• Commodities are in the spotlight as the new week gets underway
• FX stays more muted to start the session
• Fed’s Bostic: It is going to take a while before we are certain inflation is headed to 2%
• ECB’s Kazāks: It’s quite likely June will be when we start to cut rates
• BOE’s Broadbent: It is possible that a rate cut could come this summer
• Who will be Iran’s next president?

Markets:

• FX muted; NZD lags slightly
• European equities a little higher; S&P 500 futures up 0.2%
• US 10-year yields down 2.4 bps to 4.415%
• Gold up 0.7% to $2,431.50
• WTI crude down 0.4% to $79.77
• Bitcoin up 0.3% to $67,115

It was a largely quiet session with it being a bank holiday in most parts of Europe. Markets were still open though but there is a distinct lack of appetite, with major currencies extremely muted on the day.

The dollar is keeping steady but little changed overall, with not much change to take note of. The ranges for the day are also leaving a lot to be desired with most dollar pairs holding within just 25 pips. The snapshot here speaks for itself:

In the equities space, stocks are steadier as investors look to build on the winning form from last week.

But it is commodities that are stealing the spotlight to start the week, with gold racing higher to fresh record highs earlier around $2,440 levels. Price has come back down a bit to $2,431 now but the precious metal is still up 0.7% on the day.

At the same time, copper is also surging higher as futures look to hold a firm break above the $5 per pound mark. It hit a fresh record high of $5.16 earlier before holding around $5.05 now.

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

• Data on inflation has been very bumpy
• My outlook is that inflation will continue to fall this year and into next year
• But we’ve still got a ways to go
• Fed is open to all possibilities on economic path
• Risks are really balanced right now
• Our policy stance is restrictive
• Business leaders tell me that things are slowing down, but very gradually
• It will take a while for that momentum to play through in the economy

In simpler terms, he’s saying that the Fed is in no position yet to signal any pivot on rates. And when the time comes, expect them to sell the same narrative as the other major central banks ahead of them currently. That being even if they do proceed to cut once, it’s no biggie and policy is still restrictive to keep pinning inflation down.

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

For a while there it seemed like the dollar was the hot commodity in the last few months. Inflation seemed stickier and the US economy was faring much better than the rest. Essentially, it was the case of being the cleanest shirt among the dirty laundry.

It felt like the BOJ acted too late. As for the ECB, BOE, and BOC, they had economic worries to consider towards the end of last year. In Switzerland, the SNB surprised with an early rate cut. And China worries had dampened the optimism surrounding the aussie and kiwi. But a lot of that has changed over the last one month or so.

The BOJ is well, still stuck in the mud as they face a fight against the inflation clock. But Q1 data shows that the situation in the Eurozone, UK, and Canada may not be that bad. Although, all three are facing possible rate cuts going into the summer. However, the difference now is that the Fed may join them a little after that after some question marks about stickier inflation and a hot economy. And in Australia, we’re seeing stickier inflation push back hopes of an RBA rate cut later in the year.

So, what are traders saying about all this in terms of central bank pricing? Let’s take a look at how the rate cut odds are shaping up.

• US Federal Reserve: First -25 bps in November (September at ~82%); 44 bps of rate cuts for the year
• European Central Bank: First -25 bps in June; 55 bps of rate cuts for the year
• Bank of England: First -25 bps in August (~95%); 55 bps of rate cuts for the year
• Swiss National Bank: Second -25 bps in September (June at ~74%); 33 bps of rate cuts for the year
• Bank of Canada: First -25 bps in July; 54 bps of rate cuts for the year
• Reserve Bank of Australia: No rate cuts this year; 10 bps priced in only
• Reserve Bank of New Zealand: First -25 bps in October (~91%); 45 bps of rate cuts for the year

If you recall back to December last year and January this year here, it’s a massive change to the landscape.

Of course, the Bank of Japan is on its own as they are hoping to try and raise rates once again. The can seems to be kicked down the road from July to September now. They might just have missed the boat big time on this one.

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

Crude oil has been
falling steadily since topping around the $87.50 level following the mutual
retaliations between Iran and Israel. The drop has been kind of a
head-scratcher though as there are global growth expectations amid China and
other major central banks policy easing, improving PMIs and OPEC+ extending the
voluntary production cuts until the end of the year.

The death of Iranian
President Raisi doesn’t change anything for the market as quoting the Supreme
Leader Ayatollah Ali Khamenei “there won’t be any disruption to the country’s
affairs”. In the big picture, crude oil is still trading in a 70-90 range, so
there’s nothing exciting going on, but in the short-term it should remain supported
unless there is a latent slowing down in demand.

Crude Oil Technical
Analysis – Daily Timeframe

On the daily
chart, we can see that crude oil probed below the trendline
several times but failed to extend the drop into new lows. The market got stuck
in a consolidation just beneath the key $80 level and we will likely need a
catalyst to get things going again.

Crude Oil
Technical Analysis – 4 hour Timeframe

On the 4 hour
chart, we can see more clearly the key resistance
zone around the $80 level and we can also see that we have a downward trendline
adding extra confluence
to the barrier. This is where the sellers keep stepping in with a defined risk
above the resistance to position for a drop into new lows. The buyers, on the
other hand, will need a breakout to the upside to start targeting an extension
to the $84.50 level next.

Crude Oil
Technical Analysis – 1 hour Timeframe

On the 1 hour
chart, we can see that the rangebound price action doesn’t offer much trading opportunities.
From a risk management perspective, the best spot for the sellers to enter
short positions is around the resistance, while the buyers might want to wait
for the support around the $77 level. Nevertheless, a breakout to the upside is
likely to increase the bullish momentum and trigger a rally into the $84.50
level.

Upcoming
Catalysts

This week is pretty empty on the data front with the only
highlight being the US PMIs on Thursday where weak data might weigh on crude
oil while strong figures could give it a boost.

This article was written by Giuseppe Dellamotta at www.forexlive.com.