metal aims to recapture the all-time highs slightly above $2,220. All short-to-long term Exponential Moving Averages (EMAs) are sloping higher, suggesting strong near-term demand.

The Gold price could face a hurdle near $2,250, which coincides with the 161.8% Fibonacci extension, after breaking above the resistance of $2,220. The Fibonacci tool is plotted from December 4 high at $2,144.48 to December 13 low at $1,973.13. On the downside, December 4 high at $2,144.48 will support the Gold price bulls.

The 14-period Relative Strength Index (RSI) rebounds after cooling down to 64.00 from the extremely overbought zone.

• WTI Oil is in a short-term uptrend within a rising price channel. 
• The commodity has pulled back and is consolidating – its next move could be critical. 
• A move below the range lows could flip the trend bearish; a rise above the March high bullish.  

WTI Oil price (OIL) is trading within an ascending channel whose rising peaks and troughs indicate the commodity is in a short-term uptrend. 

Given the old adage that “the trend is your friend till the bend at the end,” the price is favored to continue rising in the short-term until the weight of evidence suggests it has reversed. 

WTI Oil: 4-hour chart

The trend on longer time frames is less clear, suggesting some caution needs to be taken in adopting an overly bullish view. 

On March 19, Oil price peaked at $83.05 before rolling over. A combination of resistance from the 100-week Simple Moving Average (SMA) (not shown) and the top of the price channel were probably the catalysts for the rejection. 

Oil price has since yo-yoed in a range between roughly $80.20 and $82.00. 

Although the pair retains its short-term uptrend intact it is at risk of reversing lower unless it can print a higher high. 

A break below the $80.20 range lows would indicate peaks and troughs were now in a  falling pattern rather than rising, and that the short-term trend was bearish. This would start to push the odds in favor of bearish bets. 

Such a move would probably lead to a decline back down within the channel to an initial target at $78.60-80 where a combination of major Moving Averages converge, supplying dynamic support for the commodity. 

Alternatively a break above the $83.05 highs would indicate a continuation of the short-term uptrend, with the next possible target in the upper $83.00s, perhaps $83.90 to put a number on it.  

Gold is holding up well near the $2,200 mark. Economists at Commerzbank analyze the yellow metal’s outlook.

The market seems to be underestimating the risk that rate cuts will come later and be less substantial

European Central Bank (ECB) executive board member Fabio Panetta said on Thursday, “the conditions to start easing monetary policy are materializing.”

Additional quotes

Restrictive policy is dampening demand and contributing to a rapid fall in inflation.

The risks to price stability have diminished.

Market reaction

Downbeat German data combined with the dovish remarks are weighing on the Euro, as EUR/USD currently loses 0.42% on the day to trade at 1.0780.

The US Dollar (USD) is no rush to sell off, economists at ING say.

Short-dated interest rate differentials are moving in favour of the Dollar

• USD/CAD pushes higher on USD strength after Fed officials advocate caution in cutting interest rates. 
• Oil remains bid despite higher inventories as official government figures moderate previous data. 
• BoC could turn dovish at the next meeting on lower inflation and negative growth outlook. 

USD/CAD continues channeling higher, up by almost a tenth of a percent and trading above 1.3600 on Thursday. The pair is benefiting from a general appreciation in the US Dollar (USD) on the back of expectations the Federal Reserve (Fed) will delay cutting interest rates, a key driver of FX markets. 

US Dollar versus Canadian Dollar: 4-hour chart

The outlook for Canada’s largest export Crude Oil, has hampered the Canadian Dollar (CAD) meanwhile, after a surprise rise in US stockpile data denoted flagging demand. Although WTI Oil is rising on Thursday – due to a more official source of stockpile data from the Energy Information Administration (EIA) moderating the initial data – Crude’s outlook remains uncertain. 

Fed officials caution against hasty rate cuts 

Overall stronger growth data and stickier-than-expected inflation in the US have led a series of Fed speakers to question whether the conditions are right for a rate cut in June. With interest rates now expected to remain higher for longer, the US Dollar (USD) has gained a boost, since higher interest rates tend to attract greater inflows of foreign capital. 

Policymakers in Canada have been less vocal about cutting interest rates and at the last Bank of Canada (BoC) meeting BoC Governor Tiff Macklem said it was still too early to consider cutting interest rates as more time was needed to ensure inflation had come down to the BoC’s 2.0% target. 

BoC may change tone

The divergence in policy stances between the two central banks would normally be expected to favor the Canadian Dollar over the US Dollar (bearish for USD/CAD), however, since Maclem spoke, Canadian inflation data for February has shown a fairly steep drop. 

The core Consumer Price Index, which is the metric most central banks favor for targeting price stability, fell to 2.1% YoY in February, from 2.4% in January, placing it just a tenth of a percent above the BoC’s target, according to data from Statistics Canada. 

Headline inflation also slowed to 2.8% from 2.9% and undershot expectations of 3.1%. The cooling inflation data suggests the BoC could shift their stance from its current “mute” setting at the next policy meeting on April 10. 

Apart from disinflation there may be other reasons why the BoC may feel a need to start cutting interest rates. Canada’s economy is in comparatively worse shape than the US’s and it could do with the panacea of lower interest rates to help stimulate activity. 

Canada’s  GDP growth rate is slower, it has higher unemployment and – in the words of BoC Assistant Deputy Governor Carolyn Rogers – suffers from “low productivity” and “poor levels of investment”. 

In addition, the BoC’s policy rate is lower at 5.0% than the fed funds rate of 5.25%-5.50%, a differential which mildly favors the US Dollar over the CAD.

USD/JPY is trading sideways near 151.35. Economists at Société Générale analyze the pair’s outlook.

150.20 is first support

• A combination of factors drags the NZD/USD pair to a fresh YTD trough on Thursday.
• Rising bets for a rate cut by RBNZ in July weigh on the Kiwi amid a softer risk tone.
• Sustained USD buying exerts additional pressure and contributes to the ongoing slide.

The NZD/USD pair comes under heavy selling pressure on Thursday and continues losing ground through the first half of the European session. The downward trajectory drags spot prices to the 0.5970-0.5965 region, or the lowest level since November 17, and is sponsored by a combination of factors.

The New Zealand Dollar (NZD) weakens after the business outlook survey by ANZ Bank showed weakening activity indicators and a slight fall in inflation pressures. Moreover, markets are pricing in an almost 50% chance the Reserve Bank of New Zealand (RBNZ) could cut rates as early as July. This, along with a fresh bout of the US Dollar (USD) buying, turn out to be key factors exerting downward pressure on the NZD/USD pair.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, climbs to over a one-month peak in the wake of Federal Reserve (Fed) Governor Christopher Waller's hawkish comments on Wednesday, which tempered rate cut bets. This remains supportive of elevated US Treasury bond yields, which, along with a softer risk tone, is seen benefitting the safe-haven buck and driving flows away from the risk-sensitive Kiwi.

With the latest leg down, the NZD/USD pair now seems to have confirmed a breakdown through the weekly trading range and the 0.6000 psychological mark. This, in turn, favours bearish traders and supports prospects for a further near-term depreciating move. market participants now look to the US economic docket – featuring the final Q4 GDP print, Weekly Initial Jobless Claims, Pending Home Sales and revised Michigan Consumer Sentiment Index.

NZD/USD is a shade below 0.6000. Economists at ANZ Bank analyze Kiwi’s outlook. 

Broader FX markets are likely to be illiquid and quiet into Easter

• USD/MXN gains ground on risk aversion ahead of US GDP Annualized.
• Mexico’s Jobless Rate stood at 2.5% in February, against the expected 2.8%.
• The higher US Treasury yields contribute support for the US Dollar.

USD/MXN halts its three-day losing streak, advancing to near 16.60 during the European hours on Thursday. However, the Mexican Peso received upward support, which could be attributed to the softer Jobless Rate, consequently, undermining the USD/MXN pair.

The unemployment rate in Mexico decreased to 2.5% from 2.7% in the same period a year earlier, surpassing market forecasts of 2.8%. The number of unemployed individuals decreased by 137,000 to 1.5 million, while the number of employed individuals rose by 1.1 million to 59.4 million.

This situation allows the Bank of Mexico (Banxico) to continue implementing tight borrowing conditions as a means to address persistent inflationary pressures. Inflation has consistently exceeded expectations, as observed in both headline and core measures during the mid-March assessment.

Traders adopt a cautious stance ahead of the release of Gross Domestic Product Annualized and Initial Jobless Claims data scheduled for Thursday, with Personal Consumption Expenditures set to be revealed on Friday.

The US Dollar Index (DXY) has risen to nearly 104.60, supported by higher yields on US coupon bonds, with the 2-year and 10-year yields standing at 4.62% and 4.21%, respectively, at the time of writing. However, conflicting views among members of the Federal Open Market Committee (FOMC) regarding monetary policy easing are contributing to market uncertainty.

Federal Reserve Board Governor Christopher Waller continues to advocate for a cautious approach toward rate cuts, citing persistent inflation data. Atlanta Fed President Raphael Bostic shares this sentiment, anticipating only one rate cut this year and warning against premature reductions that could exacerbate economic disruptions.

• EUR/USD takes another step lower on poor German Retail Sales data. 
• Subdued consumer spending levels in Germany increase the probability the ECB will cut interest rates soon. 
• This contrasts with the US, where Fed officials are advocating a delay in rate cuts. 

EUR/USD edges down on Thursday, retesting key support at 1.0800, after the release of subpar German Retail Sales data raised further concerns over the health of Europe’s largest economy, weighing on the Euro (EUR). 

EUR/USD downtrend continues on fears Fed could delay cuts

EUR/USD’s move down extends the short-term downtrend that started after the rollover from the March 8 highs in the 1.0980s. The main catalyst appears to be the diverging commentary from rate-setters at the US Federal Reserve (Fed) and European Central Bank (ECB). 

Whilst at the beginning of March the ECB was signaling it would cut interest rates by June and the Fed potentially by as early as May, recent higher-than-expected US data and sticky inflation has led many Fed officials to question whether it may be too early to start cutting interest rates. 

The view the Fed may keep interest rates higher for longer has supported the US Dollar (USD) because higher interest rates tend to attract more foreign capital inflows. This is bearish for EUR/USD, which measures the buying power of a single Euro in USD terms. 

On Wednesday, Federal Reserve board member Christopher Waller added his voice to those advocating a delay, saying that “there is no rush to cut the policy rate,” in a speech to the Economic Club of New York, according to Reuters. 

ECB officials, on the other hand, have cleaved increasingly to June. Eurozone economic data has been on the whole disappointing compared to US data, although persistently high wage inflation still concerns some policymakers. 

EUR/USD took another step lower on Thursday after German Retail Sales in February showed shoppers on the whole tightening their purse strings. Weakening consumer spending is another sign inflation will come down further, prompting the ECB to cut interest rates. 

Retail Sales fell 2.7% YoY in Germany, which was far below estimates of a 0.8% decline, according to data from Statistisches Bundesamt Deutschland. Month-on-month the 1.9% decrease must have come as a shock after economists predicted a 0.3% rise.

Friday’s US core Personal Consumption Expenditures (PCE) Price Index data for February – the Fed’s preferred gauge of inflation – is likely to be an even more important release for EUR/USD. 

A higher-than-expected result could push even further back the time when the Fed is expected to cut interest rates, with negative consequences for the pair. 

Technical Analysis: EUR/USD continues pushing lower

EUR/USD extends the dominant short-term downtrend that started at the March 8 high. It is currently retesting key support at around 1.0800. 

Euro versus US Dollar: 4-hour chart

The pair formed a three wave price pattern called a Measured Move back in February and early March and the low of wave B is underpinning key support at just above 1.0800. 

If the downtrend continues and breaks decisively below the B-wave lows at roughly 1.0795 it would signal a continuation of the downtrend even lower, to the next target at 1.0750, followed by the February lows at roughly 1.0700. 

A decisive break is one characterized by a long red bearish candle that breaks cleanly through the level and closes near its low, or three down candles in a row that breach the level. 

Alternatively, a move above the 1.0950 level would bring into question the validity of the short-term downtrend. 

• EUR/GBP faces sell-off near 0.8570 on poor German Retail Sales for February.
• Monthly German Retail Sales surprisingly dropped by 1.9% against expectations of 0.3% growth.
• BoE Haskel sees rate cuts are far away.

The EUR/GBP pair falls back from 0.8570 as German Retail Sales data for February remains weaker than expected. Monthly Retail Sales surprisingly contracted by 1.9% against the consensus of 0.3% growth. In January, Retail Sales dropped by 0.4%. Annually, sales at retail stores were declined at a higher pace of 2.7% against expectations of -0.8% and the former decline of 1.4%.

The Retail Sales data is an indicator of the current status of consumer spending, which accounts for a major part of the economy. Weak Retail Sales data indicates deepening cost of living crisis due to high interest rates by the European Central Bank (ECB).

Poor Retail Sales could force ECB policymakers to discuss more about reducing interest rates early. Weak German Retail Sales tend to influence ECB policymakers heavily as it is the largest economy of Eurozone in term of Gross Domestic Product (GDP). ECB policymaker Madis Muller said on Tuesday that “we're closer to a point where ECB can start cutting rates.” Easing wage growth has fuelled ECB’s rate-cut expectations for the June meeting.

Meanwhile, the Pound Sterling remains unchanged even though Bank of England (BoE) policymaker Jonathan Haskel delivers a hawkish guidance on interest rates. BoE Haskel said on late Wednesday to the Financial Times that rate cuts should be "a long way off." Haskel warned that, “fall in headline inflation is good news. However, he doesn’t think the headline figures give a good guide to the persistence.”

• The Pound Sterling falls to 1.2600 against the US Dollar as investors wait for US core PCE inflation data for February.
• The Fed’s preferred inflation gauge could give clues over when the Fed may begin the rate-cut cycle.
• UK’s soft inflation data for February has lifted expectations for BoE rate cuts in June.

The Pound Sterling (GBP) drops to 1.2600 against the US Dollar in Thursday’s European session. More broadly, the GBP/USD pair struggles for direction as investors wait for fresh cues about when the Bank of England (BoE) will begin reducing interest rates. The United Kingdom’s inflation has come down significantly, but BoE policymakers are expected to adopt a cautious approach as early rate cuts could revamp price pressures again.

Investors expect that the BoE will start cutting rates from the June meeting. The expectations have been prompted by sharply easing inflation in February. Also, no BoE policymakers see the need for more rate hikes, indicating that the current level of interest rates is sufficiently restrictive. Generally, the Pound Sterling weakens when investors expect the BoE will start reducing borrowing rates early.

Meanwhile, the UK Office for National Statistics (ONS) released on Thursday its revised Q4 2023 Gross Domestic Product (GDP) estimates, confirming that the economy contracted by 0.3% in the October-December period.

The US Dollar rises ahead of the United States core Personal Consumption Expenditure (PCE) Price Index data for February, which will be published on Friday. The measure, which gauges underlying inflation, is expected to have increased steadily by 2.8% on year.

Daily digest market movers: Pound Sterling dips, but is broadly sideways

• The Pound Sterling consolidates in a tight range slightly above 1.2600 as investors seek fresh guidance on the UK interest-rate outlook. Bank of England policymakers are mixed about rate cuts as Jonathan Haskel said on Wednesday to the Financial Times that rate cuts should be "a long way off."  Haskel further added: “Although the fall in headline inflation is very good news, it is not informative about what we really care about. What we really care about is the persistent and the underlying inflation.”
• The comments from Jonathan Haskel suggest that he has low confidence on progress in inflation declining to 2% and rate cuts are still off the table. On the contrary, BoE Governor Andrew Bailey said in a recent interview with the Financial Times that market expectations for two or three rate cuts this year are not “unreasonable”. Regarding the inflation outlook, Bailey said "We are not seeing a lot of sticky persistence."
• Currently, market expectations for BoE rate cuts have been brought forward to the June policy meeting from prior anticipation for August after UK inflation softened more than expected in February. Apart from that, the BoE’s slightly dovish outlook on interest rates in last week’s monetary policy statement has boosted expectations for June’s rate cuts.
• Meanwhile, the market sentiment is slightly risk-off as S&P 500 futures trade lower in Thursday’s European session. The US Dollar Index (DXY) rises to 104.40, an inch away from its monthly high of 104.50, amid uncertainty ahead of the United States core PCE Price Index data for February.

Technical Analysis: Pound Sterling consolidates around 1.2600

The Pound Sterling trades back and forth in a narrow range around 1.2600. The GBP/USD pair seems vulnerable around 1.2600 as the 20-day Exponential Moving Average (EMA) at 1.2690 has turned down. The asset is slowly declining to the 200-day EMA, which trades around 1.2564. On the downside, the horizontal support from December 8 low at 1.2500 would provide cushion to the Pound Sterling bulls.

The 14-period Relative Strength Index (RSI) slips to near 40.00. A bearish momentum would trigger if the RSI dips below this level.

EUR/USD struggles to gain traction in the second half of the week. Will the easter bunny bring quotes below 1.0800? Economists at Commerzbank analyze the pair’s outlook.

Maybe a little tailwind for the Dollar

EUR/USD holds slightly above the 1.0800 level. Economists at ING analyze the pair’s outlook.

Trading conditions will continue to be sticky

• USD/CHF gains ground on risk-off sentiment ahead of US data.
• US GDP Annualized is expected to remain consistent at 3.2% in the fourth quarter of 2023.
• KOF Leading Indicator is expected to show a slight uptick to 102.0 in March, compared to the previous reading of 101.6.

USD/CHF moves higher to near 0.9060 during the early European session on Thursday. The US Dollar (USD) receives upward support against the Swiss Franc (CHF), which could be attributed to the risk aversion ahead of the key economic figures from the United States (US).

Traders adopt a cautious stance ahead of the releases of Gross Domestic Product Annualized and Initial Jobless Claims data scheduled to be released on Thursday. Furthermore, Personal Consumption Expenditures is set to be revealed on Friday.

US Dollar Index (DXY) rises to near 104.50, with higher 2-year and 10-year yields on US coupon bonds standing at 4.61% and 4.20%, respectively, by the press time. However, conflicting views among members of the Federal Open Market Committee (FOMC) regarding monetary policy easing are adding to market uncertainty.

Federal Reserve Board Governor Christopher Waller continues to advocate for a cautious approach toward rate cuts, citing persistent inflation data. Atlanta Fed President Raphael Bostic shares this sentiment, foreseeing only one rate cut this year and warning against premature reductions that could worsen economic disruptions.

In other news, the ZEW Survey – Expectations rose by 1.3 points in March to reach 11.5, the highest level since October 2021. This increase was supported by the Swiss National Bank's decision to lower its interest rate by 25 basis points to 1.5%. Following the announcement, the Swiss Franc (CHF) weakened further year-to-date, as the SNB's move is likely to undermine the currency, being the first G10 central bank to implement such a cut.

Looking ahead, the Swiss Leading Indicator, to be released on Thursday by the KOF Swiss Economic Institute, is expected to show a slight uptick to 102.0 in March, compared to the previous reading of 101.6.

Gold extended recent gains amid expectations of lower inflation. Economists at ANZ Bank analyze the yellow metal’s outlook.

Safe haven demand remains strong

See: Gold Price Forecast: Push back in rate cut expectations from March to June may cap XAU/USD rally – ANZ

Economists at ANZ Bank expect the Indian Rupee (INR) to enjoy a mild appreciation over the course of the year.

INR to remain less volatile compared to other Asian currencies

• GBP/JPY edges lower to 191.00 following the UK GDP Q4 data on Thursday. 
• The UK GDP numbers contracted 0.3% QoQ and 0.2% YoY in Q4, as expected. 
• The speculation that the Bank of Japan (BoJ) will intervene in the FX market might lift the Japanese Yen against the Euro. 
• Investors will closely watch the Tokyo Consumer Price Index (CPI) for March, due on Friday. 

The GBP/JPY cross trades in negative territory for two straight days, hovering around the 191.00 mark on Thursday. The dovish remarks from the Bank of England (BoE) exert some selling pressure on the Pound Sterling (GBP). 

The latest data from the Office for National Statistics showed on Thursday that the UK Gross Domestic Product (GDP) for the fourth quarter (GDP) contracted 0.3% QoQ and 0.2% YoY in Q4. Both figures were in line with market expectations. The GBP remains weak following the UK GDP numbers as the markets raise their bet that the Bank of England (BoE) will begin three quarter-point reductions in rates this year. The BoE Governor Andrew Bailey said that interest rate cuts will be ‘in play’ at future BoE policy meetings.

On the other hand, the weakening of the Japanese Yen might be limited amid speculation that the Bank of Japan (BoJ) will intervene in the FX market to stop disorderly and speculative moves in the currency. Japan’s Chief Cabinet Secretary Yishimasa Hayashi stated on Thursday that he will closely watch the FX volatility and won’t rule out any steps against excessive moves. 

Moving on, market participants will keep an eye on the Tokyo Consumer Price Index (CPI) for March, Unemployment Rate, Industrial Production, and Retail Trade, due on Friday. If the Japanese CPI data shows softer-than-estimated, this could complicate the BoJ's interest rate hike path and weigh on the JPY. The UK market will be closed on the occasion of Good Friday. 

Germany's Retail Sales dropped 1.9% MoM in February, slowing from a 0.4% decline in January, according to the official data released by Destatis on Thursday. The data missed the market expectations for a 0.3% increase.

Retail Sales in the Eurozone's biggest economy fell 2.7% YoY in February versus a 1.4% annual drop reported in January, much below the forecast of -0.8%.

EUR/USD reaction to the German data

Weaker-than-forecast German data are weighing on the Euro, pushing EUR/USD closer toward 1.0800. The pair is trading 0.10% down on the day at 1.0814, as of writing.

Here is what you need to know on Thursday, March 28:

Major currency pairs continue to fluctuate in familiar ranges in the second half of the week. Before markets go into the Easter holiday on Friday, the US economic docket will feature weekly Jobless Claims, February Pending Home Sales and the University of Michigan's Consumer Sentiment Index for March. Additionally, the US Bureau of Economic Analysis will release the final revision to the fourth quarter Gross Domestic Product growth before it publishes the Personal Consumption Expenditures (PCE) Price Index data for February on Friday.

The US Dollar (USD) Index closed the day virtually unchanged on Wednesday as the improving risk mood made it difficult for the currency to gather strength against its rivals. Early Thursday, the USD Index moves up and down in a narrow channel below 104.50. Meanwhile, the benchmark 10-year US Treasury bond yield extends its sideways grind above 4.2% and US stock index futures trade marginally lower. 

USD/JPY retreated after touching a multi-decade high near 152.00 on Wednesday. The pair, however, stabilized above 151.00. Japan’s Chief Cabinet Secretary Yishimasa Hayashi said on Thursday that he “won't rule out any options against excessive currency moves.” In the meantime, the Bank of Japan's (BoJ) Summary of Opinions from its March monetary policy showed earlier in the day that one of the policymakers argued that the yield curve control, the negative interest rate and other massive stimulus tools have accomplished their roles. In the Asian session on Friday, Industrial Production and Tokyo Consumer Price Index data from Japan will be watched closely by market participants.

Japanese Yen hangs near multi-decade low against USD, not out of the woods yet.

USD/CAD closed the third consecutive day in negative territory on Wednesday and went into a consolidation phase below 1.3600 early Friday. Statistics Canada will publish the monthly GDP growth for January later in the day.

Consumer Inflation Expectations in Australia declined to 4.3% in March from 4.5% in February, while Retail Sales grew by 0.3% on a monthly basis in February. After closing the day flat on Wednesday, AUD/USD came under modest bearish pressure and retreated toward 0.6500 early Thursday.

Australian Dollar moves sideways amid a stable US Dollar, US economic data awaited.

EUR/USD struggles to gain traction in the second half of the week but manages to hold comfortably above 1.0800. 

GBP/USD registered small gains on Wednesday but failed to extend its recovery early Thursday. The pair was last seen trading marginally lower on the day below 1.2650.

After facing rejection near $2,200 and making a deep downward correction in the first half of the day on Wednesday, Gold gathered bullish momentum and closed in the green above $2,190. XAU/USD stays relatively quiet early Friday but remains within a touching distance of $2,200.

Gold price flat lines below $2,200 mark as traders await US PCE Price Index on Friday.

• Silver price moves higher to $24.70, while the broader trend is sideways.
• The core PCE inflation will provide cues about Fed’s rate cut timing.
• Fed policymakers see three rate cuts by the year-end.

Silver price (XAG/USD) advances to $24.70 in the late Asian session on Thursday. The white metal posts gains ahead of the United States core Personal Consumption Expenditure Price Index (PCE) data for February, which will be published on Friday.

Core PCE will provide cues about when the Federal Reserve (Fed) will begin reducing interest rates. The annual underlying inflation data is estimated to have grown steadily by 2.8%, with monthly growth declining to 0.3% from 0.4% in January.

Currently, market expectations indicate that the Fed will cut interest rates from the June policy meeting. The expectations also show that there will be three rate cuts by the year-end, as projected by Fed policymakers in the monetary policy meeting last week.

According to the CME FedWatch tool, traders are pricing in 64% chance that the Fed will trim interest rates in June.

Meanwhile, the US Dollar Index (DXY) edges down slightly from monthly highs of 104.50. The USD Index is broadly sideways in a 104.00-104.50 range from last four trading sessions. The US core PCE inflation is expected to support the USD index to blown out the consolidation. 10-year US Treasury yields rebound to 4.21% after falling sharply to 4.18% on Wednesday.

Silver technical analysis

Silver price consolidates in a range of $24.32-$25.00 from a week. This exhibits an indecisiveness among market participants. The 20-period Exponential Moving Average (EMA) at $24.60 remain stick to the spot price, demonstrating a sideways trend.

The 14-period Relative Strength Index (RSI) oscillates in the 40.00-60.00 zone, indicating a sharp volatility contraction.

Silver hourly chart

• GBP/USD trades on a softer note below the mid-1.2600s on Thursday ahead of UK GDP growth numbers data. 
• The pair keeps the bearish vibe below the key EMA; RSI indicator holds below the 50 midlines. 
• The immediate resistance level will emerge at 1.2655; the initial support level is located at the 1.2600–1.2605 zone.

The GBP/USD pair remains on the defensive around 1.2630 on Thursday during the early European trading hours. The hawkish tone from Federal Reserve (Fed) Governor Christopher Waller early Thursday has lifted the US Dollar (USD) broadly, which creates a headwind for the GBP/USD pair. 

The Fed’s Waller said the US central bank is in no rush to cut the benchmark rate and may need to “maintain the current rate target for longer than expected. Traders await the final UK Gross Domestic Product (GDP) growth number for Q4 on Thursday, which is projected to contract 0.3% QoQ in Q4. 

From a technical perspective, GBP/USD maintains the bearish outlook unchanged as the major pair holds below the key 100-period Exponential Moving Average (EMA) on the four-hour chart. The downward momentum is confirmed by the Relative Strength Index (RSI), which lies below the 50 midlines, supporting the sellers for the time being.

The first upside barrier for GBP/USD will emerge near the upper boundary of the Bollinger Band at 1.2655. A break above the latter will expose the 100-period EMA at 1.2685. Further north, the next hurdle is seen near a high of March 18 at 1.2746, followed by the psychological level of 1.2800. 

On the flip side, the initial support level of the major pair is located near the lower limit of the Bollinger Band at the 1.2600-1.2605 region. A breach of this level will pave the way to a low of March 22 at 1.2575. The next contention level to watch is a low of February 14 at 1.2535, en route to the 1.2500 round figure. 

GBP/USD four-hour chart

FX option expiries for Mar 28 NY cut at 10:00 Eastern Time, via DTCC, can be found below

- EUR/USD: EUR amounts

• 1.0752 803m
• 1.0825 1.9b
• 1.0850 1.7b
• 1.0925 544m

- GBP/USD: GBP amounts     

• 1.2600 1.1b

- USD/JPY: USD amounts                     

• 150.00 1.3b
• 150.50 2.9b
• 151.00 732m
• 152.00 2.3b

- USD/CAD: USD amounts       

• 1.3600 1.6b

In an interview with the Financial Times (FT) on Thursday, Bank of England (BoE) policymaker Jonathan Haskel warned against rushing to cut interest rates.

Haskel said that “I think cuts are a long way off.”

Additional quotes

Market reaction

GBP/USD fails to find any inspiration from the hawkish BoE commentary, currently trading at 1.2635, almost unchanged on the day.

• NZD/USD loses ground on softer Kiwi data released on Thursday.
• ANZ – Roy Morgan Consumer Confidence fell to 86.4 in February from 94.5 prior.
• US GDP Annualized is expected to remain consistent at a 3.2% increase in Q4.

NZD/USD snaps its three-day winning streak, depreciating to near 0.5990 during the Asian hours on Thursday. The New Zealand Dollar (NZD) faces challenges due to the softer-than-expected domestic key economic figures, which in turn, undermine the NZD/USD pair.

ANZ – Roy Morgan Consumer Confidence decreased to 86.4 in February from 94.5 in the prior month. The index stepped down from January 2022 level highs. Business Confidence fell to 22.9 in March, from the previous reading of 34.7. Kiwi markets will observe Good Friday and Easter Monday.

At the Boao Forum for Asia (BFA), China's top legislator, Zhao Leji, underscored China's commitment to inclusive economic globalization. He articulated China's opposition to unilateralism and protectionism in all manifestations and expressed a dedication to closely aligning its development with that of other nations.

The US Dollar (USD) shows subdued momentum as investors await the release of Gross Domestic Product Annualized data for the fourth quarter of 2023 from the United States (US) on Thursday. Furthermore, Personal Consumption Expenditures for February on Friday. The US Dollar Index (DXY) hovers around 104.30. US Treasury yields rebounded after losses in the previous two sessions, supporting the US Dollar.

Market participants are eagerly awaiting guidance from the Federal Reserve (Fed) on its interest rate trajectory. However, conflicting views among members of the Federal Open Market Committee (FOMC) regarding monetary policy easing are adding to market uncertainty.

• EUR/JPY trades on a softer note around 163.75 in Thursday’s early European session. 
• The verbal intervention from Japanese authorities provides some support to the JPY. 
• ECB’s Stoumaras said there is a growing consensus for a rate cut in June. 
• The German February Retail Sales data will be due later on Thursday. 

The EUR/JPY cross trades with a mild negative bias around 163.75 during the early European session on Thursday. The cross edges lower amid the fear of foreign exchange intervention from the Japanese authorities.  

On Thursday, Japan’s Chief Cabinet Secretary Yishimasa Hayashi said that he will not rule out any options against excessive foreign exchange moves and will closely watch it. This verbal intervention complied with top currency diplomat Masato Kanda statement that he will react to the disorderly FX moves. The fear of FX intervention from Japanese authorities might support the Japanese Yen (JPY) and limit the upside of the EUR/JPY cross in the near term. 

On the Euro front, the growing speculation that the European Central Bank (ECB) will cut the interest rate in June acts as a headwind for the Euro (EUR) against the JPY. On Tuesday, ECB official Yannis Stoumaras said that there is a higher chance for a June rate cut, while Bank of Italy Governor Fabio Panetta said on Monday that the ECB is moving towards an interest rate cut as inflation is easing rapidly and approaching the 2% target. 

Looking ahead, traders will monitor German Retail Sales data, which is estimated to drop 0.8% YoY in February. Also, the German Unemployment Change and Italian Producer Price Index (PPI) will be released. On Friday, market players will turn their focus to the Tokyo Consumer Price Index (CPI) for March. In the case of the stronger-than-expected data, this could lift the JPY against the EUR. 

§

• USD/CAD gains some positive traction on Thursday, though the upside remains capped.
• The Fed’s projected three rate cuts in 2024 caps the upside for the USD and the major.
• An uptick in Oil prices underpins the Loonie and contributes to keeping a lid on the pair.

The USD/CAD pair attracts some buyers during the Asian session on Thursday and for now, seems to have snapped a three-day losing streak, albeit lacks follow-through. Spot prices remain below the 1.3600 mark as traders look to important macro data from the US and Canada for some meaningful impetus.

Thursday's economic docket highlights the release of the monthly Canadian GDP report, along with the final US Q4 GDP print. Apart from this, the usual Initial Weekly Jobless Claims, Pending Home Sales and the revised Michigan Consumer Sentiment Index might influence the US Dollar (USD), which might produce short-term trading opportunities around the USD/CAD pair. The focus, however, remains glued to the US Personal Consumption Expenditures (PCE) Price Index on Friday.

In the meantime, the overnight hawkish remarks by Federal Reserve (Fed) Governor Christopher Waller cooled rate cut hopes and pushed the USD back closer to the monthly peak, lending some support to the USD/CAD pair. The Fed, however, projected a less restrictive policy going forward and indicated that it remains on track to cut interest rates by 75 basis points in 2024. This is holding back the USD bulls from placing aggressive bets and acting as a headwind for the currency pair.

Meanwhile, Crude Oil prices gain some follow-through traction in the wake of worries about tighter global supply amid lower Russian production. Furthermore, the Israel-Hamas conflict has shown little signs of de-escalation, which continues to fuel concerns about supply disruptions from the Middle East and lends additional support to the black liquid. This, in turn, is seen underpinning the commodity-linked Loonie and contributing to capping the upside for the USD/CAD pair.

• EUR/USD extends its losing streak on dovish remarks from ECB officials.
• US GDP Annualized is expected to be consistent at a 3.2% increase in Q4.
• German Retail Sales (MoM) is anticipated to show a 0.3% rise, against the previous decline of 0.4%.

EUR/USD continues to lose ground for the third successive session on Thursday, inching lower to near 1.0820 during the Asian session. However, the US Dollar (USD) exhibits tepid momentum ahead of the Gross Domestic Product Annualized data from the United States (US) for the fourth quarter of 2023. Furthermore, traders will likely observe the Personal Consumption Expenditures for February.

The US Dollar Index (DXY) hovers around 104.30, correcting from March’s highs. US Treasury yields retrace losses registered in the previous two sessions, which could provide support for the US Dollar.

Market participants await fresh guidance from the Federal Reserve (Fed) regarding its interest rate trajectory. However, conflicting opinions among members of the Federal Open Market Committee (FOMC) regarding monetary policy easing are contributing to market confusion.

Federal Reserve Board Governor Christopher Waller maintains his stance of 'no rush' to cut rates, citing persistent inflation data. Atlanta Fed President Raphael Bostic echoes a similar sentiment, anticipating only one rate cut this year, warning against premature rate reductions that could exacerbate economic disruptions.

The Euro faces downward pressure as European Central Bank (ECB) officials are increasingly suggesting a probable interest rate cut in June. Yannis Stoumaras remarked on Tuesday that there is a mounting consensus within the ECB for a rate reduction in June, a sentiment echoed by Madis Muller, who hinted at the ECB nearing a point where rate cuts are feasible.

Thursday will bring German Retail Sales data for February. The data is expected to show a decrease of 0.8% year-over-year. While the monthly report could reveal an increase of 0.3%, swinging from a previous decline of 0.4%.

• Gold price fails to capitalize on its weekly gains registered over the past three days.
• The overnight hawkish remarks by Fed’s Waller act as a headwind for the XAU/USD.
• The downside seems limited as traders await more cues about the Fed’s rate-cut path.

Gold price (XAU/USD) continues with its struggle to make it through the $2,200 mark and oscillates in a range during the Asian session on Thursday. The overnight hawkish remarks from Federal Reserve (Fed) Governor Christopher Waller cooled rate cut hopes and pushed the US Dollar (USD) back closer to the monthly top. This, in turn, is seen as a key factor acting as a headwind for the non-yielding yellow metal, though any meaningful slide seems elusive as traders await more cues about the Fed's policy path before placing fresh directional bets.

Last week, the Fed projected a less restrictive monetary policy going forward and indicated that it remains on track to cut interest rates by 75 basis points in 2024. That said, the incoming US macro data suggested that the economy is in good shape and pointed to still-sticky inflation, which should allow the Fed to keep rates higher for longer. Hence, Friday's release of the US Personal Consumption Expenditures (PCE) Price Index will influence expectations about the Fed's rate-cut path, which will drive the USD and provide fresh impetus to the Gold price.

Daily Digest Market Movers: Gold price struggles to lure buyers amid mixed fundamental cues

• Federal Reserve (Fed) Governor Christopher Waller said on Wednesday that he was in no hurry to cut rates in the wake of hotter inflation readings in recent months, boosting the US Dollar and capping gains for the Gold price.
• Waller, however, noted that further expected progress on lowering inflation will make it appropriate for the Fed to start cutting interest rates later this year, which is seen acting as a tailwind for the non-yielding yellow metal.
• Moreover, the Fed last week projected three interest rate cuts of 25 basis points each by the end of this year, and the markets are currently pricing in a greater chance of the first move at the June FOMC monetary policy meeting.
• Apart from this, geopolitical risks stemming from the protracted Russia-Ukraine war and the ongoing conflicts in the Middle East should help limit any meaningful corrective decline for the safe-haven precious metal.
• Traders now look to Thursday's US economic docket – featuring the release of the final Q4 GDP print, the usual Weekly Initial Jobless Claims, Pending Home Sales and the revised Michigan Consumer Sentiment Index.

Technical Analysis: Gold price needs to find acceptance above $2,200 for bulls to regain control

From a technical perspective, the range-bound price action witnessed over the past two weeks or so might be categorized as a bullish consolidation phase against the backdrop of a blowout rally since the beginning of this month. Moreover, oscillators on the daily chart are holding comfortably in the positive territory and support prospects for an eventual breakout to the upside. Some follow-through buying back above the $2,200 mark will reaffirm the constructive setup and allow the Gold price to retest the record high, around the $2,223 region touched last week.

On the flip side, any corrective decline now seems to find some support near the overnight swing low, around the $2,173 area ahead of the $2,164-2,163 zone. This is followed by the lower end of the short-term trading range, around the $2,146-2,145 region, which, if broken, might prompt aggressive technical selling. The Gold price might then accelerate the fall to the next relevant support near the $2,128-2,127 region en route to the $2,100 round-figure mark. The latter should act as a strong base, which, if broken, will suggest that the XAU/USD has topped out in the near term.

• Australian Dollar recovers its intraday losses on risk-on sentiment.
• Australia’s Retail Sales (MoM) increased by 0.3%, against the expected 0.4% and 1.1% prior.
• US Dollar corrects ahead of US GDP Annualized data due on Thursday.

The Australian Dollar (AUD) manages to recover its intraday losses and extends its gains on Thursday. Challenges persisted for the AUD/USD pair due to softer Consumer Inflation Expectations and Retail Sales figures from Australia. These factors heightened expectations of the Reserve Bank of Australia (RBA) considering interest rate cuts in the second half of 2024. Additionally, Wednesday's release of the softer Australian Monthly Consumer Price Index supported this perspective.

Australia's consumer expectations for future inflation rose by 4.3% in March, a slight decrease from the previous increase of 4.5%. February's seasonally adjusted Retail Sales showed a month-over-month increase of 0.3%, falling short of the expected 0.4% and the prior 1.1%. Additionally, on Wednesday, Australia's Monthly Consumer Price Index (YoY) for February saw a 3.4% rise, maintaining consistency with previous levels but slightly below the anticipated 3.5%.

The US Dollar Index (DXY) appears to pause its two-day winning streak, edging lower in anticipation of the upcoming release of US Personal Consumption Expenditures (PCE) data scheduled for Friday. Nevertheless, the recent uptick in US Treasury yields may have lent support to the US Dollar (USD) amid divergent opinions among members of the Federal Open Market Committee (FOMC) regarding monetary policy easing.

Daily Digest Market Movers: Australian Dollar gains ground on improved risk appetite

• Australia’s Westpac Consumer Confidence dipped 1.8% to 84.4 in March 2024 from February's 86.0, easing from 20-month highs.
• Australia’s Westpac Leading Index (MoM) increased by 0.1% in February, against the previous decline of 0.09%.
• Australia's government has pledged to support a minimum wage increase aligned with inflation this year, recognizing the ongoing challenges low-income families face amid rising living costs.
• At the Boao Forum for Asia (BFA), China's top legislator, Zhao Leji, emphasized China's stance on inclusive economic globalization. He stated that China opposes unilateralism and protectionism in all their forms and is committed to closely linking its development with other countries.
• Federal Reserve Board Governor Christopher Waller still sees 'no rush' to cut rates amid sticky inflation data.
• Atlanta Fed President Raphael Bostic expressed his expectation for just one rate cut this year, cautioning that reducing rates prematurely could lead to greater disruption.
• Fed Governor Lisa Cook cautioned against easing policy too soon, warning that it could exacerbate the risk of inflation becoming entrenched.
• Chicago Fed President Austan Goolsbee, leaning towards a dovish stance, expects three cuts but indicates a need for more evidence of inflation subsiding before taking action.
• US Durable Goods Orders increased by 1.4% in February, against the 1.3% expected and previous decline of 6.9%.
• US Durable Goods Orders ex Defense rose by 2.2% in February, compared to the expected 1.1% and 7.9% previous decline.
• US Housing Price Index (MoM) decreased by 0.1% in January, against the December’s increase of 0.1%.

Technical Analysis: Australian Dollar could test the major barrier of 0.6550

The Australian Dollar trades near 0.6540 on Thursday. Immediate resistance is observed around the 23.6% Fibonacci retracement level at 0.6541, coinciding with the major barrier of 0.6550 and the 21-day Exponential Moving Average (EMA) at 0.6553. On the downside, a notable support level is at the psychological mark of 0.6500, followed by March’s low at 0.6477. A breach below this level may lead the AUD/USD pair to test the major support level at 0.6450.

AUD/USD: Daily Chart

• Indian Rupee loses ground on Thursday on the firmer USD and the Fed governor’s hawkish comments. 
• The INR’s downside might be limited by the potential intervention from the Indian central bank. 
• The RBI is expected to hold rates steady in its April meeting amid strong economic growth and elevated inflation.
• The Annualized US GDP (Q4) growth number will be released on Thursday. 

Indian Rupee (INR) edges lower on Thursday amid the higher demand for the US Dollar (USD) from oil importers and the hawkish remarks from the Federal Reserve (Fed) officials. Furthermore, the ongoing weakening of Asian peers will continue to exert pressure on the INR. However, the downside of INR might be capped on the back of the Reserve Bank of India's (RBI) intervention in the foreign exchange market to help limit the depreciation in INR.

The Indian Central Bank released its monetary policy committee (MPC) schedule for the upcoming financial year 2024–25, starting from April 1, 2024. The first policy meeting will be held from April 3–5, and the RBI is anticipated to keep interest rates unchanged until at least July amid strong economic growth and elevated inflation. Moving on, investors await the release of the US Gross Domestic Product Annualized (Q4) on Thursday, which is estimated to grow at a steady pace at 3.2%. The US February Personal Consumption Expenditures Price Index (PCE) data will take center stage on Friday even though the markets are closed for Good Friday.

Daily Digest Market Movers: Indian Rupee remains vulnerable despite the robust economic outlook

• India’s Current Account Deficit narrowed to $10.5 billion or 1.2% of Gross Domestic Product (GDP) in the fourth quarter (Q4) that ended December 2023 from $11.4 billion in the previous reading. 
• Morgan Stanley has raised India’s GDP growth projection for FY 24-25 to 6.8% from 6.5% estimated earlier, citing the ongoing growth in industrial and capex activities.
• S&P Global raised India's GDP growth forecast for FY25 to 6.8%, lower than the RBI’s estimation of 7%. Furthermore, S&P expects RBI to cut rates by 75 bps by the end of this fiscal year.
• The Fed Governor Christopher Waller said early Thursday that the central bank is in no rush to cut the benchmark rate and may need to “maintain the current rate target for longer than expected.” 
• Fed’s Waller further stated that he needs to see more inflation progress before supporting rate cuts.

Technical Analysis: Indian Rupee weakens, further upside is likely to remain limited

Indian Rupee trades on a softer note on the day. USD/INR extends its uptrend in the longer term since the pair rose above a multi-month-old descending trend channel last week. 

In the near term, USD/INR remains above the key 100-day Exponential Moving Average (EMA) on the daily chart, with the 14-day Relative Strength Index holding above the 50 midline. This upward momentum of the pair indicates the support levels are more likely to hold than to break, and there’s more room for further upside. 

The potential upside barrier for USD/INR will emerge at an all-time high of 83.49. A decisive break above this level will see a rally to 84.00 (round figure). On the downside, the initial support level is seen at 83.20 (high March 21), followed by 83.00 (psychological level, the 100-day EMA). A breach of the mentioned level could confirm that sellers are returning and ready to let the downtrend resume.

Japan’s Chief Cabinet Secretary Yishimasa Hayashi said on Thursday, he “won't rule out any options against excessive currency moves.”

On Wednesday, Hayashi said that he is “closely watching FX moves.”

Related reads

• Japanese Yen edges lower against USD, languishes near Wednesday’s 34-year low
• BoJ’s Summary of Opinions: YCC, negative rate, and other massive stimulus tools have accomplished their roles

• The Japanese Yen meets with a fresh supply in the wake of the BoJ’s dovish outlook.
• Fed Governor Waller’s hawkish comments underpin the USD, supporting USD/JPY.
• Thursday’s US macro data eyed for some impetus ahead of the PCE data on Friday.

The Japanese Yen (JPY) struggles to capitalize on the previous day's modest recovery against its American counterpart from the lowest level since 1990 and edges lower during the Asian session on Thursday. Speculations that Japanese authorities may soon intervene in the markets to support the domestic currency prompted traders to lighten their bearish bets around the JPY on Wednesday. That said, the Bank of Japan's (BoJ) cautious approach and uncertain outlook for future rate hikes caps any further JPY appreciating move. 

The US Dollar (USD), on the other hand, stands tall near the monthly peak in the wake of Federal Reserve Governor Christopher Waller's hawkish remarks on Wednesday. This turns out to be another factor that assists the USD/JPY pair to attract some dip-buying, though the upside seems limited as traders might wait for more cues about the Fed's policy path. Hence, the focus will remain glued to the US Personal Consumption Expenditures (PCE) Price Index – the Fed's preferred inflation gauge – due for release on Friday. 

Daily Digest Market Movers: Japanese Yen continues to be undermined by BoJ’s cautious outlook

• Japan's top currency diplomat Masato Kanda said on Wednesday that he won't rule out any steps to respond to disorderly FX moves and provided a modest lift to the Japanese Yen. 
• Japan's top monetary officials met to discuss the rapidly weakening currency and suggested that they were ready to intervene to stop disorderly and speculative moves in the currency.
• The JPY recovery lacks follow-through in the wake of the Bank of Japan's dovish tone, indicating that accommodative financial conditions will be maintained for an extended period.
• The view was echoed by BoJ Board Member Tamura Naoki, adding that the bank will guide monetary policy appropriately in accordance with the economic, price, and financial developments.
• The overnight hawkish comments by Federal Reserve Governor Christopher Waller cooled rate cut hopes, lifting the US Dollar closer to the monthly top and lending support to the USD/JPY pair. 
• Waller said that hotter-than-expected inflation readings in recent months and the current resilience in the US economy give the Fed substantial headroom to keep rates higher for longer.
• Traders, however, seem reluctant to place aggressive directional bets and prefer to wait for the release of the US Personal Consumption Expenditures (PCE) Price Index on Friday.
• The crucial inflation data will play a key role in influencing expectations about the Fed's rate cut path, which, in turn, will drive the USD and provide a fresh impetus to the currency pair.
• In the meantime, Thursday's US economic docket – featuring the final Q4 GDP print, Weekly Initial Jobless Claims and Pending Home Sales – might produce short-term opportunities.

Technical Analysis: USD/JPY bulls need to wait for move beyond 152.00 before placing fresh bets

From a technical perspective, any subsequent move up might continue to confront stiff resistance and remain capped near the 152.00 mark. The said handle should act as a key pivotal point, which if cleared decisively will be seen as a fresh trigger for bullish traders. Given that oscillators on the daily chart are holding in the positive territory, the USD/JPY pair might then prolong its well-established uptrend witnessed since January 2023 and climb further towards the 153.00 round figure.

On the flip side, the overnight swing low, around the 151.00 mark, now seems to protect the immediate downside. Any further decline is more likely to attract fresh buyers and remain limited near the 150.25 support zone. This is closely followed by the 150.00 psychological mark, which, if broken decisively, could make the USD/JPY pair vulnerable to accelerate the corrective decline further towards the 149.35-149.30 region en route to the 149.00 round figure.

• ASX 200 Index extends its gains on expectations of RBA deducting interest rates in the second half of 2024.
• Australia’s Consumer Inflation Expectations increased by 4.3% in March, against the previous rise of 4.5%.
• Allup Silica has extended its application potential by achieving high-purity results from its Sparkler project.

The ASX 200 Index rises to nearly 7,900, up by 0.26% on Thursday, extending gains to new record highs. Positive market sentiment is bolstered by subdued Consumer Inflation Expectations and Retail Sales figures from Australia, which raise expectations of the Reserve Bank of Australia (RBA) adopting a more accommodative approach to interest rates. Furthermore, Wednesday's release of the Australian Monthly Consumer Price Index, which was lower than anticipated, lent further support to the Australian stock market.

Australia’s consumer expectations of future inflation during the next 12 months increased by 4.3% in March, lower than the previous increase of 4.5%. The seasonally adjusted Retail Sales increased by 0.3% month-over-month in February, against the expected 0.4% and 1.1% prior.

The ASX 200 Index surged, driven by strong performances in mining stocks, buoyed by rising prices of gold, iron ore, and lithium. Among the top gainers were Arcadium Lithium, which soared by 10.20% to 4.43; Alumina, which saw a rise of 5.60% to 1.42; and Whitehaven Coal, which increased by 5.27% to 7.10. On the other side, Xero experienced a decline of 1.09% to 132.43; Audinate Group fell by 0.75% to 21.24; and Tabcorp Holdings dipped by 1.05% to 0.76.

Allup Silica has expanded its potential applications with promising results from its Sparkler project in southern Western Australia, where bulk sample tests of high-purity silica have surpassed industry standards. This positions the product well for various high-purity applications, including photovoltaics and high-tech manufacturing.

Terra Uranium is enhancing its Canadian exploration and development endeavors by finalizing a binding letter of intent for the acquisition of the Amer Lake uranium deposit in Nunavut. This move follows Terra's recent acquisition of two new 100%-owned projects in Canada's Athabasca Basin.

AIC Mines, a copper producer, has reported a significant 86% increase in ore reserves at its Jericho copper deposit, located south of its Eloise high-grade underground copper mine in Queensland. The revised reserve estimate now stands at 3.2 million tonnes grading 1.9% copper and 0.4 grams per tonne of Gold, amounting to 61,100 tonnes of copper and 37,000 ounces of Gold.

On Thursday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.0948 as compared to the previous day's fix of 7.0946 and 7.2259 Reuters estimates.

• TI trades on a softer note near $81.50 on Thursday. 
• The high-for-longer rate narrative from the Fed boosts the US Dollar. 
• US crude oil inventories rose by 3.165 million barrels for the week ending March 22 from a decline of 1.952 million barrels. 

Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around $81.50 on Wednesday. WTI prices edge lower amid the recovery of the US Dollar (USD) and a surprise jump in U.S. crude and gasoline stocks.

The hawkish comments from US Federal Reserve (Fed) policymaker early Thursday lift the Greenback across the board. The Fed Governor Christopher Waller, one of the most hawkish Fed officials, said that the US central bank is not in a hurry to lower the benchmark interest rate and may need to retain the current rate target for longer than previously expected. A firmer USD weighs on WTI prices as it makes dollar-denominated oil more expensive for holders of other currencies, dampening oil demand.

Additionally, US crude oil inventories rose by 3.165 million barrels for the week ending March 22 from a decline of 1.952 million barrels, according to the Energy Information Administration (EIA). A surprise US crude inventories build also contributed to the pressure on WTI prices.

On the other hand, the escalating geopolitical tensions in the Middle East and between Russia and Ukraine could raise the fear of tighter global supply and cap the downside of WTI prices. Ukraine has been striking Russia's oil infrastructure since the start of the conflict but intensified its attacks in late 2023. There have been seven drone attacks this month alone, and experts estimate that the disruptions have impacted almost 12% of Russia's total oil processing capacity.

The Organisation of Petroleum Exporting Countries and its allies (OPEC+) decided to extend output cuts of around 2.2 million bpd until the end of June. OPEC+ is expected to affirm its production cuts policy until a full ministerial meeting in June. 

Oil traders will watch the US Gross Domestic Product Annualized (GDP) for the fourth quarter (Q4) on Thursday, which is estimated to remain steady at 3.2%. On Friday, the US Personal Consumption Expenditures Price Index (PCE) data for February and Fed’s Powell will be in the spotlight. 

 

Australia’s Retail Sales, a measure of the country’s consumer spending, rose 0.3% MoM in February from the previous reading of a 1.1% rise, according to the official data published by the Australian Bureau of Statistics (ABS) on Thursday. The figure came in weaker than market expectations with an increase of 0.4%.

Market reaction

Following the downbeat Australia’s Retail Sales data, the AUD/USD pair is down 0.11% on the day at 0.6527.

Bank of Japan (BoJ) published the Summary of Opinions from its March monetary policy meeting on March 18 and 19, with the key findings noted below.

Key quotes

Market reaction

Following the BoJ’s Summary of Opinions, the USD/JPY pair is losing 0.02% on the day to trade at 151.30, as of writing.