For some context, the existing 2.2 mil bpd worth of oil production cuts are to run until June. Three sources cited in the report say that even though formal talks have yet to begin on the matter, an extension to the voluntary cuts are likely. But another source did say that OPEC+ is not yet leaning one way or the other.
This article was written by Justin Low at www.forexlive.com.
How does halving affect the
Bitcoin price?
At
the time of writing, the Bitcoin exchange rate is around $57,000. Many analysts
expect the halving to catalyse further BTC price growth in the long term.
Historically,
with each new cycle following a halving event, the price of Bitcoin reached a
new high. For example, in late 2013, about a year after the first halving,
Bitcoin reached the $1,200 mark. The next market cycle peaked at $20k per
Bitcoin in late 2017 and went up to $69k in late 2021 before collapsing again.
However, in the last six months, the value of BTC has already risen by about
140%. In comparison, over the same period, the price of Ethereum, the second
most crucial cryptocurrency, has only increased by 85%.
‚The
current situation is unique: Bitcoin, for the first time, exceeded the previous
high before halving, reaching $73,000 in March 2024′, said Kar Yong Ang, Octa
Broker financial analyst. He added that demand from the U.S. bitcoin ETFs
launched in January was a vital factor in that price rise.
At
the same time, miners‘ revenues will drop by exactly half. As a result, they
will have to spend twice as much time and twice as much electricity to get the
usual amount of cryptocurrency. And since energy is not cheap, the weakest
players are expected to leave the market. In other words, we expect a supply
shortage against the backdrop of increasing demand.
Conclusion
The
halving of Bitcoin is a milestone in the history of the major cryptocurrency,
which shows its limited issuance and inherent mechanisms to protect against
inflation. Many believe that Bitcoin, with its deflationary model, is well
positioned to become a reliable store of value in an unstable global economy,
much like traditional gold—but only digitally.
If
we draw historical parallels, Bitcoin should enter an intense growth phase
around the end of 2024, after which it should exceed $200,000. The current
conditions are very different from those observed in 2020 because the demand
for cryptocurrency is extremely high due to ETFs, and its deficit is already
felt today.
Octa
Octa is an
international broker that has been providing online trading services worldwide
since 2011. It offers commission-free access to financial markets and various
services already utilised by clients from 180 countries with more than 42
million trading accounts. Free educational webinars, articles, and analytical
tools they provide help clients reach their investment goals.
The company is involved in a comprehensive network
of charitable and humanitarian initiatives, including the improvement of
educational infrastructure and short-notice relief projects supporting local
communities.
Octa has also won more than 70 awards since its
foundation, including the ‚Best Educational Broker 2023‘ award from Global
Forex Awards and the ‚Best Global Broker Asia 2022‘ award from International
Business Magazine.
This article was written by FL Contributors at www.forexlive.com.
Headlines:
Markets:
It was a quiet session for the most part with European markets closed in observance of Labour Day.
Major currencies aren’t up to much with the dollar keeping steadier mostly, holding in smaller ranges on the day. All eyes are on the coming US data as well as the FOMC meeting later. The USD/JPY focus continues with the pair keeping just under the 158.00 mark throughout the session.
Meanwhile, equities remain fairly nervous after falling at the end of April trading yesterday. US futures are down with tech shares leading the declines again.
In other markets, gold is finding a temporary base just under $2,300 after yesterday’s plunge while oil is marked down to its lowest since March at $80.47 as geopolitical tensions fade. Bitcoin is one to watch as well as it comes under pressure amid a break below $60,000 on the day.
This article was written by Justin Low at www.forexlive.com.
Mortgage applications continued to decline in the past week, with both purchases and refinancing activity also falling. It comes as the average rate of the most popular US home loan rises further by 5 bps to 7.29% – its highest since the end of November last year.
This article was written by Justin Low at www.forexlive.com.
Gold Technical Analysis – Daily Timeframe
On the daily chart, we can see that Gold fell below a key trendline recently, and after some consolidation, continued lower led by the market’s positioning into a hawkish Fed and the hot US Q1 ECI report yesterday. All else being equal, the natural target should stand around the next trendline near the previous all-time high at 2145 which can be reached if the US data continues to run hot.
Gold Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price broke the bearish flag to the downside increasing the bearish momentum as the sellers piled in more aggressively. Technically, the measured target stands around the 2220 level. From a risk management perspective, the sellers will have a better risk to reward setup around the 2320 level as we will find the downward trendline acting as resistance, although we will liekly need some weak US data releases or a dovish Fed to get there. A break above the trendline should see the buyers stepping in with more conviction while a break above the 2352 high will invalidate the bearish setup.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
The US ADP is expected at 175K vs. 184K prior. Last month, the data surprised to the upside with the biggest increase in hiring in eight months. The worrying part was the change in annual pay which showed an unchanged 5.1% rate for job stayers and a big jump to 10.1% vs. 7.6% prior for job changers. The problem here is that a resilient labour market with rising wage growth could not only stop the disinflationary trend but even reverse it. This is something that the Fed will want to avoid. Therefore, watch out for the pay gains data today as an upside surprise could fuel another hawkish reaction from the market with more buying momentum for the USD across the board and more downside for bonds, stocks and gold.
US ISM Manufacturing PMI 14:00 GMT (10:00 ET)
The US ISM Manufacturing PMI is expected
to tick lower to 50.1 vs. 50.3 prior. Last
month, the index jumped into expansion for
the first time after 16 consecutive months in contraction with generally upbeat
commentary. The latest S&P
Global US Manufacturing PMI returned back
into contraction after the Q1 2024 expansion. The commentary this time has
been pretty bleak with even mentions of strong layoff activity, although there
was also good news on the inflation front. The ISM report is generally
considered more important by the market, so it will be used to confirm or
deny the S&P Global result.
If the data surprises to the upside, it will likely trigger a hawkish reaction as the market will brush off completely some latent worries from the S&P Global survey and lead to more bids for the USD and offers for bonds, stocks and gold. Conversely, if the data surprises to the downside, the market might reverse some of the moves seen in the last few days.
US Job Openings 14:00 GMT (10:00 ET)
The US Job Openings is expected at 8.680M
vs. 8.756M prior. This will be the first major US labour market report of
the week and, although it’s old (March data), it’s generally a market
moving release. The last
report we got a slight beat with negative
revisions to the prior readings highlighting a resilient although normalising
labour market. The market will also focus on the hiring and quit rates as they
both fell below the pre-pandemic trend lately. This report will be overshadowed by the ISM Manufacturing PMI but watch out for big surprises as they could exacerbate or even reverse the moves from the ISM release.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
Investors are feeling nervous awaiting the Fed later in the day. But at the same time, don’t discount the impact from the US data later. There is the ADP employment change, ISM manufacturing PMI, and JOLTS job openings before the FOMC meeting comes in. Those will also play a role in driving market sentiment in the first half of US trading at least.
But if we are to see a more hawkish Fed take later in the day, risk trades could really be in for a world of hurt. For the S&P 500, a test of the 100-day moving average (red line) will be the first key level to watch in that scenario:
This article was written by Justin Low at www.forexlive.com.
The near-term pressure is back on for gold in trading today. The precious metal had been holding in a consolidative phase coming into this week, above the $2,300 mark. But amid a break of key near-term support today, we are seeing sellers pick up the momentum now. Here’s a look at the hourly chart:
Gold buyers did manage to hang on at the 100-hour moving average (red line) since the end of last week. But they were unable to force a breakthrough, as price action did not challenge the upper near-term limit of the 200-hour moving average (blue line). In turn, sellers are pushing price back down now and that sees the near-term bias turn more bearish.
So, are there any notable downside levels to watch from here?
The first one will be the $2,300 mark itself. That will be one to watch especially on the daily chart. Then, there is the 23 April low at $2,391 to contend with. However, I’d argue that a firm break below $2,300 will help to set off further downside momentum in gold in any case.
The 38.2 Fib retracement level at around $2,260 and then the $2,200 mark will be the next two key technical levels to watch. That is should the correction lower run much deeper on a break under $2,300. Those are the recognised risk levels to be mindful of.
As for the fundamental plays, the dollar is seeing some push and pull this week. But all eyes are now on the Fed tomorrow next. That will be the first key risk event for gold, before the US jobs report on Friday factors into play.
This article was written by Justin Low at www.forexlive.com.
NZD
NZDUSD Technical Analysis –
Daily Timeframe
On the daily chart, we can see that NZDUSD managed
to erase most of the losses from the US CPI release and almost reached the key trendline
resistance around the 0.60 handle where we had also the 61.8% Fibonacci retracement level
for confluence. The
price couldn’t push right into it as the pair rolled over before that. We may
be heading back into the 0.5860 support but the
sellers will need to break some key levels on the lower timeframes to keep
pushing to the downside.
NZDUSD Technical Analysis –
4 hour Timeframe
On the 4 hour chart, we can see that the price bounced
from the key support zone around the 0.5920 level where the buyers stepped in
with a defined risk below it to position for a rally back into the major
trendline targeting a break above it. The sellers, on the other hand, will want
to see the price breaking lower to increase the bearish bets into the 0.5860
support.
NZDUSD Technical Analysis –
1 hour Timeframe
On the 1 hour chart, we can see that the
price has been diverging with
the MACD for
some time as it was rallying into the major trendline. This is generally a sign
of weakening momentum often followed by pullbacks or reversals. In this case, it
led to a pullback into the support zone but a break below it would confirm a
reversal. This week is full of economic data which will likely give us a
direction for the next few weeks.
Upcoming Events
Today, we have the US Q1 Employment Cost Index and
the Consumer Confidence report. Tomorrow, we get the New Zealand Jobs data, and
later in the day the US ADP, the ISM Manufacturing PMI, the Job Openings and
the FOMC rate decision. On Thursday, we will see the latest US Jobless Claims
figures. On Friday, we conclude the week with the US NFP and ISM Services PMI.
This article was written by FL Contributors at www.forexlive.com.
Could it be that the direction of the yen is even more critical than that of the economy for the markets?
It is hard to say whether it is more crucial, but it is evident that Japanese stocks have become exceptionally sensitive to yen movements over the past two years. In simpler terms, where the currency goes, so goes the market.
It should, therefore, come as no surprise that after the yen strengthened earlier in the week, the Nikkei 225 index also experienced a correction.
Similar moves have already been observed, especially ahead of the Bank of Japan’s March meeting, when the regulator was expected to announce a monetary policy review.
How much does the Nikkei get affected by the yen moves?
According to some estimates, a 1% rise in the Japanese currency could cause the blue-chip index to fall by about 2%. However, this effect tends to soften over time.
For example, although the USDJPY rate has risen by around 0.76% since the start of the week, the Nikkei index has only increased by 0.36%. Therefore, it is clear that relying solely on the yen’s movements to invest long-term in Japanese stocks can be risky.
As elsewhere and with any other instrument, it is impossible to guarantee the prediction of the direction of movement using only one indicator. It is necessary to look at the big picture.
So why should the index go down when the yen strengthens?
The rising yen puts pressure on exporters‘ earnings, which are crucial to the Japanese economy, given its heavy dependence on international trade.
Looking ahead, the unwinding of bearish yen bets by hedge funds and asset managers could strengthen the Japanese currency to 139 against the dollar by the end of 2024.
In addition, further rate hikes by the Bank of Japan or government interventions could also favor the country’s currency. Another positive factor could be the Fed’s dovish rhetoric.
What should we pay attention to?
The Bank of Japan will release its current account balance forecast tomorrow, which could help determine whether the authorities intervened in the foreign exchange market on Monday.
If they did, it suggests that the regulator is willing to intervene when necessary, and therefore, bearish investors should exercise caution. If not, the yen’s slide could resume.
The problem is that spending foreign exchange reserves is only temporary, which is unlikely to lead to a turnaround. In the end, the government will simply deplete the funds.
This article was written by FL Contributors at www.forexlive.com.