• Prior +3.3%
• Market index 196.7 vs 202.1 prior
• Purchase index 144.2 vs 145.6 prior
• Refinance index 472.7 vs 500.7 prior
• 30-year mortgage rate 7.24% vs 7.13% prior

Mortgage applications fell back in the past week, with refinancing activity leading most of the drop. It comes as the average interest rate of the most popular US home loan climbs by 11 bps to 7.24% – its highest since November last year.

This article was written by Justin Low at www.forexlive.com.

GBP

• The BoE left interest rates unchanged as expected but with Haskel and
  Mann this time voting for a hold instead of a hike.
• The employment report missed expectations with a big jump
  in the unemployment rate although the wage growth increased.
• The UK CPI beat expectations with Services inflation
  remaining sticky, which continues to support the BoE’s patient stance.
• The latest UK PMIs showed the Services PMI beating expectations
  and the Manufacturing PMI missing forecasts and slipping back into contraction.
• The UK Retail Sales missed expectations across the
  board.
• The market expects the first rate
  cut in August.

JPY

• The BoJ finally exited the negative interest rates
  policy as expected
  at the last meeting raising interest rates by 10 bps bringing the rate to a
  target between 0.00-0.10%. Moreover, the central bank scrapped the yield curve
  control and the ETF purchases, while maintaining QE in place.
• The latest Unemployment Rate missed expectations although it
  continues to hover around cycle lows.
• The Japanese PMIs improved further for both the
  Manufacturing and Services measures although the former remains in
  contractionary territory.
• The latest Japanese wage data came in line with expectations.
• The Japanese CPI came in line with expectations.
• The market expects another rate hike
  from the BoJ this year although the timing remains uncertain.

GBPJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that GBPJPY fell
once again into the lower bound of the channel where the buyers piled in to
push the price back into the highs. The pair continues to get rejected from the
193.00 resistance and this
led to a rangebound price action. The buyers will need to break through the
level to increase the bullish bets into new highs, while the sellers will look
for a break below the lower bound of the channel to position for a drop into
the 187.96 level.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see more clearly the
range between the 193.00 resistance and the 190.00 support. The market
participants will likely continue to play the range by selling at resistance
and buying at support until we get a catalyst to trigger a breakout on either
side.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
latest push higher diverged with
the MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it might be a signal for another reversal from the
resistance into the support. The sellers should step in around these levels
with a defined risk above the resistance to position for a break below the
lower bound of the channel with a better risk to reward setup. The buyers, on
the other hand, should wait to buy around the support.

Upcoming Events

Tomorrow we will see the latest US Jobless Claims
figures. On Friday we conclude the week with the BoJ Rate Decision, the Tokyo
CPI and later in the day, the US PCE report.

This article was written by FL Contributors at www.forexlive.com.

• Prior -18

The UK manufacturing order book balance falls in April to its lowest since January. But at least the good news is that the output expectations balance increased to 11 on the month, its highest since October last year. Adding to that is an improvement in the quarterly business optimism reading to +9 (previously -3 in January). And that is the highest since July 2021.

This article was written by Justin Low at www.forexlive.com.

• No reason for BOE to move rates in lockstep with either Fed or ECB

Cable is up from around 1.2355 to 1.2385 on the day now as Pill is trying to temper with market expectations. The BOE had previously said they were comfortable with markets pricing in a move in August. However, traders had recently pushed to test that narrative by pricing in a June move – which is now at near 50% (it was 62% before the PMI data today). I reckon we’re seeing a bit of a walk back in that regard now.

This article was written by Justin Low at www.forexlive.com.

• Policy outlook has not changed substantially since March
• There has been little news in recent months on inflation persistence
• Now seeing signs of a downward shift in the persistent component of inflation dynamic
• A cut in the bank rate would not entirely undo the restrictive policy stance
• Will need to maintain a degree of restrictiveness in policy stance to squeeze out inflation persistency
• Absence of news and passage of time have brought a bank rate cut somewhat closer

This is pretty much the step before the step to cut rates. As such, the language is angling towards a move in the next few months. As for market pricing, a move in June is ~51% priced in. Meanwhile, an August move is ~98% priced in after the PMI data today.

This article was written by Justin Low at www.forexlive.com.

USD

• The Fed left interest rates unchanged as expected at the last meeting with basically no
  change to the statement. The Dot Plot still showed three rate cuts for 2024 and
  the economic projections were upgraded with growth and inflation higher and the
  unemployment rate lower.
• The US CPI beat expectations for the third
  consecutive month, while the US PPI came in line with forecasts.
• The US NFP beat expectations across the board
  although the average hourly earnings came in line with forecasts.
• The US ISM Manufacturing PMI beat expectations by a big margin with
  the prices component continuing to increase, while the US ISM Services PMI missed with the price index dropping to
  the lowest level in 4 years.
• The US Retail Sales beat expectations across the board by a
  big margin with positive revisions to the prior figures.
• The market now expects the first rate cut in
  September.

AUD

• The
  RBA left interest rates unchanged as expected at the last meeting and
  finally dropped the tightening bias.
• The
  last Monthly CPI report came in line with
  expectations although the underlying inflation measure increased from the prior
  month.
• The
  latest labour market report missed expectations.
• The
  wage price index surprised to the upside as wage
  growth in Australia remains strong.
• The
  latest Australian PMIs showed the Manufacturing PMI almost
  jumping back into expansion while the Services PMI ticked slightly lower
  remaining in expansion.
• The
  market expects the first rate cut in February 2025.

AUDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that AUDUSD fell
below the 0.64 handle but eventually bounced back to retest the previous lows
where we can also find the 38.2% Fibonacci retracement level
for confluence. This is
where we can expect the sellers to step in with a defined risk above the
Fibonacci level to position for a drop into the 0.6272 level. The buyers, on
the other hand, will want to see the price breaking higher to increase the
bullish bets into the 0.65 resistance zone
where we have also the red 21 moving average for
confluence.

AUDUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the latest leg
lower diverged with the
MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, it led to a pullback into the resistance around the
0.6475 level. If the price were to break higher, the chances for a reversal
will increase and we could see a quick rally into the 0.6520 resistance.

AUDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have a minor upward trendline defining the current bullish momentum with the
red 21 moving average acting as dynamic support. The buyers are leaning on this
trendline to
keep bidding up the pair into new highs. The sellers, on the other hand, will
want to see the price breaking lower to pile in and position for a drop into
new lows.

Upcoming Events

Today we get the US Flash PMIs. Tomorrow, we have
the Australian CPI data. On Thursday we will see the latest US Jobless Claims
figures, while on Friday we conclude the week with the US PCE report.

This article was written by FL Contributors at www.forexlive.com.

Well, that’s quite a bummer in European morning trade. There was a bit of life after the PMI data earlier but things have quickly settled back down. Dollar pairs are sitting within 10 pips of one another, showing very little change on the day.

That speaks to the lack of conviction we’re seeing for the time being. Hopefully that will change when we get to the US PMI data later, to help set the tone for the sessions ahead as well. Otherwise, it might stay quieter until we get to the US Q1 GDP data on Thursday and the PCE price index on Friday.

If anything else, USD/JPY remains one to pay close attention to as it holds close to the 155.00 mark.

In other markets, gold is still down a little over 1% at $2,300 while equities are hoping to post back-to-back daily gains this week. S&P 500 futures are up 0.2% but things are still looking a little nervy, as seen in US trading yesterday. Nonetheless, investors managed to snap the run of six straight days of losses so let’s see if they can keep the bounce going for now.

This article was written by Justin Low at www.forexlive.com.

It was a quick one at that, as EUR/USD backs away from the earlier high of 1.0695 to fall to 1.0655 on the day. The data doesn’t change the ECB’s plan for a move in June but it is perhaps a first step in keeping their options open after that. For now at least, traders are more focused on the next move.

And as mentioned earlier:

„Taking that into consideration, the euro bounce we’re seeing might not have much legs to it. But at least from the near-term chart above, EUR/USD is working above both its 100 and 200-hour moving averages again. That sees the near-term bias turn more bullish at least. But we’ll see if price can hold above the high last week at 1.0690 for the day. If that doesn’t last, I’m inclined to fade this move for a quick one.“

A good ol‘ fade the pop trade in the bag. Now, we’re back to square one on the day. And with price action continuing to consolidate in and around the key hourly moving averages, we’ll have to wait on the US PMI data to settle the score.

This article was written by Justin Low at www.forexlive.com.

It all started with the dollar making some headway two weeks back, before a drop below 1.2500 made things really tough for GBP/USD. There was a brief consolidation phase below the figure level but we’re seeing sellers pick up the momentum again in the last two days. And now, the pair is down another 0.4% to 1.2315.

From a technical perspective, there is very little support in stopping the drop here. The next key support target will be the October low itself at 1.2037. That’s still nearly 300 pips away from here.

Unless the mood music changes up for the dollar, it might be tough to argue otherwise. And that is despite the recent inflation data from the UK, as argued last week here.

While the BOE is still poised for a potential August rate cut, the Fed’s timeline has readjusted quite significantly. We’re looking at one potentially in September but even that isn’t as much as a given as compared to the BOE for August. And that pretty much outlines the risk balance for both the dollar and pound currently.

I mean, if sterling can’t even compose itself even with a better risk mood today, that’s not a good sign in the short-term especially with the chart looking as it is above.

This article was written by Justin Low at www.forexlive.com.

Last week,
the Nasdaq Composite got under pressure amid geopolitical fears and a general
risk off sentiment. The latest developments saw Israel retaliating against Iran
but the latter downplaying the airstrikes. This episode might be behind our
backs, although it’s worth to keep an eye on it if it were to become a concern
again. On the macro side, the Fedspeak turned more hawkish, especially in the
latter part of the week as the inflation progress looks to be stalled. Overall,
the last week had plenty of bearish catalysts weighing on the market, so we
will probably need some positive data on the inflation front this week to turn
the sentiment around.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite broke through another key level at 15453 and extended the selloff
into the 15162 support. We can
also notice that the price got a bit overstretched as depicted by the distance
from the blue 8 moving average. In
such instances, we can generally see a pullback into the moving average or some
consolidation before the next move. The buyers might start to pile in more
aggressively around these levels to position for a rally into a new all-time
high with a better risk to reward setup. The sellers, on the other hand, will
want to see the price breaking lower to increase the bearish bets into next
support at 14477.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the
price got overstretched on this timeframe as well. The buyers might want to
start piling in around these levels or wait for a catalyst which could be
either the Flash US PMIs tomorrow or the US PCE on Friday. The sellers should
continue to sell the rallies though to position for the ultimate target around
the 14477 level. There’s not much else to glean from this chart, so we need to
zoom in to see some more details.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have
a trendline
defining the current downward momentum where we can find the red 21 moving average for confluence. If we
get a pullback, we can expect the sellers to step in around the trendline with
a defined risk above it to position for new lows. The buyers, on the other
hand, will want to see the price breaking higher to pile in and position for a
rally into the 15929 level.

Upcoming
Events

This week is a bit empty on the data front with just a
few notable releases. We begin tomorrow with the US PMIs. On Thursday, we get
the US Q1 GDP and the latest US Jobless Claims figures. On Friday, we conclude
the week with the US PCE report.

This article was written by FL Contributors at www.forexlive.com.