Copper remains under pressure, albeit the bearish momentum appears to be
slowing. Last week, the FT reported that stockpiles in Shanghai warehouses hit
their highest level since 2020 amid weak demand due to China’s real estate
sector downturn. Given the high prices reached in the previous month,
manufacturers refrained from buying since they had an incentive to deplete
their inventories.

The FT also reported that Chinese copper fabricators appeared to have
resumed buying the metal, with stocks showing minor declines in recent weeks.
All else being equal, if we continue to see the pickup in global growth, we
could see new highs in the coming months, although more policy support from the
Chinese officials would give the market a stronger boost.

Copper
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that after a minor bounce, copper fell back to the 4.35 support
where we can also find the 50% Fibonacci retracement level for confluence. This is where we can expect the
buyers to step in with a defined risk below the level to position for a rally
into a new all-time high. The sellers, on the other hand, will want to see the
price breaking lower to increase the bearish bets into the 4.00 level.

Copper Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the downside momentum seems to be slowing as the lower lows get shallower.
This might be a signal for a reversal although a break to the downside could
invalidate it.

If we do get a rally from these
levels, the first target for the buyers should be around the 4.66 level where
we can find the 38.2% Fibonacci retracement level of the entire correction. That’s
also where we can expect the sellers to step back in with a better risk to
reward setup to target a break below the 4.35 support.

Copper Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor downward trendline defining the current downward
momentum. The buyers will want to see the price breaking higher to gain more
conviction and increase the bullish bets into the 4.66 level. The red lines
define the average daily range for today.

Upcoming
Catalysts

Tomorrow we get the latest US Jobless Claims figures, while on Friday we
conclude the week with the US PCE.

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

• Fed’s Bowman: not yet at the point where it is appropriate to cut rates
• Major currencies not showing much appetite on the day
• France on the verge of a political standstill?
• Japan finance minister says will closely monitor currency movements
• European equities on the backfoot again after the gains yesterday
• Spain Q1 final GDP +0.8% vs +0.7% q/q prelim
• What are the main events for today?
• Eurostoxx futures -0.4% in early European trading
• Little on the agenda in the session ahead
• Japan April revised leading indicator index 110.9 vs 111.7 prior
• FX stays little changed ahead of European morning trade

The
European session was pretty uneventful. On the data front, we just saw the
Spain Final Q1 GDP which beat expectations slightly. We also got the usual
jawboning comments from the Japanese Finance Minister as USD/JPY continues to trade
near the previous intervention level at 160.00.

Near the
end of the session, we got the comments from Fed Governor Bowman (hawk – voter)
who continues to maintain her hawkish stance as she wants to see more progress
before easing the policy rate.

Looking at
the markets, we’ve seen a pretty rangebound price action almost across the
board. The major currency pairs are mostly flat on the day although the US Dollar is picking up some pace going into the American session. In the equity
space, after an early morning weakness, we saw a bit of a bounce.

Gold and US
Treasuries are mostly flat. The biggest mover has been Bitcoin which has
already erased all the late yesterday’s losses and it looks like the bullish
momentum could have further legs. Crude oil is down roughly 0.6% on the day but it’s
still above the key $80 level.

The focus
will now switch to the American session as we get the Canadian CPI and the US
Consumer Confidence reports. Some further easing in the Canadian underlying
inflation figures should seal the rate cut in July with the market assigning a
65% probability at the moment.

The US
Consumer Confidence will be something to watch, especially the labour market
details given the recent weakness in US Jobless Claims.

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

• Not yet at the point where it is appropriate to cut rates.
• Should data show inflation moving sustainably to 2%, it will eventually become appropriate to gradually lower policy rate.
• Baseline outlook continues to be inflation will return to 2% with policy rate held steady for some time.
• Willing to raise the target rate at a future meeting if inflation progress stalls or reverses.
• Will remain cautious in approach to future changes in policy stance.
• Other central banks may ease monetary policy sooner or more quickly that the Fed.
• Only modest further progress on US inflation seen this year.
• Expect US inflation to remain elevated for some time.
• Still see a number of upside inflation risks.
• US labour market remains tight despite some further rebalancing.

Q&A session:

• Central bank independence is very important and the Fed is apolitical.
• Began to shift view on policy to be more scenario-based.
• Need to see how subcategories of inflation evolve.
• Closely monitoring the labour market for deterioration.
• Doesn’t see any rate cut in 2024. Shifted cuts to 2025.

Bowman is a known hawk, so these comments are not surprising. The market sees a total of 48.8 bps of easing by the end of the year (basically 2 cuts) with 90% probability of no change at the upcoming meeting at the end of July.

A lot will depend on the next inflation data. I think the Fed will be more dovish if we get a good inflation report in July. Then, if we get some more good figures in August, Fed Chair Powell will likely pre-commit to a rate cut in September at the Jackson Hole Symposium.

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

The USD last week finished
slightly positive but overall, it was a pretty flat week. We got some great US PMIs on Friday which showed growth without
inflationary pressures. In fact, despite the strong PMIs the market pricing for
interest rates remained unchanged. That should be generally positive for risk
sentiment going forward.

The NZD, on the other hand,
got pressured mainly because of the bouts of risk-off flows here and there. The
mood in the market seems to be gradually improving though and that should
support the Kiwi going forward.

NZDUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that NZDUSD bounced and consolidated near the key support around the 0.6082 level where we have also the
38.2% Fibonacci retracement level for confluence.

The buyers continue to step
in around the lows to position for a rally back into the 0.6217 resistance. The
sellers, on the other hand, will want to see the price breaking lower to
increase the bearish momentum and position for a drop into the 0.60 handle
next.

NZDUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price action has been mostly rangebound between the 0.6082 support
and the 0.6217 resistance. These will be the key levels that the market will
need to break to start a more sustained trend. For now, we could keep bouncing
around as the market participants continue to “play the range”.

NZDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a strong resistance zone around the 0.6145 level where the
price got rejected from several times. The buyers will want to see the price
breaking higher to gain more conviction and increase the bullish bets into the
0.6217 level.

The sellers, on the other
hand, will likely keep on leaning on that resistance to position for a drop
back into the 0.6082 support targeting a break below it. The red lines define
the average daily range for today.

Upcoming
Catalysts

Today we have the US Consumer Confidence report where the market will be
focused on the labour market details. On Thursday, we get the latest US Jobless
Claims figures, while on Friday we conclude the week with the US PCE.

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

Major dollar pairs are still keeping within 0.1% change on the day and that sums up a rather lackluster start to European trading.

The Canadian CPI report later will at least give loonie traders something to work with. Otherwise, broader markets have to look towards the overall risk mood and perhaps the Treasury auction for 2-year notes.

USD/JPY continues to sit on edge, bouncing around 159.30-40 levels as traders are nervy with price holding just under the 160.00 threshold. Besides that, USD/CHF continues to hold around the 0.8910-40 range after the SNB last week. But the pair is still keeping the downside for the month, lower by 1% and reaffirming the seasonal trend here at least.

Looking to the days ahead, month-end and quarter-end rebalancing flows might factor into the equation. So, just be wary of that. I still haven’t seen notes on what the bank models are suggesting just yet. But I’ll post them if and when I do. Anyway, the flows there could make things a bit tougher to read before we get into July trading next week.

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

The first round of voting will begin this weekend on 30 June, before the second round on 7 July. There’s plenty of buzz surrounding the French election this time around. So, let’s take a look at what are the possible outcomes and how that might impact markets.

It all started with the European parliamentary election at the start of this month. That saw Marine Le Pen’s far-right party trump French president Emmanuel Macron’s Renaissance party, leading to Macron calling for a snap election. While the overriding sentiment isn’t just contained to France, the fact that we’re seeing such political uncertainty in Europe’s second largest economy is triggering nerves in markets.

The French parliamentary election here is going to end up being an interesting one regardless.

Given the prevailing sentiment among the public, Macron’s Renaissance party is not expected to win an absolute majority. This outcome would be the most surprising one if it were to play out that way. If so, Macron can easily appoint Gabriel Attal as his prime minister once again. Easy-peasy, French stocks will rally back alongside the euro. But again, it’s quite implausible to imagine at this stage.

The biggest worry now is that we might just see no party winning a majority. As such, there will be no ruling government formed immediately and this is a rather unfamiliar situation for France. One can argue it is rather unprecedented in modern politics and there would be a political standstill within the country.

That is because new legislative elections cannot be called for at least another year to resolve the situation.

If this were to occur, we might see Macron start to come around to the idea of resigning to allow for the process to play out quicker. So far, he has vehemently ruled out such an option. But when the time comes, we’ll see.

The other plausible outcome is that Le Pen’s National Rally party secures an absolute majority. That will make things rather awkward for Macron, as he will be tasked to choose the next prime minister from the party itself. Given the circumstances, he will be left with little choice but to appoint Jordan Bardella to head the government.

In this instance, Macron will still be in charge of things involving foreign politics, treaties, and what not. However, Le Pen’s faction will be the ones in charge when it comes to domestic policies instead.

Things are running smoothly now as Macron is the figurehead and also helps to run the show when it comes to EU matters. It will be a whole different ball game though if this outcome plays out. Expect there to be much tension involving French politics. And in return, that won’t bode too well for domestic assets and also the euro in general.

On the currency, the fear is that this is just the start of a bigger wave that is about to sweep across the region.

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

• The nerves are starting to show again in USD/JPY
• What are the main events for today?
• Weekly update on interest rates expectations
• Germany June Ifo business climate index 88.6 vs 89.7 expected
• UK June CBI trends total orders -18 vs -25 expected
• SNB total sight deposits w.e. 21 June CHF 451.8 bn vs CHF 453.5 bn prior
• China calls for EU to scrap tariffs on EVs by 4 July

Markets:

• EUR leads, USD lags on the day
• European equities higher; S&P 500 futures up 0.1%
• US 10-year yields up 0.8 bps to 4.265%
• Gold up 0.2% to $2,325.58
• WTI crude up 0.3% to $80.97
• Bitcoin down 4.9% to $61,023

It was a quiet session as markets are slowly easing into the final trading week of June.

There’s not much on the agenda today, so that explains the lack of major headlines in European morning trade. The German Ifo business climate missed on estimates but fits with the stutter from the PMI data last week.

That didn’t do much to dent the euro though, as the single currency nudged higher alongside regional stocks. EUR/USD is seeing a bump higher from 1.0700 to 1.0730, with European equities also up modestly across the board.

The first round of the French election will be coming later this weekend, so do be wary of that.

Looking to other major currencies, the yen was a bit nervy as well earlier amid some light profit-taking. USD/JPY fell from 159.60 in a quick drop to 158.75 before holding back around 159.50 currently.

The dollar itself is a touch softer but little changed against the rest of the major currencies bloc.

Elsewhere, Bitcoin is a notable mover as it is dragged down to $61,000 again with the low earlier touching $60,605.

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

Despite good data on the inflation
and growth
front, Bitcoin couldn’t find a sustained bid amid the generally positive risk
sentiment. There was no real catalyst for the drop other than a key technical
support getting breached. We got a quick drop into a key
support zone today which will likely attract more buyers looking to buy the dip at
better levels.

Bitcoin
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that Bitcoin dropped all the way back to the key 60000 support
zone after breaking below the 67275 level. The sellers for now remain in
control but we can expect the buyers to start piling in around these levels with
a better risk to reward setup.

Bitcoin Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the key levels for the buyers which will be:

• the support zone around the
  60000 level and
• the major trendline
  around the 58000 region.

The sellers, on the other hand, will want to see the
price breaking below those levels to increase the bearish bets into new lows.

Bitcoin Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that from a risk management perspective, the sellers will have a better
risk to reward setup at the downward trendline around the 64000 level. The
buyers will want to see the price breaking above the most
recent lower high at 63000 to find some footing and eventually get the price above
the trendline to gain more conviction and increase the bullish bets into a new
all-time high.

Upcoming
Catalysts

This week is a bit light on the data front although we will still get to see some
important releases. We begin tomorrow with the US Consumer Confidence where the
market will be focused on the labour market details. On Thursday, we get the
latest US Jobless Claims figures, while on Friday we conclude the week with the
US PCE.

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

This is the sort of nervous price action that we also saw previously when getting close to intervention territory. The pair just took a quick dip from 159.60 to 158.75 before holding around 159.15-30 levels again.

In the run up to the last intervention, there were also jerky price movements such as this during the build towards 155.00 previously. That ultimately settled with a break higher though, before Tokyo stepped in at the 160.00 mark.

For now, the price jumps are not too volatile even with the rise since last week. So, I wouldn’t say Japanese officials are feeling extremely compelled to intervene for the time being.

This is all pretty much the same sort of nerves that is leading to profit-taking as we are near the key threshold.

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

• Prior -33

Manufacturing orders in the UK fell again in June but at a slower pace as compared to May at least. The balance for manufacturing output expectations also increased to 13 from 7 previously, marking the highest since October last year. CBI notes that the readings are „encouraging“ and that the recovery should „broaden out over the summer“.

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