Here’s a look at how the curve in Fed funds futures have changed since a month ago and at the start of this month:

It may seem like an eternity but it was just four weeks ago that traders were still convinced of three rate cuts by the Fed before year-end.

That pricing was ultimately reversed and it helped to spur a dollar rally in May. And earlier this month, there was still some consideration about a rate hike for June but after since talks of a „skip“ came about, we have seen that settle to where we are now.

But looking out to the end of the year, traders are quite convinced of a higher for longer narrative by the Fed.

And as policymakers are set to keep rates unchanged today, it will be a question of whether or not they can convince markets that the narrative has not changed.

If the Fed chooses to „skip“ this meeting, everyone is anticipating a hawkish pause of sorts. However, how will that look like?

For one, Powell surely cannot pre-commit to a rate hike in July. As usual, I would expect him to stress on data dependence but at the same time reaffirm that the Fed’s job is not done yet. So, if traders are hoping to get confirmation that this is just indeed a „skip“ and not a „pause“, they may end up being disappointed.

That’s a big downside risk for the dollar and it will be a key consideration for risk assets and bonds later in the day.

Besides that, there’s also the focus on the dot plots and economic projections. If that reaffirms a more hawkish narrative, what should markets focus on in the aftermath? Powell’s remarks/guidance or the overall outlook among Fed members?

Seeing as how markets have set up for the Fed to stick with a higher for longer narrative, I fear that the risk is skewed towards a disappointment. But as we saw with the US CPI data yesterday, the reaction may not be too straightforward.

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

Since the rumours of
China’s reopening emerged in November 2022, Copper experienced a notable surge.
The market anticipated a surge in demand for the metal, considering China’s
position as the largest global importer and consumer of copper. However, these
expectations started to diminish due to persistent disappointments in China’s recovery
data, leading to a decline in copper imports during the first quarter of 2023.
Moreover, the contraction of Manufacturing PMIs worldwide indicated a global
manufacturing slump.

Consequently, the
„China reopening trade“ reversed, and copper returned to the levels
observed in November 2022. However, there has been a recent rebound in copper
prices driven by more positive news from China and speculation regarding
potential economic stimulus measures. This speculation arises from the
declining inflation in China, which poses a threat of transitioning into
deflation. In response, the People’s Bank of China (PBOC) has already
implemented some rate cuts, and expectations are growing for
further cuts in the MLF (medium-term lending facility) and LPR (loan prime
rate) in the coming days.

Copper Technical Analysis –
Daily Timeframe

On the daily chart, we can see that copper’s rally
has stalled at the key 3.8245 resistance level.
The bearish trend has recently turned bullish after the price bounced from the
major upward trendline and the
3.5475 support. In fact, the moving averages have
crossed to the upside and we may be about to see a breakout to the upside as
China is trying to bolster demand with more expansionary monetary policy.

Copper Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price has
been diverging with the
MACD coming
into the 3.8245 resistance. This is generally a sign of weakening momentum
often followed by pullbacks or reversals. If the price breaks below the lower
bound of the channel, we should see the price falling back to the base of the
channel at 3.6955. A strong breakout to the upside would invalidate the bearish
setup though and lead to a rally towards the 4.000 level.

Copper Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that from
a risk management perspective, the best place for the buyers to enter the
market would be the lower bound of the channel so they can have a better risk
to reward setup. The sellers, on the other hand, can either lean on this
resistance area targeting a bigger move to the downside or wait for the price
to break the lower bound of the channel to pile in and target the 3.6955 level
first and eventually the 3.5475 support.

This article was written by ForexLive at www.forexlive.com.

The recent NFP report presented a mixed picture. While the headline
number exceeded expectations, there was also a notable increase in unemployment
and a decline in average weekly hours. These less favourable details led to a
weakening of the USD as the market began to reassess its hawkish expectations
and adopt a more cautious stance. The ISM Services PMI added to the subdued sentiment,
falling short of expectations, particularly in the prices paid sub-index, which
sparked hopes of a potential decline in core inflation.

Shifting focus to jobless claims, there was a significant deviation
from the expected number. However, seasonal adjustments were cited as the
likely culprit. On a positive note, continuing claims demonstrated further
improvement, suggesting that individuals are finding new employment relatively
quickly after experiencing a period of unemployment.

Overall, the previously hawkish
sentiment observed in May has started to fade, as evident from the recent
change in the outlook of Federal Reserve members. They have expressed a
preference for a cautious approach and avoiding significant actions during the
upcoming FOMC meeting. The latest set of data supports their concerns and
justifies their restrained approach but as we have seen yesterday with the US CPI report, core inflation remains stubbornly
high, and the month-over-month rate is stuck at 0.4%.

USDCHF Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the rally in
USDCHF has stalled at a key resistance level at
the 0.91 handle. The moving averages are
still crossed to the upside indicating a bullish bias, but they are on the
verge of a crossover as the price keeps ranging. This may turn into a bullish flag
consolidation if the price confirms it breaking above the 0.91 resistance. The
target for the buyers will be the 0.94 handle. This will depend on the next set
of economic data. If they are strong, the USD is likely to rally, but if they
are weak the USD should weaken even more.

USDCHF Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price has
recently broke out of the upward trendline that
acted as a strong support in the past month. The strong move after the break
was also helped by hawkish comments from the SNB’s Governor Jordan.
Technically, the price has made a new lower low in that case, so the structure
on this timeframe turned bearish, but we will need a confirmation from the data
to start seeing more follow through and the USDCHF pair falling into the 0.8858
support.

USDCHF Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have two levels to watch: the 0.9073 high and the 0.9032 low. We are likely to
range here trading into the FOMC rate decision and we might even see some
spikes that could lead to fakeouts once the Fed event gets underway, but a
break on either side should show what is the prevailing sentiment. A break to
the upside should take the USDCHF pair to the 0.91 resistance, while a break to
the downside should result in a move towards the 0.8980 low.

Today we have the FOMC rate decision to watch and in
the next days the highlights are the US Jobless Claims report on Thursday and
the University of Michigan consumer sentiment survey on Friday. Beware that the
last time the consumer sentiment survey impacted the market heavily as long
term inflation expectations showed a big jump to the upside, so another
increase may give the USD a boost while a big miss should weaken it.

This article was written by ForexLive at www.forexlive.com.

Headlines:

• Dollar under pressure as US CPI data looms
• Sterling gets a lift as UK jobs report vindicates another BOE rate hike
• UK May payrolls change 23k vs -135k prior
• BOE appointee Greene: It is reasonable to expect inflation to come down fairly quickly
• China reportedly considering broad stimulus package to bolster economic support
• OPEC maintains demand outlook for the year but warns on economic risks
• Germany June ZEW current conditions -56.5 vs -40.0 expected
• Germany May final CPI +6.1% vs +6.1% y/y prelim
• Spain May final CPI +3.2% vs +3.2% y/y prelim
• US May NFIB small business optimism index 89.4 vs 89.0 prior

Markets:

• GBP leads, USD lags on the day
• European equities mixed; S&P 500 futures up 0.1%
• US 10-year yields down 4.1 bps to 3.724%
• Gold up 0.4% to $1,964.37
• WTI crude up 1.8% to $68.32
• Bitcoin up 0.8% to $26,085

European trading today served more or less as a placeholder ahead of the US CPI data to come later.

The dollar dropped in the build up to the main event as markets seem to be leaning towards a softer report later in the day. EUR/USD briefly clipped the 1.0800 mark and is keeping just below its 100-day moving average of 1.0805 for now. USD/JPY is little changed though around 139.40-50 levels, despite lower Treasury yields.

The pound was a notable gainer after the UK labour market report showed a fall in the jobless rate while wages continue to run hot. That saw GBP/USD push up from 1.2530 to 1.2565 and is now keeping at the highs around 1.2575.

That saw money markets price in an additional rate hike as well for the BOE, with the terminal rate now seen at 5.75%.

Besides that, commodity currencies are also seeing a decent advance with USD/CAD down 0.2% to 1.3345 after rising yesterday on a plunge in oil prices. The key trendline support around 1.3336 is still the big technical level to watch for now.

Then, we have AUD/USD up 0.4% to 0.6780 as buyers are nearing a test of the April and May highs near 0.6800.

Equities were firmer earlier to start the session but have given back nearly all of its gains as traders appear to be squaring positions ahead of the key risk event in around 30 minutes‘ time.

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

Considering the recent hot CPI report and this
morning’s incredibly strong Employment report with
high wage growth, it is anticipated that the Bank of England (BoE) will
continue to raise interest rates in order to address one of the highest
inflation rates among the major economies. On the other hand, the Bank of Japan
(BoJ) is expected to maintain its accommodative monetary policy this week,
which has played a role in the significant depreciation of the Japanese Yen
(JPY) over the past two years.

This divergence in monetary policies has led to a
strong upward movement in the GBPJPY pair. It appears that only concerns about
a potential global economic downturn can cause the pair to decline, otherwise
the BoJ will need to switch to a hawkish stance to defend the JPY depreciation.

GBPJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the buyers keep
leaning on the moving averages to
position for more upside on the GBPJPY pair. The recent hot inflation data from
the UK and the high wage growth should keep the BoE on track to increase
interest rates.

GBPJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have a big divergence with the
MACD going on,
which is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we only got some shallow pullbacks, and a reversal is
unlikely to occur at least until we get a fundamental catalyst that points to a
recession or the BoJ becomes hawkish.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price has recently bounced from a support near
the 174.50 level where we had also the 38.2% Fibonacci
retracement level for confluence. The
big spike today is because of the strong employment report and unless we get
bad US CPI data today, we should keep seeing the GBPJPY pair rallying.

This article was written by ForexLive at www.forexlive.com.

Market picture

The crypto
market cap rose 1% in 24 hours to $1.06 trillion. Bitcoin adds 1%, while Ethereum
just 0.4%. Meanwhile, the top altcoins try to recover some losses, adding
between 0.2% (Cardano) and 4% (BNB). The cryptocurrency Fear & Greed Index
is in the Fear territory at 45 (-2 points overnight), whereas the Fear &
Greed index for the stock market is at 79 (extreme greed).

Bitcoin is
struggling for a third day to hold above $26K. This struggle away from
meaningful technical levels shows how heavy the crypto market is right now,
despite optimism in equities and a slightly decreased USD rate. Technically, to
break the downtrend, Bitcoin needs to overcome $27K, and a drop below $26.5K is
required to confirm the downtrend. The second scenario seems more likely.

According to
CoinShares, investments in crypto funds fell by $88 million last week, the most
in three months and the eighth consecutive week of outflows. Bitcoin fell by
$52 million and Ethereum by $36 million.

According to
Glassnode, outflows from Coinbase and Binance reached $4 billion during the
week. Crypto traders, spooked by SEC lawsuits, are withdrawing assets from exchanges
en masse.

News background

According to
CryptoQuant, bitcoin reserves on US crypto exchanges have fallen below the 50%
– levels last seen in 2017. Assets are flowing to overseas exchanges due to
regulatory uncertainty and recent SEC actions against Binance and Coinbase.

Binance’s
share of the cryptocurrency market has fallen to 43%, according to analyst firm
CCData. Trading volume in the crypto market fell 15.7% m/m in May.

Polygon
developers defended their MATIC cryptocurrency, disagreeing with the SEC’s
characterisation of it as an unregistered security. The Solana Foundation also
criticised the SEC’s decision. Robinhood had previously announced its intention
to delist MATIC, ADA, and SOL.

North Korean
hackers have stolen $3 billion in cryptocurrency over the past five years to
fund the country’s nuclear programme, the Wall Street Journal reported.

This article was written by FxPro’s Senior Market Analyst Alex
Kuptsikevich.

This article was written by FxPro FXPro at www.forexlive.com.

• World oil demand to rise by 2.35 mil bpd in 2023 (no change to previous forecast)
• China oil demand to rise to 840k bpd (up from 800k bpd previously)
• Sees world economic growth at 2.6% this year
• But there are rising uncertainties amid high inflation, rising interest rates
• It is also still unclear how and when Easter Europe geopolitics might be resolved

After the surprise output cuts, oil prices suffered a bit of a hangover and then a big plunge yesterday. It is making up for some lost ground today though, with WTI now up 1.9% to $68.40. That comes off a bounce of its 200-week moving average again, seen at $67.31 currently. That remains the key technical support level for oil since March.

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

The recent beat in the non-farm payrolls (NFP) data, followed by concerning
factors like a higher unemployment rate and fewer average weekly hours, has
resulted in a weakening of the USD. The market has adjusted its hawkish
expectations to less hawkish ones because a looser job market can help reduce
inflation. Additionally, the disappointment in the ISM Services Purchasing Managers‘
Index (PMI),
particularly in the lower prices paid sub-index, has further contributed to the
expectations that core inflation may soon start to normalise.

The significant miss in US jobless claims was taken with a grain of salt due
to seasonal adjustments. Continuing claims have shown even greater improvement,
indicating that people are finding jobs relatively quickly after being
unemployed. Overall, the strong hawkish sentiment observed in May due to
positive economic data has recently started to reverse. This change in
sentiment occurred as Federal Reserve members expressed a preference to hold
off on major actions during the upcoming Federal Open Market Committee (FOMC)
meeting and the misses in the data.

NZDUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that the big
reversal in hawkish expectations for the June FOMC meeting led the NZDUSD to
pullback into the downward trendline where we
can also find the red 21 moving average. This is
a key resistance level
and we will likely see the sellers leaning on this trendline to position for a
selloff towards the previous low at 0.6000. The buyers will need to break above
the trendline to extend the rally to new highs.

NZDUSD Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that we also have
some confluence from the
50% Fibonacci retracement level
and the psychological 0.6150
level. This is a good spot for the sellers to position for more downside from
here. The buyers will need to break above the trendline to get the conviction
to target new highs.

NZDUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price is diverging with
the MACD
trading into the trendline. This is generally a sign of weakening momentum
often followed by pullbacks or reversals. In this case, a divergence here may
be significant and increases the odds of the bearish setup. Anyway, today’s
data will decide where the NZDUSD will go next.

This week is packed with many significant events,
starting with the release of the US Consumer Price Index (CPI) report today.
This report is expected to strongly influence expectations for tomorrow’s
Federal Open Market Committee (FOMC) rate decision and the next meetings. The most
straightforward scenarios are likely to be a rally in the NZDUSD pair if the
CPI data misses across the board and a selloff in case the data beats on all
fronts. The market is likely to pay more attention to the Core CPI, making it
the most critical measure to monitor.

Moving on to later in the
week, we have the release of the Jobless Claims report and the University of
Michigan consumer sentiment survey. During the previous release of the consumer
sentiment survey, there was a substantial rise in long-term inflation
expectations, which significantly impacted the market. Consequently, if this
survey fails to meet expectations, it would be viewed as positive news for NZDUSD.

This article was written by ForexLive at www.forexlive.com.

Despite worrisome factors
such as a higher unemployment rate and lower average weekly hours, the recent
release of the NFP data has had minimal impact on the Nasdaq
Composite. The labour market has exhibited resilience, albeit with some
looseness, which could potentially result in lower inflation without causing
severe harm to the economy.

Furthermore, the
underperformance of the ISM Services PMI has not affected the market
significantly. Instead, speculation has arisen from the sub-index indicating
lower prices paid, suggesting the possibility of decreased core inflation
without substantial damage.

The market cautiously
considered the significant miss in Jobless Claims, taking into account the impact of
seasonal adjustments, while also acknowledging the improvements seen in
Continuing Claims. Overall, the market chose to emphasize the positive aspects
of the data rather than dwell on the negatives.

Nasdaq Composite Technical
Analysis – Daily Timeframe

On the daily chart, we can see that the Nasdaq
Composite started to struggle a lot just above the key 13174 swing level. The
index has been curiously underperforming its peers recently prompting some
speculation that we may be peaking. It had a great run since breaking out of
the bullish flag back in
March, but the good news are getting exhausted and we are entering a period
where the data is expected to show either a deterioration in the economy or a
stickier inflation.

Nasdaq Composite Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that if were to get
a pullback, the nearest support zone is
at the upward trendline where we
can also find a previous swing support and the 61.8% Fibonacci retracement level.
From a risk management perspective, that’s the best level where the buyers can
re-enter the market with a defined risk just below the support zone.

The sellers, on the other hand, are probably
already piling in here to target the trendline and a possible breakout, while
more conservative sellers may be waiting for a break of the trendline first
before jumping onboard to target the 12274 support.

Nasdaq Composite Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we’ve
been diverging with
the MACD right
at this resistance level. This is generally a sign of weakening momentum often
followed by pullbacks or reversals. The fact that we are seeing it here makes
it more significant. A break below the minor upward trendline would give the
sellers even more conviction for a fall into the major upward trendline where
we are likely to find the buyers fighting for more upside.

This week holds a series of significant events for the Nasdaq
Composite. It all starts with the eagerly awaited US CPI report scheduled for
tomorrow. This report is anticipated to have a crucial influence on shaping the
market’s expectations for the upcoming FOMC rate decision, which is scheduled
for the following day. Additionally, later in the week, we can expect another
Jobless Claims report and the release of the University of Michigan consumer
sentiment survey. The previous release of this survey had a notable impact on
the market, primarily driven by a substantial surge in long-term inflation
expectations.

This article was written by ForexLive at www.forexlive.com.

Headlines:

• USD/CAD takes a look below key trendline support to start the week
• AUD/USD marches on towards April, May highs
• Central banks in the spotlight this week
• BOE’s Haskel: Further rate hikes cannot be ruled out
• SNB total sight deposits w.e. 9 June CHF 509.8 bn vs CHF 519.0 bn prior

Markets:

• AUD leads, GBP lags on the day
• European equities slightly higher; S&P 500 futures up 0.3%
• US 10-year yields up 0.8 bps to 3.753%
• Gold up 0.1% to $1,962.44
• WTI crude down 2.4% to $68.50
• Bitcoin down 1.9% to $25,953

It was a quiet session as markets get settled into what will be a blockbuster week coming up over the next few days.

There is a lack of key events and data today but that will all start to change from tomorrow onwards. Central banks are back in the spotlight and all eyes will be on the Fed in particular, with the ECB and BOJ policy decisions also in focus.

Major currencies aren’t showing much poise and the dollar is just marginally lower as the changes today are relatively minor at best. You can’t really blame traders for that as convictions are low at the moment, awaiting the key risk events to come.

EUR/USD did push up from 1.0750 to 1.0790 but is now keeping little changed around 1.0765 while GBP/USD moved up to test 1.2600 before slipping back to 1.2565 at the moment.

The loonie and aussie are the two more interesting currencies from a technical standpoint, testing some limits against the dollar as noted in the posts above.

Besides that, equities are steady alongside bonds so there isn’t much to work with for now. But the S&P 500 may look poised to test its August high of 4,325 so keep an eye out for that later in US trading.

Elsewhere, oil is suffering a poor start to the new week with a big slide of over 2% to $68.50 and is now testing key technical support from its 200-week moving average again. That level is where the drop in March and May were held, so it will be a big moment for oil traders over the next few days.

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