Daily Digest:
w/c 17 June 2024: The US data highlight this week is Retail Sales on Tuesday, with global Flash PMI data on Wednesday. Plus on the central bank side we get the RBA, PBoC, SNB and BoE all in play
Richard Perry

Richard Perry

Editor
Richard is an independent market analyst with over 20 years of experience working for brokers in London. Most recently he has worked with Hantec Markets and Infinox, focusing on trading education, analysis and research of global financial markets. Richard uses a blended analysis style focusing on fundamentals and technicals in the production of his written reports, analysis videos and trading webinars. Since graduating from the University of Reading with a 2:1 in Politics & Economics, Richard has gained professional qualifications in the Society of Technical Analysts diploma (where he received a distinction) and the Private Client Investment Advice & Management qualification (achieved with merit). He has been interviewed frequently on news channels such as CNBC, Bloomberg and Sky News. Richard has extensive experience of writing for industry journals such as Shares Magazine and Investors Chronicle. He also has experience in hosting seminars at trade shows and educating traders around the world.

Is the downside surprise in UK inflation a tipping point for GBP?

GBP has been one of the standout performers on major forex for several months. The move has been driven by continued high inflation and eyewatering expectations of Bank of England rate hike expectations. However, the CPI inflation data for June has come in below expectations and markets are reacting. This could now trigger a re-assessment … Continued

Intermediate

The USD is oversold near term but any recovery will be short-lived

There has been a significant shift in how markets now view the USD. The crucial data points of the past couple of weeks have put the dollar bulls massively on the back foot. A relatively weak Nonfarm Payrolls was followed by lower-than-expected inflation readings on US CPI and PPI. The selling pressure that has followed … Continued

Intermediate

Oil futures finally break out on hopes of a less hawkish Fed

It has been a while since I could say anything even remotely interesting about oil. However, oil has finally broken the shackles of a two-month trading range. The move has largely come on hope rather than anything more concrete in terms of the oil market. Hope that oil demand remains strong, and hope that a … Continued

Intermediate

USD correction accelerates after a sharp downward surprise in US CPI

US CPI inflation was expected to fall in June, but not to the extent that it has. The negative surprise is significantly impacting major markets. As traders react to what they see as the implications of the decline in inflation, an already corrective move in the USD is threatening to move into an accelerating tailspin. … Continued

Intermediate

What is needed for Gold to rally again?

Since hitting a high of $2072 in May, the Gold futures have been on the slide. There are signs though, in recent sessions that this move may be starting to find a low. However, building support is one thing, building a rally is something else. I have taken a look at what is driving this … Continued

Intermediate

The data will be key for trading USD positions in the coming weeks

As US traders wearily return to their desks following their Independence Day celebrations there is a sense that consolidation is developing across USD major forex pairs. Views are becoming set that the Fed still has a likely one more rate hike to come this year before a prolonged pause. But if traders are settled in … Continued

Intermediate

Uncertainty in trading AUD crosses as the RBA pauses again

The Reserve Bank of Australia (RBA) kicked off the July round of major central bank announcements with another pause in its monetary policy tightening. The guidance from the RBA suggests that there might yet be more tightening in the pipeline with data-dependent decisions to come. This topsy-turvy approach leaves AUD traders with a sense of … Continued

Intermediate

Record weakness in JPY opens the door to currency intervention

Major currencies have seen fluctuating performance in recent months. USD performance has ebbed and flowed, with major currencies often reacting in line with swings in risk appetite. However, there is one currency that has failed to take part in these moves. That is the perennially underperforming Japanese yen. The record levels of weakness that the … Continued

Intermediate

Preparing for a 6% BoE base rate as hot UK CPI wobbles GBP

It was not meant to be like this. Inflation in other countries is falling, but not in the UK. Once more, the CPI data from the Office of National Statistics has come in hot. UK CPI has come in much higher than expected as headline inflation did not fall, whilst core inflation increased sharply. The … Continued

Intermediate

Hot UK wage growth is hawkish for the BoE and helps to sustain GBP strength

UK economic growth is pretty anaemic. Headline inflation has only just dropped below double digits. Some would arguably point to the economy going through a period of stagflation. Despite this, the performance of GBP continues to stand up strongly against other major currencies. The Bank of England is having to prioritise inflation reduction in its … Continued

Intermediate

Complacency mounts as equity markets climb a wall of worry

US equity markets have broken out to multi-month highs. The reasons to not be positive (or perhaps even outright bearish) are still prevalent. Yet, investors still seem happy to climb a wall of worry. Since October, the S&P 500 futures have rallied from a shade above 3500 to hit levels above 4300 this week. However, … Continued

Intermediate

Is Gold starting to build support?

Gold has been corrective over the past month. This has come as the US dollar (USD) and US Treasury yields have rebounded. The two big factors that are historically so crucial the near to medium-term outlook for gold remain the key drivers right now. Subsequently, with the USD rally starting to falter, the corrective move … Continued

Intermediate

Dovish signals in Eurozone inflation testing key support on EUR crosses

Eurozone inflation was lower than forecast in May. Core inflation fell to 5.3% in a move that saw two consecutive months of declines for the first time since mid-2021. With GDP faltering this will mean that the ECB will be more cautious in hiking rates aggressively from here. This is likely to weigh on the … Continued

Is NASDAQ about to follow other equity markets into a pullback?

There has been a huge rally in the NASDAQ in 2023. However, notably, there has been a disconnect with other equity markets in recent weeks. Whilst the tech-laden NASDAQ has continued to post strong gains, elsewhere the rallies have fallen over and some are turning corrective. So is NASDAQ an outlier and set to be … Continued

Intermediate

GBP surges as hot UK inflation gives the BoE a headache

The Bank of England (BoE) is facing an ongoing battle against inflation. Despite interest rates having been aggressively hiked to 4.50% as headline inflation reached double digits, there is more work to be done. Today’s announcement of inflation for April suggests that the work could be considerable. The likely need for further rate hikes (yes, … Continued

Beginner

US yields remain key for moves on USD major pairs

As Treasury yields have picked up in the past two weeks, we have seen the USD also strengthening once more. With the US debt ceiling having been hit, politicians remain locked in negotiations to prevent what would surely be a chaotic default. This may have been impacting very short-duration T-bills but further out the curve, … Continued

Intermediate

Gold looks to be losing its shine… at least for now

Gold has been a consistently solid investment over recent months. However, the shine is beginning to be taken off the performance. The drivers that have allowed gold to outperform other metals (that are deemed to be a higher risk) are starting to dissipate. This is leading to a retreat which could drag the gold price … Continued

Intermediate

Oil boosted by debt ceiling progress but it may be short-lived

Oil rebounded yesterday as traders have taken progress in the talks over the US debt ceiling as a positive for market sentiment. This near-term boost may still have legs to run, but the path to sustainable upside looks restricted. There is a whole catalogue of mixed signals impacting the oil price right now, but for … Continued

Beginner

EURGBP set to fall with more Bank of England hikes likely

The Bank of England (BoE) joined the throng of major central banks in hiking interest rates by +25 basis points today. However, whilst other central banks seem to be close to the end of their tightening, with inflation yet to be tamed, the BoE seems set to continue hiking. The prospect of higher rates in … Continued

Falling inflation remains key with the Fed now on pause

Inflation has always been a crucial factor in how central banks devise their monetary policy positions. As the Federal Reserve has paused its rate hikes amid mounting signs of recession, the FOMC members will be hoping that inflation begins to accelerate lower. The monthly data suggest they may just get their wish in the coming … Continued

Intermediate

A less gloomy outlook is driving a recovery in oil

The oil price has been swung around like a rag doll in the past couple of months. The focus on supply factors has been shoved aside as traders have fretted over the outlook for oil demand. Concerns over an impending recession in the US have dominated the narrative. However, this may have become overdone for … Continued

The Fed and ECB decisions drive USD and EUR volatility

After the Reserve Bank of Australia hiked unexpectedly on Tuesday, the Federal Reserve and the European Central Bank (ECB) made it a hat-trick of 25 basis points of rate hikes in the past 24 hours. Whilst the caution and pausing signals from the Fed were broadly anticipated, the admission of the negative impact of monetary … Continued

Intermediate

The warning signs flash for the March/April equities rally

Equity markets had a strong run higher in March and April. However, moving into May the rallies are looking tired. Macro factors are starting to weigh on sentiment ahead of crucial monetary policy announcements from the Federal Reserve and the European Central Bank. Sentiment is threatening to sour and this could mean a period of … Continued

Beginner

Understanding tier-one data can be crucial for traders

There are many ways to trade financial markets. Some traders get their signals from fundamental data, some use technical analysis. However, some traders trade newsflow and economic data. Understanding the influence of the most important events on the economic calendar (known as tier-one data) can have a decisive impact on the profitability of traders that … Continued

Intermediate

US tech earnings provide a welcome boost to a sagging rally

Last week, I discussed whether the US growth stocks that had driven the rally on Wall Street could keep up the pace. Despite the big tech stocks doing the heavy lifting, there are increasing signs that the Wall Street rally is sagging. Yesterday’s earnings from the tech giants, Microsoft and Alphabet have provided a welcome … Continued

Intermediate

Timing the opportunity to buy gold could be crucial

A near-term correction is building on gold. Since peaking at $2039 in mid-April, the gold price has been pulled lower. It is currently trading around three-week lows, with cash gold trading decisively back below the psychological $2000 level.   However, this looks to be a near-term move that is likely to be the source of … Continued

Beginner

Can US growth stocks continue to outstrip value stocks?

Equity markets have fluctuated in recent months, but there is a key theme that has developed. There has been a decisive shift in the outlook for US equities since the turn of the year. US growth stocks have decisively outperformed value stocks. This has become the key story of US equities so far in 2023. … Continued