Archive for: Echo_8

Market Q2 Forecasts: US Dollar, Gold, Euro, Oil, Bitcoin, Yen, Equities Outlooks

The second quarter of the year looks set to bring renewed volatility to a wide range of asset classes as a slew of central banks look set to pull the trigger on interest rate cuts.

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There are a range of volatility drivers lining up in the second quarter of the year that will provide multiple trading opportunities. A range of major G7 central banks are set to start unwinding their restrictive monetary policy by cutting interest rates, or increasing them in the case of the Bank of Japan, US earnings will provide extra volatility to a range of major US indices that currently trade at, or near, multi-decade highs, while the Bitcoin ‘halving’ event historically sees the BTC push substantially higher. The war in Ukraine looks set to continue, the Middle East remains volatile, and markets will begin to look ahead to multiple elections across the Western World later in the year.

The VIX Index, below, highlights the benign market conditions over the last few months as investors enjoyed a profitable, risk-on Q1.

VIX – S&P 500 Volatility Index

After a quiet start to Q2, gold prices rallied sharply in March, printing a fresh all-time high as investors, and central banks, bought the precious metal.

Gold Daily Price Chart

Bitcoin enjoyed a positive Q1, rallying from the start of the year. Heavy demand from spot Bitcoin ETF advisors drove demand, while the upcoming Bitcoin halving event – expected mid-to-late April – will cut new Bitcoin issuance in half, crimping new supply.

The Next Bitcoin Halving – What Does it Mean?

Bitcoin Daily Price Chart

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Q2 Technical and Fundamental Market Forecasts

Australian Dollar Q2 Technical Forecast: AUD/USD and AUD/JPY

AUD/USD remains in a long-term or ‘secular’ downtrend channel which has been in place since mid-February 2021. The base of this band has been very well respected, to the point where the relatively brief fall below it in the second half of 2022 looks like an aberration.

Japanese Yen Q2 Fundamental Forecast: Brighter Days Ahead, Catalysts to Watch

This article provides a comprehensive analysis of the second-quarter outlook for the Japanese yen, shedding light on factors that could spur volatility and dictate price action.

British Pound Q2 Technical Outlook – GBP/USD, EUR/GBP, and GBP/JPY Technical Outlooks

The British Pound has started the process of re-pricing against a range of currencies after the Bank of England’s shift in tone.

Equities Q2 Fundamental Outlook: AI Euphoria, US Election and the Fed to Drive US Stocks

US stocks enjoyed a broad rally in Q1 and the positive market sentiment looks likely to spill over into Q2. The prospect of rate cuts and the growing AI drive supports US stocks.

Crude Oil Q2 Technical Forecast – WTI and Brent. What Looms Ahead?

The US benchmark has scaled five-month highs at the time of writing and is closing in on a longer-term downtrend line on its weekly chart. This has capped the market since mid-2022, admittedly with few tests.

Bitcoin Q2 Fundamental Forecast: Current Demand/Supply Imbalance is Driving Bitcoin Higher

Bitcoin traders have enjoyed the first quarter of 2024 with the largest cryptocurrency by market capitalization buoyed by the SEC approval of a raft of spot Bitcoin ETFs in early January.

Gold, Silver Q2 Technical Forecast: Key Resistance in Focus as Markets Get Stretched

This article thoroughly examines the second-quarter technical outlook for gold and silver, delving into the nuances of current price action dynamics and market sentiment to uncover potential trends.

Euro Fundamental Forecast: ECB Will Start Cutting Rates in Q2

Easing price pressures and a stagnant economy will likely see the ECB cut rates in Q2 with more to follow if recent central bank rhetoric is to be believed.

US Dollar Q2 Forecast: Dollar to Push Forward as Major Central Banks Eye Rate Cuts

The US dollar performed phenomenally in Q1 – something that is likely to continue but perhaps to a lesser degree now that growth is moderating and rate cuts come into focus.

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Market Wrap and Week Ahead – w/c March 11th

Recent commentary from ECB President Christine Lagarde and Federal Reserve Chairman Jerome Powell suggest that both central banks are looking to start a series of interest rate cuts in June.

In his testimony to the Senate Banking Committee on Thursday, Fed Chair Jerome Powell indicated that interest rates could soon be on the way down. ‘If the economy does as expected, we think carefully removing the restrictive stance of policy will begin over the course of the year’, Powell said Thursday.

Friday’s latest US Jobs Report also showed the closely watched unemployment rate rise unexpectedly from 3.7% to 3.9%, while average earnings slowed further.

US Dollar Falls Further After US NFP Beat But January Number Revised Lower

Also Thursday, post-policy decision commentary from ECB’s Lagarde also pointed to the end of H1 as an appropriate time to start cutting borrowing costs.

‘We are making good progress towards our inflation target and we are more confident as a result…But we are not sufficiently confident. We need clearly more evidence and more data. We will know a little more in April, but we will know a lot more in June.’

Earlier, ECB staff projections cut inflation and growth forecasts for the next three years.

Euro (EUR/USD) Drifts Marginally Lower, ECB Leaves All Policy Rates Unchanged

In Japan, recent commentary from Bank of Japan officials suggests that if the current round of wage negotiations produce the expected results, then the BoJ may well start to hike interest rates soon, with the markets already pricing in a 60%+ chance of a hike this month.

High Importance Economic Releases and Events – w/c March 11th.

There are a few important data releases that can inject a further shot of volatility into a range of asset classes. The standout next week is the latest US inflation report, followed by UK employment and growth data.

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Gold, Nasdaq 100, Nvidia

This week saw gold continue to push higher and make a couple of fresh record highs. The precious metal is being driven ever higher on a combination of increased rate cut expectations, Chinese demand, and safe haven buying.

Gold Daily Price Chart

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US indices pushed marginally higher over the week although Friday’s sell-off, noticeable in the Nasdaq, is worth taking note of. Friday’s sell-off, while damaging, still leaves Nasdaq in a bullish trend with the indices making an unbroken series of higher lows and higher highs over the past five months.

Nasdaq 100 Daily Chart

One company that bucked its recent bullish trend, Nvidia, turned sharply lower on Friday. Chip giant Nvidia is one of the largest quoted companies and has an oversized impact on various US indices. It will be worth following Nvidia next week to see if Friday’s move was an aberration.

Nvidia Daily Chart

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Technical and Fundamental Forecasts – w/c March 11th

British Pound Weekly Forecast: GBPUSD Looks Overextended at 7-Month High

The Pound looks set to start a new trading week at more-than seven-month highs against a United States Dollar broadly weakened by expectations that interest-rate cuts are surely coming.

Euro Weekly Forecast: Gains Look Vulnerable in the Week Ahead

This article explores the euro’s fundamental and technical outlook, examining pivotal factors that may influence price movements in the upcoming week.

Gold Price Outlook – Rally Looks Set to Continue on Positive US Rate Cut Backdrop

The recent record-breaking gold rally seems likely to continue as US interest rate cuts are now seen starting at the end of H1

US Dollar Forecast: US CPI to Spark Next Big Move – EUR/USD, USD/JPY, GBP/USD

February’s U.S. inflation data is poised to ignite heightened market volatility in the upcoming week, playing a pivotal in shaping the near-term outlook for the U.S. dollar.

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Markets Week Ahead: S&P 500, Dow Hits Fresh Highs, Gold Fades, US Dollar Rallies

Fed Holds Steady, Ditches Tightening Bias, Gold and US Dollar on the Move

Fed chair Jerome Powell pushed back against aggressive rate cut expectations again mid-week after the FOMC left US rates unchanged. A March rate cut is currently being priced out, leaving the May meeting a live event, with six rate cuts seen in 2024, down from seven last week. The blockbuster US NFP report on Friday gave Chair Powell’s stance some validation as the US jobs market continues to forge ahead.

US Dollar Jumps After NFPs Smash Estimates, Gold Slumps

US Dollar Index Daily Chart

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Despite US dollar strength, the US equity markets continue to power ahead, driven in part by some big moves in the big tech stocks, including Amazon and Meta.

Amazon (AMZN) Daily Chart

Meta Daily Chart

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The world’s largest company, Microsoft fell post-earnings but regained nearly all losses by the close on Friday, while Apple fell mid-week but also regained some losses. The US earnings calendar is not as busy next week although Ford, MicroStrategy, Uber Technologies, Alibaba, and PayPal will all be opening their books in the coming days and are worth noting.

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After last week’s data and events-heavy week, the next few days are light of potential market-moving releases and events. Traders should note that after the pre-FOMC blackout, Federal Reserve members will now be allowed to give their latest opinions next week and these comments should be carefully noted, especially any talk of a rate cut timetable.

For all market-moving economic data and events, see the DailyFX Calendar

US regional banks were back in the headlines last week after the New York Community Bancorp release that sent their shares sprawling over 40% lower.

Chart of the Week – New York Community Bancorp

Technical and Fundamental Forecasts – w/c February 5th

British Pound Weekly Forecast: Rare BoE Vote Split will Continue to Provide Support

The British Pound was boosted last week by the widest split for sixteen years. on the Bank of England’s interest-rate-setting committee. The key bank rate was held at 5.25%, as more or less everyone had expected on February 1.

Euro Weekly Forecast: Stagnant EU Growth Exposes Euro Vulnerabilities

Euro pessimism drags on as the EU narrowly avoided a recession. ‘US excellence’ is very much alive after NFP, while the pound and yen could aid euro performance.

Gold Weekly Forecast: XAU/USD Testing Support After US NFPs Hammer Rate Expectations

Gold is likely to struggle to push higher over the coming week after the latest US Jobs Report smashed expectations, paring Fed rate cut expectations.

US Dollar Forecast: Bulls Return as Bears Bail, Setups on EUR/USD, USD/JPY, AUD/USD

This article provides a comprehensive analysis of the U.S. dollar’s fundamental and technical outlook, with a specific focus on EUR/USD, USD/JPY, and AUD/USD. The piece also offers insights into critical price levels for the week ahead.

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When will Microsoft Corp report its latest earnings?

Microsoft Corp is scheduled to report its second (Q2) earnings on Tuesday, January 30th, 2024, after the market closes.

The backdrop

Investors cheered Microsoft’s first-quarter results, reported in late October, as it beat Wall Street‘s estimates and promised future product offerings infused with AI.

“With copilots, we are making the age of AI real for people and businesses everywhere,” said Satya Nadella, chairman and chief executive officer of Microsoft. “We are rapidly infusing AI across every layer of the tech stack and for every role and business process to drive productivity gains for our customers.”

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Microsoft FY24 Q1 Financial Summary

Source Microsoft

Within the details, Microsoft reported the following highlights.

• Revenue from Microsoft’s Intelligent Cloud segment was $24.3 billion, up 19%. Within that, Server products and cloud services revenue increased by 21%, driven by Azure and other cloud services revenue growth of 29%.

• Revenue in Productivity and Business Processes was $18.6 billion, up 13%. Within that, Office Commercial products and cloud services revenue increased by 15%, driven by Office 365 Commercial revenue growth of 18%

• Revenue in More Personal Computing was $13.7 billion and increased 3%. Within that Windows revenue increased 5%, with Windows OEM revenue growth of 4% and Windows Commercial products and cloud services revenue growth of 8%.

What to look for in Q2?

In its Q1 earnings call, Microsoft provided the following forward-looking guidance for Q2.

Microsoft Outlook Slide.

Source Microsoft.

• During 1Q, Microsoft saw its Azure cloud revenue growth accelerate after two years of deceleration. Analysts will likely look for more of the same in its Q2 Earnings Report.

• There will be keen interest in the uptake and impact of the Microsoft 365 CoPilot AI add-on, launched last year and is available via subscription. So far, it has met with a mixed reception.

• Microsoft completed its $68.7 billion acquisition of video game publisher Activision Blizzard in mid-October. As such, it will affect earnings for Q2, and executives will likely discuss Activision Blizzard when providing guidance for Q3.

• Management thoughts and insights into the recent drama at OpenAI and any opinions on the current OpenAI board structure.

Key Financials – Summary

Wall Street’s expectations for the upcoming results are as follows.

• Earnings per share: $2.77 vs. $2.99 in Q1

• Revenue: $61.1bn billion vs. $56.52billion in Q1

Microsofts Revenue

Source Trading Economics

Technical Analysis

Building on an almost 57% gain in 2023, Microsoft’s share price has surged over 6% in the opening weeks of 2024, as investors began the new year with renewed enthusiasm for tech stocks that offer exposure to AI.

The chart of Microsoft’s share price is a textbook example of a market in an uptrend, putting in place a sequence of higher highs and higher lows punctuated by corrective and orderly pullbacks. The RSI is now pushing into overbought territory, which offers hope that a pullback may not be too far away, providing an opportunity to buy Microsoft shares at better levels.

Near-term horizontal support comes in at $380/378 and below that at $360ish, coming from July highs/ December lows. Medium-term support is strong $350/335 area, coming from the uptrend drawn from January 2023 $219.35 low and the 200-day moving average at $337.00.

Aware that a sustained break below $335 would negate the uptrend and warn a deeper pullback is underway.

Summary

Microsoft Corp is scheduled to report its second (Q2) earnings on Tuesday, January 30th, 2024, after the market closes. The price action in the lead-up to the report suggests the market is looking for both an earnings beat and positive forward guidance.

Global Market Outlook – W/C January 22nd

Markets to Watch Next Week as Central Bankers Have Their Say

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US equities are running ever higher with the S&P 500 and the Dow Jones posting fresh all-time highs on Friday. A strong in big tech stocks is behind the latest leg higher and with the Q4 earnings season already up and running, strong results from any of the ‘Magnificent Seven’ will likely see US indices rally further. The S&P 500 is dominated by these seven companies with Microsoft on its own having a 7.29% weighting in the index.

S&P 500 Monthly Chart

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The US dollar has enjoyed a strong start to the year as US Federal Reserve Members push back against what they perceive to be excessively bullish interest rate cut expectations. US Treasury yields have backed up, underpinning the US dollar against a range of other currencies. Precious metals have been under pressure this week with gold twice testing the $2,000/oz. level.

Gold and Silver Under Pressure From Pared Back Interest Rate Cut Expectations

US Dollar Index Daily Chart

Aside from a raft of Q4 US earnings releases next week, the economic docket is packed full of high-importance data releases and events. The Bank of Japan Quarterly Outlook Report needs to be closely monitored, especially with USD/JPY at elevated levels, while Thursday’s ECB policy decision and Friday’s US core PCE release will be next week’s main attractions.

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Technical and Fundamental Forecasts – w/c January 22nd

British Pound Weekly Forecast: Ranges Look Set to Hold, But Watch US Data

The Pound has been quite resilient to economic shocks, probably because they haven’t moved the dial on interest-rate views.

Euro Weekly Forecast – Will the ECB Give Any Guidance? EUR/USD and EUR/GBP

The ECB policy meeting on Thursday is the ideal place for central bank President Christine Lagarde to start to outline a rate cut timetable. Trouble is the meeting will likely follow the familiar ‘let’s wait and see the data’ script.

Gold, Silver Weekly Forecast: Tempered Rate Cut Bets Pose a Headwind

Gold revealed its vulnerability to further selling as a result of renewed vigor from the dollar and US yields. Fed members warn markets about overly optimistic rate cut bets.

US Dollar Forecast: EUR/USD, USD/JPY, USD/CAD & AUD/USD’s Path Tied to US PCE

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