• Far-right movement makes waves in Europe over the weekend
• Italy-Germany 10-year bond yields spread widens by the most since April
• Was the US NFP a gamechanger?
• ECB’s Nagel: We must be cautious about future rate moves
• Eurozone June Sentix investor confidence 0.3 vs -1.8 expected
• SNB total sight deposits w.e. 7 June CHF 459.8 bn vs CHF 461.9 bn prior

Markets:

• AUD leads, EUR lags on the day
• European equities lower; S&P 500 futures down 0.1%
• US 10-year yields up 3.7 bps to 4.465%
• Gold up 0.3% to $2,299.63
• WTI crude up 0.6% to $75.98
• Bitcoin up 0.3% to $69,502

In what will be a big week for markets, things are off to a rather slow start.

The big news came over the weekend as the results of the European parliamentary election sent shockwaves across the region. The far-right movement is gaining traction and that saw some humiliating defeats for incumbent governments in France and Germany especially.

In the case of the former, it prompted Macron to even call a snap election. The political angst is weighing on European bonds and also the euro currency, with the latter opening today with a gap lower.

EUR/USD opened down at around 1.0777 before sliding further to 1.0732 during the session. The pair is now down 0.5% still on the day at around 1.0750 currently. This comes as the spread between periphery yields and German bund yields is seen widening. At the same time, European indices were offered with French stocks the main drag.

Other major currencies didn’t get up to much, with the dollar keeping largely steadier. All eyes are on the bigger events coming up later this week instead. USD/JPY is hugging levels just under 157.00 while the commodity currencies are all little changed against the greenback.

As European yields shoot higher, that’s spilling over to Treasury yields too. 10-year yields are back up to 4.46% to start the week but it’s still early days.

Wednesday will be the main one to watch as we’ll have both the US CPI report and FOMC meeting falling on the same day for the first time since June 2020.

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

In order to
increase the share’s liquidity and make it more affordable, a corporation may split its existing shares
into many shares, a move known as a stock split. Because the
split adds no actual value, even though the number of shares outstanding rises,
the shares‘ total dollar worth stays the same. In essence,
a stock split results in an increase in the company’s share count but also a corresponding decrease in share price.

How does it work?

• Announcement:
  A stock split with a specified ratio (such as 2-for-1, 3-for-1, etc.) is
  announced by the corporation.
• Change of
  Share Count: The split ratio is multiplied by each shareholder’s share count.
• Share Price
  Adjustment: The split ratio is used to divide the market price of the shares.
• Market
  Capitalization: Following the split, the company’s overall market
  capitalization stays the same.

Let’s see an example with Nvidia’s 10-for-1 stock split:

Pre-split

• A
  shareholder has 100 shares.
• A share costs $1200.
• Shares
  total worth is equal to 100 shares * $1200, or $120,000.

After-split

• A 10-for-1
  split is announced.
• 10 shares
  are divided from each share.
• Now, the
  shareholder has 1,000 shares.
• One share
  now costs $120 (1200 / 10).
• Shares
  total worth is equal to 1000 shares * $120, or $120,000.

What makes
the stock split historically positive?

Sign of
confidence:

Stock
splits are usually announced by companies after a major increase in share
price. This could be seen as an indication that the business is optimistic
about its chances for future growth.

Enhanced
liquidity:

The number
of outstanding shares rises when the stock is split, which may enhance
liquidity. More shares at a reduced price could draw in more investors, even
retail ones who might have been crowded out previously.

Perceived
bargain:

Reduced
share prices may increase demand by making the stock seem more accessible to
small investors. Investors may view a company priced at $50 as more affordable
than one priced at $200, despite the fact that the stock’s fundamental remains the same.

Psychology:

Historical
evidence shows that stocks often do well after a split, owing to increased
investor interest and psychological impact. This can result in a
self-fulfilling prophecy in which growing demand drives prices upward.

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

• Rates are on a mountain ridge, not a peak
• We still have to find the right point for a further descent
• We must remain cautious
• Uncertainty about future economic and price trend remains high

The language continues to suggest that they will be pausing in July, as per what is expected at the moment.

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

The USD came back with a vengeance
last Friday following the strong US NFP report where the data surprised with solid
job and wage growth. There were also negatives like the uptick in the unemployment
rate, but all in all, we can say that it was a good report.

The data triggered a
hawkish repricing in interest rates expectations with the market now expecting
once again just one cut by the end of the year. It’s not a big deal in the bigger
picture, but for now the sentiment is bullish for the greenback and we will
likely need a catalyst to change it again.

The EUR, on the other hand,
has been gaining ground against the USD mainly because of the Dollar weakness amid
the general risk-on sentiment regime due to the pickup in global growth.

This sentiment has been
changed by the NFP data and the European elections over the weekend where we
got some governments like France calling snap elections which added even more
pressure on the single currency due to political uncertainty.

All eyes will now be on the
US CPI and FOMC decision on Wednesday as that day can turn the sentiment around
or exacerbate it further.

EURUSD Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that EURUSD sold off following the strong US NFP report and broke the 1.08 support. The breakout of the range gave the sellers
more control with the first target now standing around the 1.0727 level.

That’s where we can expect the
buyers to step in with a defined risk below the level to position for a rally
into new highs with a better risk to reward setup.

EURUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the breakout of the range. We can see that we have also the
61.8% Fibonacci
retracement level of the entire rally from the 1.06 region standing around
the 1.0727 level. This looks like an important level for market participants.

The buyers will want to see
a bounce, while the sellers will want to see a break to extend the downtrend
back into the 1.06 region.

EURUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that from a risk management perspective, the sellers will be better off
waiting for a pullback into the 1.08 resistance where we can also find the
38.2% Fibonacci retracement level for confluence.

The red lines show the average daily range for today, so in case the price reaches one of the two zones, the
market participants will have defined levels where to protect their stops.

Upcoming
Catalysts

This week is a bit empty on the data front although we will
have the biggest market moving events on Wednesday when we get the US CPI data
and the FOMC rate decision. On Thursday, we have the US PPI and the latest US
Jobless Claims figures. On Friday, we conclude the week with the University of
Michigan Consumer Sentiment survey.

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

Gold had a really bad Friday last week as it suffered one of its worst days
in several months. The reason for the selloff was due to two strong catalysts.
The first one hit in the European session when we got the headline that China
halted its reserve buying.

This has been the prevailing market narrative for the strong gains in the
past months, so it weighed on the price as market participants retrenched.

Then, in the US session, we got a strong NFP
report that saw the market repricing once again interest rates expectations
on the more hawkish side and real yields spiked to the upside taking gold
downward with them.

The sentiment in the gold market is now a bit soft, so we will need a
catalyst to give the buyers more confidence to keep charging higher. This
catalyst will likely come on Wednesday when we will get the US CPI and the FOMC
decision.

A hot US CPI report will likely trigger another selloff and take us to new
lows, while cold figures should give the market a boost.

Gold Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that gold sold off into the strong support around the 2277 level where we can also find
the 38.2% Fibonacci retracement level for confluence. This is where we can expect the
buyers to step in with a defined risk below the support to position for a rally
into a new all-time high with a much 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 the major trendline around the 2150 level where we can
also find the 61.8% Fibonacci retracement level for confluence.

Gold Technical Analysis
– 4 hour Timeframe

On the 4 hour chart, we can
see that from a risk management perspective, the sellers will be better off
waiting for a pullback into the recent support-turned
resistance around the 2320 level where they will also find the 38.2% Fibonacci
retracement level for confluence.

The buyers, on the other
hand, will want to see the price breaking higher to invalidate the bearish
setup and increase the bullish bets into the all-time high.

Gold Technical Analysis
– 1 hour Timeframe

On the 1 hour chart, we can
see the two catalysts that sent gold lower on Friday. There’s not much to do
here as the price trades right in the middle of the two key zone. The red lines
show the average
daily range for today, so in case the price reaches one of the two zone,
the market participants will have defined levels where to protect their stops.

Upcoming
Catalysts

This week is a bit empty
on the data front although we will have the biggest market moving events on
Wednesday when we get the US CPI data and the FOMC rate decision. On Thursday,
we have the US PPI and the latest US Jobless Claims figures. On Friday, we conclude
the week with the University of Michigan Consumer Sentiment survey.

See the video below

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