• 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.

• Tuesday: UK
  Labour Market report, US NFIB Small Business Optimism Index.
• Wednesday: Japan
  PPI, China CPI, UK GDP, US CPI, FOMC Policy Decision.
• Thursday:
  Australia Labour Market report, Swiss PPI, Eurozone Industrial Production,
  US PPI, US Jobless Claims.
• Friday: New
  Zealand Manufacturing PMI, BoJ Policy Decision, US University of Michigan
  Consumer Sentiment.

Tuesday

The UK unemployment rate is expected to hold
steady at 4.3%. The wage growth figures are also seen unchanged with the
average earnings including bonus at 5.7% and the average earnings excluding
bonus at 6.0%.

Last
month, the data showed another uptick in
the unemployment rate and job losses, but wages surprised to the upside. The
BoE is more focused on the inflation data at the moment, so barring big
surprises, the data is unlikely to change much for the central bank. The market
sees 30 bps of easing by year end.

Wednesday

The US CPI Y/Y is expected at 3.4% vs.
3.4% prior, while the M/M measure is seen at 0.2% vs. 0.3% prior. The Core CPI
Y/Y is expected at 3.5% vs. 3.6% prior, while the M/M figures is seen at 0.3%
vs. 0.3% prior.

This is going to be a big market
moving release since it comes on the same day of the FOMC decision, and it will
influence their views (they will get to see
the report a day earlier). It looks like this one is going to have a pretty
binary outcome with higher-than-expected figures triggering a hawkish reaction
and lower-than-expected readings leading to a more dovish repricing.

As a reminder, the market got a bit uneasy
last Friday as we got a hot NFP
report where the wage growth surprised to
the upside and the unemployment rate ticked higher to 4% (3.96% unrounded) setting
a new cycle high. The market’s pricing got back to expect just one rate cut by
the end of the year as we continue to jump between one and two.

The Fed is expected to keep interest rates
unchanged at 5.25-5.50% with minimal (if any) change to the statement. The
focus will be on the Summary of Economic Projections (SEP) and the Dot Plot. I
see the Fed projecting two rate cuts for this year to bring it in line with
market’s expectations.

This way it wouldn’t be seen neither
dovish nor hawkish. Of course, if we see a deviation from this baseline, the
market’s reaction will be dovish in case they project three cuts and hawkish in
case they pencil just one cut.

The focus will then move on to Powell’s
Press Conference where he will likely keep a neutral tone as the Fed continues
to see inflation moving back to target but at a slower pace than expected.

These views are based on the current
state of things and since we have the US CPI report on the same day of the FOMC
decision, they might change. In fact, if we get hot
CPI figures, the market’s pricing will likely change to show just one cut for
this year (or even none).

Therefore, the Dot Plot will have a
different impact on the market with two cuts being seen as more dovish and no
cuts as hawkish. A hot CPI report will likely have a greater impact compared to
a cold one.

Conversely, if we get cold or in line
figures, the original views should still hold although the market might react
before the Fed’s decision as the risk-on sentiment will likely return.

Thursday

The Australian Labour Market report is
expected to show 39K jobs added in May vs. 38.5K in April and the unemployment
rate to tick lower to 4.0% vs. 4.1% prior. The data is unlikely to change
anything for the RBA which is seen on hold well into 2025. We will need a huge
surprise to trigger a repricing in interest rate expectations, otherwise the
focus will remain on the inflation figures.

The US PPI Y/Y is expected at 2.2% vs.
2.2% prior, while the M/M measure is seen at 0.2% vs. 0.5% prior. The Core PPI
Y/Y is expected at 2.3% vs. 2.4% prior, while the M/M figures is seen at 0.2%
vs. 0.5% prior. I don’t expect this data to influence the
market much given that the sentiment will be set by the CPI and FOMC the day
before.

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. Initial Claims keep on hovering around
cycle lows, while Continuing Claims remain firm around the 1800K level.

This has led to a weaker
and weaker market reaction as participants become used to these numbers. This
week Initial Claims are expected at 227K vs. 229K prior, while there’s no consensus at the
time of writing for Continuing Claims although the prior release showed an
increase to 1792K vs. 1790K previously.

Friday

The BoJ is expected to keep
interest rates unchanged at 0.00-0.10% and trim its government bond buying.
Speculations began last week as we got reports from “people familiar with the
matter” which were then confirmed by Governor Ueda’s comments.

This might have been the
primary cause of Yen strength although it’s mostly noise amid a pickup in
global growth and hawkish repricing in other DM interest rates expectations. In
fact, if this trend were to continue, we can expect the Yen to restart its
depreciation against the other major currencies.

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

Holzmann spoke in a radio interview on Saturday with public broadcaster ORF (Österreichischer Rundfunk, ‚Austrian Broadcasting‘). He said further European Central Bank rate cuts in the abscence of cuts from the US Federal Reserve would have an impact (lower) on the EUR exchange rate and mean higher inflation:

“If the original assumption of three rate cuts were to materialize, and the Federal Reserve didn’t respond, it would certainly have an impact on the exchange rate, and with it inflation”

On Thursday last week the ECB cut deposit rate to 3.75%, from 4%. Holzmann dissented from the rate cut:

• ECB’s Holzmann dissented on the rate cut
• ECB’s Holzmann: I was the only one against a rate cut

Holzmann blamed comments from members of the Governing Council ahead of the meeting that he felt left the Bank with no option but the cut:

• “The council’s opinion was that there was no other way, also because it had been announced that such a decision would be made in June.”

Huh. I don’t think its going out on a limb too much to suggest that officials at the ECB are hosing down future rate cut expectations in order to limit the risk of a sell-off in the euro. Holzmann is getting the ball rolling on this.

This article was written by Eamonn Sheridan at www.forexlive.com.

• ForexLive European FX news wrap: ECB tries to justify rate cut, gold dips on China

In May 2024 gold prices hit a record high, and it looks like the PBOC stepped back from reserve buying in response. The Bank had been buying in each of the preceding 18 months.

China’s purchases dwindled in March and April:

• in February the PBoC bought 390,000 ounces
• in March, 160,000
• in April, 60,000
• in May, 0

The pause in May had taken heat out of the rally and the news on Friday pulled the rug.

The cessation of buying in May should be viewed as a pause, the Bank is not done buying. USD2275/80 and thereabouts is some technical support on the daily chart.

This article was written by Eamonn Sheridan at www.forexlive.com.

• Major indices close lower on the day/higher for the week
• Crude oil settles at $75.53
• US consumer credit for April rises by $6.40B versus $11.0B increase estimate
• With the Bank of Canada, ECB and jobs in the rear view mirror, the Fed is ahead
• ECB Pres. Lagarde: Still a long way to go until inflation is defeated
• Baker Hughes oil rigs -4 to 492 rigs
• J.P. Morgan changes first Fed rate cut to November from July
• Major European indices close the week little changed
• Atlanta Fed GDPNow growth estimate for Q2 rises to 3.1% versus 2.8% yesterday
• Nick Timiraos from WSJ: What does jobs report mean to Fed? Not much.
• Lael Brainard (NEC director): US jobs report is good news for American workers
• US wholesale inventories for April 0.1% versus 0.2% estimate
• Kickstart the FX trading day for June 7 w/a technical look at the EURUSD, USDJPY & GBPUSD
• US May non-farm payrolls 272K vs +185K expected
• Canada May employment change 26.7k vs 22.5k expected
• The JPY is the strongest and the NZD is the weakest as the NA session begins
• ForexLive European FX news wrap: ECB tries to justify rate cut, gold dips on China
• ECB’s Centeno: The message is one of confidence in the disinflation process
• ECB’s Villeroy: We will move at appropriate pace on rate cuts
• ECB’s Holzmann: I was the only one against a rate cut
• ECB’s Schnabel: We cannot pre-commit to a particular rate path
• ECB’s Rehn: Inflation will continue to decline
• ECB’s de Guindos: Inflation is to be around 2% next year
• ECB’s Nagel: The decision to cut rates was not premature

The US jobs report came in stronger, but then again there was some ambiguous/less strong components.

• Non-farm payroll rose 272K vs 185K estimate.
• Private payrolls rose 229K vs 170K estimate
• Average hourly earnings rose 0.4% vs 0.3% expected
• Average earnings YoY rose 4.1% vs 3.9% expected

Those were the stronger-than-expected pieces of the report.

The not so strong parts were:

• Unemployment rate rising to 4.0% from 3.9%.
• The survey of households used to compute the unemployment rate showed that the level of people who reported holding jobs fell by -408,000.
• The household survey also showed that full-time workers declined by -625,000, while those holding part-time positions increased by 286,000.

The household survey is typically more volatile than the establishment survey, which showed the significant payroll gains.

Liz Ann Sonders of Schwab to CNBC said that,

“On the surface, [the report] was hot, but you’ve also got a bigger drop in household employment. For what it’s worth, that tends to be a more accurate signal when you’re at an inflection point in the economy. You can find weakness in the underlying numbers.”Next week, the markets will get the Fed’s take on the report when they announce its interest rate decision on Wednesday. The Fed is expected to keep rates unchanged. The market will be focused on the Fed’s expectations for the end of year rate. At the March meeting, they still saw 3 cuts. That is likely to be lowered to 1-2 (the market about 40 pips of cuts between now and the end of the year).

The markets reaction today saw the USD move higher by 0.52% to 1.53% vs the major currencies. The NZD and the AUD were sold as commodities were sold. China gold purchases were lower last month and the higher dollar and higher yields gave sellers another reason to sell commodities. That tends to weaken the NZD and the AUD whose economies are more commodity-dependent.

• Gold prices today tumbled -$82 or -3.45% to $2293.49. The % decline was the steepest since November 6, 2020.
• Silver prices felt $-2.14 or -6.88% to $29.14 which was its worst % decline since February 2021.
• Copper prices also fell sharply with a -4.82% decline.

The price of Bitcoin reached high of $71949 intraday, but is trading at $69,156 currently. Ethereum is trading at $3684.80 after reaching a high of $3839.70.

Yields moved higher, erasing some of the declines seen this week

• 2 year yield 4.888%, +15.9 basis points. The 2-year yield is near unchanged for the week
• 5-year yield 4.462%, +17.1 basis points. The yield is down -4.6 basis points for the week.
• 10 year yield 4.435%, +15.5 basis points. The yield is down -6.7 basis points for the week.
• 30-year yield 4.554%, was 12.5 basis points. The yield is down -9.6 basis points for the week.

Next week in addition to the FOMC rate decision, the U.S. Treasury will auction off 3, 10, 30-year coupon issues on Monday, Tuesday, and Thursday respectively. It will be tricky with the Fed rate decision between the 10 in 30-year auctions scheduled for Tuesday and Thursday. The Fed decision will be announced on Wednesday.

In the US stock market today, the S&P and NASDAQ indices backed off their record closing levels with modest declines, but still closed higher for the week.

• Dow industrial average fell -0.22% on the day but rose 0.29% for the week.
• S&P index fell -0.11% on the day, but rose 1.32% for the week
• NASDAQ index fell -0.23% on the day, but rose 2.3% for the week

Thank you for your patience and support this week. Adam is hoping to be back in the 1st half of next week. I am hope that all have a happy and safe weekend.

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

The S&P index reached a site today of 5375.08. That is its new all-time record high. The gains could not be maintained and the price moved into negative territory by the close.

The NASDAQ index traded to a new record high yesterday at 17235.73. Today it’s high-price could only get to 17229.31 before rotating lower into the close.

The final numbers are showing:

• Dow industrial average fell -87.20 points or -0.22% at 36799.00
• S&P index fell -5.97 points or -0.11% at 5346.98
• NASDAQ index -39.99 points or -0.23% at 17133.13

For the trading week, the major indices rebounded from last week’s declines:

• Dow Industrial Average rose 0.29%
• S&P index rose 1.32%
• NASDAQ index rose 2.38%

Looking at some of the major large-cap stocks this week:

• Nvidia +10.29%.The company moved above $3T for the first time ever and was the second largest capitalized stock overtaking Apple, but has reversed positions into the close
• CrowdStrike, +11.42%
• Apple, +2.41%
• Microsoft, +2.10%
• Meta Platforms, +5.6%
• Palantir, +7.52%
• Amazon +4.455%
• Alphabet, +1.14%
• Tesla, -0.33%

The meme stock, Gamestop closed the week higher by 21.95% after falling -39.3% today. Roaring Kitty (ie.Keith Gill) went live on YouTube and rambled on and on with the best of them, but was not able to ignite any buying interest. Shares are closing the week at $28.22. .

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