Fundamental
Overview

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.

One of the first
questions beginner traders ask is what currency pair to trade. Unfortunately,
there’s lots of misinformation around and most of the time the advice they get
is to trade the most volatile pairs because they can make more money.

That’s of course
incorrect because the more volatile a pair is, the bigger your stop loss should
be to avoid being stopped out prematurely. In fact, professional traders adapt
their stop losses based on the volatility of the instrument. They don’t have a
fixed stop loss for everything.

The real answer
lies in the fundamentals. If you expect a currency to be strong and another to
be weak, then you select the relative pair and buy the stronger currency against
the weaker one. You don’t need to trade 5 or 10 pairs if you have conviction on
just one. Your job is not to trade, but to make money. You can make a lot of
money on just one single pair.

This way not only
you increase your chances of success, but you will also have cleaner moves.
Take for example the EUR/GBP pair. It’s been ranging for months because there’s
not been a real divergence between the ECB and BoE.

On the other hand,
if you look at the EUR/JPY pair you will see that there’s been a steady uptrend
as global growth expectations and the hawkish repricing in interest rates continued to fuel the upside.

Don’t select a pair just because of the volatility
because more volatility doesn’t mean more profits. You should filter the pairs
based on the fundamentals because that’s what will drive the currencies up or
down.

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

UPCOMING EVENTS:

• Monday: PBoC
  LPR, Fed’s Waller.
• Tuesday: RBA
  Meeting Minutes, Canada CPI.
• Wednesday: RBNZ
  Policy Decision, UK CPI, FOMC Minutes.
• Thursday: New
  Zealand Q1 Retail Sales, Australia/Japan/Eurozone/UK/US Flash PMIs, Eurozone
  Negotiated Q1 Wage Growth, US Jobless Claims.
• Friday: Japan
  CPI, UK Retail Sales, Canada Retail Sales, US Durable Goods Orders.

Monday

The PBoC is expected to leave the 1-year
and 5-year LPR rates unchanged at 3.45% and 3.95% respectively. Last week, the
central bank maintained the MLF
rate unchanged at 2.50%, which is generally a reliable precursor for a
change in the LPR rates. We got some mixed economic data recently but overall
it looks like the PBoC doesn’t have an urgent reason to ease policy further.

Tuesday

The Canadian CPI Y/Y is expected at 2.8%
vs. 2.9% prior,
while the M/M figure is seen at 0.5% vs. 0.6% prior. The focus will be on
the underlying inflation measures though as that’s what the BoC cares most
about. The Trimmed-Mean CPI Y/Y is expected at 2.9% vs. 3.1% prior, while
the Median CPI Y/Y is seen at 2.7% vs. 2.8% prior. Such readings or even lower should
give the BoC enough confidence to deliver the first rate cut in June as they
would be within their 1-3% target band.

Wednesday

The RBNZ is expected to keep the Official
Cash Rate (OCR) unchanged at 5.50%. The central bank has limited tolerance for
an increase in the time to achieve its 1-3% inflation target. The latest Q1
CPI
report showed inflation easing further, while the labour
market report saw another uptick in the unemployment rate and job losses in
the first quarter. The market expects the RBNZ to ease policy in August while
the central bank continues to repeat that it doesn’t expect to normalise policy
before 2025.

The UK CPI Y/Y is expected at 2.1% vs. 3.2%
prior, while the Core CPI Y/Y is seen at 3.7% vs. 4.2% prior. The BoE is
mostly focused on services inflation, so that’s what will have the major impact
on market’s expectations. As a reminder, we will have another CPI report
before the next BoE meeting, but if this week’s inflation data comes out good,
the market will likely price in higher chances for a June rate cut already.

The FOMC Minutes isn’t generally such a great
market-moving release because the market already knows what to expect
and it becomes stale by the time it’s out as more data gets released in the
meantime. I would have expected it to be market-moving this time around because
the Fed could have refrained from mentioning the QT tapering at the last
meeting but include it in the Minutes. Since they already communicated the
tapering at the last decision, I can’t see the Minutes being a such a big deal.

Thursday

The Eurozone Negotiated Q1 Wage Growth is
what the ECB has been waiting for months to give it more confidence on the inflation
outlook. The data is unlikely to change their plan to deliver the first rate
cut in June since they telegraphed it so hard in the meantime that it would
be a real bad look to backtrack at this point. Nonetheless, it might shape
the market’s expectations for the number of rate cuts for the rest of the
year.

Thursday will also be the Flash PMIs Day
for many advanced economies with the greatest focus as usual on the Eurozone,
UK and especially the US PMIs:

• Eurozone Manufacturing
  PMI 46.6 expected vs. 45.7 prior.
• Eurozone Services PMI
  53.5 expected vs. 53.3 prior.
• UK Manufacturing PMI 49.2
  expected vs. 49.1 prior.
• UK Services PMI 54.8
  expected vs. 55.0 prior.
• US Manufacturing PMI no
  consensus vs. 50.0 prior.
• US Services PMI 51.5 expected
  vs. 51.3 prior.

The US Jobless Claims
continue to be one of the most important releases to follow every week as it’s
a timelier indicator on the state of the labour market. This is because
disinflation to the Fed’s target is more likely with a weakening labour market.
A resilient labour
market though could make the achievement of the target more difficult.

Initial
Claims keep on hovering around cycle lows, while Continuing Claims remain firm
around the 1800K level. This week Initial Claims are expected at 220K vs. 222K prior,
while there is no consensus at the time of writing for Continuing Claims
although the prior release showed an increase to 1794K vs. 1785K expected and
1781K prior.

Friday

The Japanese Core CPI Y/Y is
expected at 2.2% vs. 2.6% prior, while there’s no consensus for the Headline
and the Core-Core figures at the time of writing. This report generally isn’t
market-moving because we get to see the Tokyo
CPI weeks in advance, which is a leading indicator for the National CPI
figures. Anyway, surprises could have an impact on the market, but it looks
increasingly likely that the BoJ won’t be able to hike rates further in this
cycle.

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

I was lucky enough to head to the Finance Magnates Africa Summit last year and I’ll be headed there again this week. It’s a great event that brings together the industry and retail traders in Johannesburg.

I will be speaking there and meeting with many friends and traders. If you’re in the area, please come by. Sign up for the free event here.

This article was written by Adam Button at www.forexlive.com.

• US stocks rally into the close but close mixed. Dow closing above 40K for the 1st time.
• Silver extends rally to 6% — an image to define the precious metals rally
• Crude oil for July settled at $79.58
• Bank of America: The soft-landing scenario is unfolding
• Are we in a human-intelligence bubble?
• Don’t give up on the US dollar yet – TD
• Major earnings releases for the week starting May 20 highlighted by Nvidia.
• ECBs Vasle: Awaiting data and open to possibilities on rate path
• Fed Gov. Bowman monitoring data to assess if policy is sufficiently restrictive
• Canada April Teranet-National Bank house price index +5.65% y/y
• European equity close: Subtle selling to close out the week
• The USD is moving lower. How has the technicals helped in that decline?
• No comments from the Fed’s Waller on monetary policy
• US Leading Economic Index (LEI) M/M -0.6% vs. -0.3% expected
• 6% of global nickel output at risk as turmoil hits New Caledonia
• Kickstart the FX trading day for May 17 w/a technical look at the EURUSD, USDJPY & GBPUSD
• The USD is the strongest and the AUD is the weakest as the NA session begins
• ForexLive European FX news wrap: Dollar continues to hold alongside yields

The GBP is ending the US session as the strongest of the major currencies today. The CHF is the weakest. The USD is ending the day mixed with gains versus the JPY and CHF and losses vs the GBP, AUD and NZD. The USD was near unchanged on the day vs the EUR and CAD (-0.05%).

For the trading week, the trade weighted dollar index (DXY) fell -0.77% with the index moving to the lowest level since April 1 week. That index is also closing below its 100-week MA at 104.83, after 5 weeks of closes above that MA. That shifts the technical bias for the index to the downside (staying below is more bearish for the USD).

Looking at the main currencies vs the USD, the % changes of the USD vs each major currency this week shows mostly lower USD moves. The exception is the USDs gain of 0.30% gain vs the CAD.

• EUR, -0.93%
• JPY, -0.08%
• GBP, -1.43%
• CHF +0.30%
• CAD, -0.43%
• AUD, -1.40%
• NZD, -1.92%

The move lower in the USD this week got the fundamental shove from the tamer CPI, flat retail sales (lower than expected), and lower NY manufacturing index all released on Wednesday. A PPI number that was stronger but offsel by sharp revisions in the prior month opened the door for the downside when it was released on Tuesday.

Not congruent with the fundamentals is that Fed officials remain focused on higher for longer, whereas other countries are more likely to ease conditions earlier (especially the EU). That may ultimately slow the greenback’s declines at some point. Nevertheless, the EURUSD closed above its 100-day moving average (USD bearish) at 1.0819 for the first time since March 21 after the gains on Wednesday. The GBPUSD also closed above its 100-day moving average for its first time since April 9 on Wednesday (and stayed above).

The NZD and AUD are also moving away from its 100-day MA (dollar bearish). If the USD is to move back higher, the dollar needs to reverse back above the 100 day MAs on each of those currency pairs.

Looking at the US stocks today, the major indices closed mixed with the Dow industrial average leading the way. That index closed above a key milestone today above 40K, and also closed at a new record level. On Wednesday both the NASDAQ and S&P closed at new record levels and although higher on the week, are closing the day below those record closes (marginally).

Today:

• Dow industrial average rose 134.21 points or 40.34% at 40003.60.
• S&P index rose 6.17 points or 0.12% at 5303.26. It closed at a record 5308.14 on Wednesday
• NASDAQ index fell -12.35 points or -0.07% at 16685.97. It closed at a record 16742.39 on Wednesday

The Dow industrial average closed higher for the fifth consecutive week. Both the S&P and NASDAQ indices closed higher for the fourth consecutive week.

US yields are closing the day the highs but are still down on the week after the run lower on the back of the CPI/retail sales on Wednesday. The yield did rebound on Thursday and Friday, however.

For today,

• 2-year yield 4.86%, +3.6 basis points
• 5-year yield 4.446%, +4.8 basis points
• 10 year yield 4.421%, +4.5 basis points
• 30-year yield 4.561%, +4.3 basis points

For the trading week,

• 2-year yield fell -4.3 basis points for the week, but was down -16.6 basis points at the week’s low
• 5-year yield fell -6.8 basis points for the week, but was down -20.0 basis points at the week’s low
• 10 year yield fell -7.8 basis points for the week, but was down -18.7 basis points at week’s low.
• 30-year yield felt -8.0 basis points for the week, but with down -17.3 basis point at week’s low.

Thank you for your support this week. Hoping you and yours have a happy and healthy weekend.

This article was written by Greg Michalowski at www.forexlive.com.

The major US stock indices pushed higher into the close and it seems the Dow closed not only at a record level, but also closed above 40K for the first time. The Dow is the least favored of the major indices, but it is the one that gets America excited. Headlines of Dow 40K means more on „Main Street“ than „S&P 5K“ or „Nasdaq17K“.

The Nasdaq and the S&P closed higher for the 4th week. Each of those indices also traded to new high closing levels this week with the S&P high close now at 5303.14. The Nasdaq new high close comes in at 16742.39.

A snapshot of the closing levels is showing:

• Dow industrial average rose or 0.34% at 40003.60
• S&P index rose 6.17 points or 0.12% at 5303.26
• NASDAQ index fell -12.35 points or -0.07% at 16685.97

The small-cap Russell 2000 fell -0.53 points or -0.03% at 2095.71.

For the trading week, the major indices all closed up over 1%

• Dow rose 1.24%
• S&P index rose 1.54%
• NASDAQ index rose 2.11%
• Russell 2000 rose 1.744%

For 2024, the broader NASDAQ and S&P index are battling it out for the strongest of the major indices (they are nearly up the same):

• Dow Industrial Average is up 6.14%
• S&P index is up 11.18%
• NASDAQ index is up 11.16%
• Russell 2000 is up 3.3%

Next week, the focus for the stock markets (and other markets) will be on Nvidia earnings which will be released after the close on Wednesday. Shares of Nvidia moved down by $-18.80 or -1.99% to $924.79 in trading today, but is up over 86.74% this year and just 1.9% from its all-time high close.

Although the price is up dramatically this year

• EPS are expected to come in at $5.58 which is up from $1.09 during the same quarter in 2023. That is a gain of 411% YoY.
• Revenues for Nvidia are expected at $24.556B vs $7.19B in the same quarter in 2023. That is an increase of 241%.

The stock price a year ago was at $305. With the current price at $933, that represents a rise of 205%. So all things equal, the gain in the stock- even at over 200% is supported by the gains in EPS and Revenues.

Shares of AMD this week moved up close to 8.25% this week, and is closing up 1.13% in trading today. The not-so-good news is the price is down -27.65% from its February high. For the year, AMD shares are up only 11.57% in 2024 (but they are doing better than Intel who’s shares are down -36.66% in 2024.

Micron shares are up 46.81% in 2024. Broadcom shares are up 25.0% this year.

This article was written by Greg Michalowski at www.forexlive.com.

The USDCHF moved lower with the USD selling earlier today, and in the process moved down to test the 200 hour moving average at 0.90653. Support buyers leaned against the level and pushed the price back higher. The pair is trading between the 100/200 bar MAs on the topside at 0.9091 (and a swing area up to 0.90978), and the 200 hour MA below.

Absent any big move into the close, that is where the week will close out. Next week, the MAs above and below will be the support and resistance. A break of either target with momentum would either increase the bullish bias or bearish bias.

This article was written by Greg Michalowski at www.forexlive.com.

The silver bulls are a special kind but this weekend they will be celebrating.

Silver has broken out today, in a technical waterfall.

It started with the break of $30/oz and the February high, which is just above. That’s led to a rush of buying and short covering in a 6% rip to $31.37. That’s the highest since 2013.

Now there isn’t much standing in the way, technically. The mid-2012 high was $35.40 and that’s a reasonable target given the momentum and enthusiasm for precious metals in general. Gold today is slated to close above $2400 for the first time (and also on a weekly basis). It’s also just a few dollars away from an all-time intraday record.

For the gold bulls, I think the image of Putin and Xi hugging is as good as it gets. It underscores their determination to define a multi-polar world that’s not dominated by the US — or the US dollar.

This article was written by Adam Button at www.forexlive.com.

Crude oil futures redo winds that align our sewing at $79.58. At the $0.84 on the day. The selling price is near the high for the day. The low for the day was at $78.61.

For the trading week, the price is up 1.87%.

Technically, the price is trading between the 100-day moving average below at $78.57 (blue line), and the 200 day moving average (green line) above currently at $79.96.

This week, sellers had their shot with the tries below the 100-day moving average. On Wednesday, a new low going back to February 26 took the price to the low for the week at $76.72. but the price snapped back higher by the close. Inventory data this week showed a surprise drawdown on Wednesday helping to bottom the price.

The price currently between the MAs is more neutral technically, but with the sellers having their shots this week, the buyers have the control nod heading into the close and the new week. It would now take another move below the 100 day MA to wrestle the control back from the buyers.

This article was written by Greg Michalowski at www.forexlive.com.

Headlines:

• Dollar begins to claw back CPI drop
• 10-year Treasury yields stick to the bounce after running into key technical juncture
• ECB’s de Guindos sees inflation moving towards 2% goal in 2025
• Eurozone April final CPI +2.4% vs +2.4% y/y prelim
• France Q1 ILO unemployment rate 7.5% vs 7.4% expected
• Japan inflation likely to have eased further in April – poll
• PBOC to lower interest rates on housing fund loans by 25 bps
• North Korea fired multiple short-range missiles towards sea, says South Korean military

Markets:

• USD leads, AUD lags on the day
• European equities lower; S&P 500 futures up 0.1%
• US 10-year yields up 1.9 bps to 4.394%
• Gold up 0.5% to $2,389.83
• WTI crude down 0.1% to $78.72
• Bitcoin up 1.6% to $66,331

In FX, the reaction to the US CPI earlier in the week is being clawed back somewhat. The dollar is finding a footing in the last few sessions, helped by a bounce in Treasury yields as well.

10-year yields are now at 4.39%, moving off its 200-day moving average. The low after the inflation data was 4.31%, so that is helping to also prop up USD/JPY. The pair is now up over 200 pips since the drop on Wednesday and early Thursday morning.

Meanwhile, EUR/USD is down 0.2% to 1.0843 with large option expiries at 1.0850 still holding price action. The 100-hour moving average at 1.0835 is also a key near-term level to watch in the final stretch of the week.

Elsewhere, USD/CAD is up 0.1% to 1.3635 and AUD/USD is down 0.3% to 0.6655 as commodity currencies also lag slightly in any post-CPI follow through.

In the equities space, European stocks are getting checked back while US futures are more tentative for the most part. The memes are pausing for now as Gamestop shares are down in pre-market following softer revenue sales in Q1.

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