- The US Dollar Index increases 0.13% on Wednesday and attempts to break into the April price range. April’s main price range can be seen between 105.39 and 106.35.
- Fed Kashkari continues to remain hawkish and advises the Fed’s monetary policy may not have reduced demand whatsoever.
- Disney stocks fell 9.50% as the company’s Revenue was lower than expectations. Additionally, Disney gave weaker guidance for the current quarter.
- The British Pound declines against the US Dollar, Euro and Swiss Franc as the Bank of England’s rate decision edges near.
GBPUSD – Will the BOE Members Again Vote For A Cut?
The GBPUSD is trading lower for a second consecutive day and continues to maintain the sell signal originally developed on Monday. The price continues to trade below the 75-Bar EMA and below the 50.00 mark on the RSI. In addition to this, the price continues to trade with lower highs and lower lows. These factors point towards a possible downward price movement.
The downward price movement is being witnessed as the Bank of England’s MPC votes on interest rates and holds a press conference. This will take place tomorrow at 11:00 GMT and then the press conference at 11:30 GMT. Investors currently expect the Monetary Policy Committee to fully vote for a “hold” due to other central banks taking a more hawkish stance. Previous the MPC had seen one member vote for a cut. If the MPC again sees a vote for a cut, the GBP may continue to be pressured.
Dollar traders are focusing more on interviews and speeches by Federal Reserve representatives. The head of the Richmond Federal Reserve, Mr Barkin, said that to bring inflation lower, a serious reduction in demand is necessary, however, the current interest rate level of 5.50% is enough to bring inflation to the target of 2%. However, comments from Neel Kashkari were less promising. Mr Kashkari did accept inflation in 2023 came down faster than previous expectations, however, that inflation has stalled. Mr Kashkari advises the FOMC does not yet know if the inflation rate will decline or continue to hold at its current level. In addition to this, the lower level of inflation is due to better supply chains and not due to lower demand.
However, economists advise that even though Mr Kashkari is hawkish, a hike is a low possibility. The main question for investors is if the Fed will cut in 2024. If the Federal Reserve does not cut, institutions may price the US Dollar Index above 107.00. For the GBPUSD, the price will need to break below 1.24830 for sell signals to remain intact.
USA30 – Disney Stocks Pressure the Dow Jones!
The Dow Jones rose for a fifth consecutive day yesterday but did receive some pressure from Disney stocks. The index rose in the first 90 minutes of the US open, but lost momentum and ended the day only slightly higher than the open price. Nonetheless, the index did not receive significant indications of downward price movement and the asset trades slightly higher this morning.
Of the 30 components within the index, 10 ended the day lower while 20 rose in value. Disney was the worst performing stock due to the Revenue missing expectations and the forward guidance being dimmer than the latest quarter. The best performing stocks were Merck&Co, Visa, United Health and Walmart. The next significant earnings report will be from Home Depot next Tuesday (14th). The stock is the 4th most influential based on weight and has struggled over the past month. Home Depot stocks have fallen 5.90% over the past 30 days.
Based on the latest retracement and Fibonacci levels, buy signals can materialize if the price increases above $38,954.60.
Michalis Efthymiou
Market Analyst
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