Just some token remarks and not really giving much away for now. Another rate hike is well expected for June but we will see if there will be any more after for the ECB. A lot of that is going to come down to the data.
This article was written by Justin Low at www.forexlive.com.
The dollar jump yesterday was certainly noteworthy but we are seeing a light pullback to the gains in trading today. Of note, USD/JPY is down 0.4% to 138.10 levels but buyers are still looking poised in the bigger picture.
Meanwhile, the antipodeans are also taking advantage amid the more positive risk mood. AUD/USD and NZD/USD are both up 0.5% to 0.6650 and 0.6260 respectively with the former holding a decent bounce off 0.6600 at the lows yesterday.
Despite the bit-part retracement so far today, the dollar continues to sit in a good spot from a technical perspective. That is rather evident against the euro and yen, so let’s take a look.
EUR/USD is marginally higher today near 1.0780 but the important detail on the chart remains that break below 1.0800 and the 100-day moving average (red line). That is keeping dollar bulls interested and poised to maintain a downside push in the pair so long as the levels above hold.
As for downside targets, there is room to roam perhaps back towards the March lows at 1.0516-36 and potentially 1.0500. However, there will definitely be a lot of twists and turns in the week(s) ahead so don’t expect any moves to be that straightforward.
Then, we have USD/JPY which rose to its highest levels since the end of November last year on a break above 138.00 yesterday. That is still very much holding with the broken resistance region at 137.77-91 one to watch if sellers are to wrestle back some momentum towards the end of the week.
Otherwise, buyers are looking poised to keep a push towards 140.00 next for the pair so long as the bond market plays ball.
But the pullback today is also seeing yields drop slightly with 2-year Treasury yields down 5 bps to 4.22% and 10-year yields down 2.5 bps to 3.62% on the day.
This article was written by Justin Low at www.forexlive.com.
U.S. President Joe Biden is in Japan for the G7 meeting discussing key global issues, while the spotlight stays on the resolution of the debt ceiling talks back home. The President has expressed optimism, emphasizing that the U.S. „will not default“ and citing ongoing negotiations with top Congress members. He is expected to return to Washington on Sunday to aid in reaching an agreement, which Republican leader Kevin McCarthy believes is feasible by the weekend. Despite guarded optimism, no formal resolution has been reached, and a potential government default looms as early as June 1.
The day’s economic agenda commences at 8:30 am with the release of the Canadian New Housing Price Index (NHPI) data. The forecast suggests a slight dip of -0.1%, compared to the previously recorded 0.0%. In the US at the same time, Unemployment Claims are expected to decrease to 253K from the previous count of 264K (the 4-week average was the highest since November 2021). The Philadelphia Fed Manufacturing Index is also set to be unveiled with an anticipated improvement to -19.5 from a previous -31.3. Recall, the empire manufacturing index fell sharply on Tuesday (to -31.8 from 10.8 in the previous month). At 9:05 am, remarks from FOMC Member Jefferson are scheduled, followed by FOMC Member Barr at 9:30 am. Their commentary could provide valuable insights into the Federal Reserve’s perspective on the state of the economy and monetary policy.
At 10:00 am, the release of US Existing Home Sales data, is forecasted to decline to 4.30 million from the previous figure of 4.44 million. Additionally, the Conference Board Leading Index on a month-on-month basis is expected to report a smaller decrease of -0.6%, an improvement from the previous -1.2%. FOMC Member Logan is also slated to speak during this hour. The sharp decline is forecasting a recession in the US going forward (nothing new).
A tentative release of the Bank of Canada’s (BOC) Financial System Review is on the docket, with no specific time provided. At 11:00 am, remarks from the Bank of Canada’s Governor Macklem are scheduled, potentially shedding light on Canada’s monetary policy direction.
Overnight, in the Asian Pacific session disappointing labor market data for April was released. Jobs in the economy shrunk while the unemployment rate jumped higher (however, the unemployment remains near record lows so it is not all bad). Nevertheless, the data today in addition to the subdued wages data published yesterday, along with other indications showing some steam coming out from the Australian economy should give the Reserve Bank of Australia reason enough to pause at its upcoming June 6 meeting. New Zealand PPI was lower than expectations.
Montana is the first US state to ban TicTok. The decision is expected to be challenged in the courts. If the ban is maintained it will go into effect in January and will raise tensions between the US and China.
A look around the markets is showing.
In the premarket for US stocks, the major indices are marginally higher after yesterday’s gains:
Although it is a banking holiday in Europe, stocks continue to trade:
in the US debt market, yields are higher:
This article was written by Greg Michalowski at www.forexlive.com.
Markets:
It was a quiet session with not many headlines, as some parts of Europe are on holiday and with there being no major economic releases whatsoever.
That did not stop the dollar though, as it continues its grind higher and to test key levels in EUR/USD and USD/JPY.
The former is closing in on key support near 1.0800, although there are large option expiries limiting the downside push for now. Meanwhile, the latter is also running up against recent highs around 137.77-91 at the moment as buyers look for a breakout towards 140.00.
This comes despite equities continuing to show much optimism, with European indices rallying hard after the Wall Street gains yesterday. US futures are also slightly higher, so that is helping with the mood. Of note, the DAX is just inches away from fresh record highs set last year at 16,285-90.
As the dollar holds more resilient again, GBP/USD is seen down 0.4% to 1.2440 as the retreat this week continues while AUD/USD is down 0.3% to 0.6640 as the aussie is dragged down by softer jobs data earlier.
It’s a rare sight to see the dollar move higher in a time where stocks are also performing well, but it is what it is at the moment in markets.
Traders have been quick to price in relatively dovish Fed expectations since the regional banking crisis but perhaps that is now backfiring as high inflation is keeping the Fed on course to hold rates higher for longer, alongside economic conditions that are holding up in the US.
This article was written by Justin Low at www.forexlive.com.
The crypto
market capitalisation rose 0.55% over the past 24 hours to 1.134 trillion. Late
Wednesday afternoon, another attempt was made to break above 1.14 trillion,
following the US stock market rally on the government debt ceiling news.
However, it has so far failed to stay in this territory.
Bitcoin is
up 0.7% at $27.2K, staying within the recovery trend that has been in place
since the 12th. However, this recovery is painfully slow, and local resistance
at $27.5K, which has been supporting since late March, remains in place.
According to
Santiment, large Bitcoin holders continue accumulating BTC – over the past five
weeks, cryptocurrency holdings have increased by nearly 85,000 BTC ($2.3
billion). Santiment believes Bitcoin is now in a consolidation phase before a
new surge.
News background
The stock
and cryptocurrency markets will collapse if the US defaults, says Mike McGlone,
senior strategist at Bloomberg Intelligence. He is bearish on cryptocurrencies
but bullish on gold.
Lightning
Labs, the developer of the Lightning Network, announced the release of Taproot
Assets Protocol v 0.2, which avoids potential delays in transaction processing
due to congestion on the Bitcoin network.
The UK
Parliament has proposed regulating cryptocurrencies as gambling. Crypto assets
can potentially be used for fraud and money laundering, posing a high risk to
consumers and the economy.
Tether’s
issuance team has decided to invest up to 15% of its net profits in Bitcoin
monthly to diversify its reserves. It has already invested $1.5 billion in BTC.
The bulk of USDT’s collateral is still in short-term US Treasuries.
According to
a Bloomberg survey, only 31 of the top 60 cryptocurrency companies have
successfully undergone external financial audits or confirmed reserves. Many
auditors are reluctant to work with cryptocurrency companies or need more
expertise.
This article was written by FxPro’s Senior Market Analyst Alex
Kuptsikevich.
This article was written by FxPro FXPro at www.forexlive.com.
On the daily chart below for the S&P
500, we can see that the price action remains rangebound just beneath the 4175
level. This has been a really strong resistance and we can expect some quick
rally once the price breaks out decisively with buyers jumping in aggressively
and sellers folding fast.
Overall, the market hasn’t done
much since April as we’ve just been bouncing up and down between the 4175
resistance and the 4061 support. This is the type of market that
chops out many traders that suffer from impatience. At the moment, it’s a
waiting game until we get a clear breakout supported by a fundamental catalyst.
In the 4
hour chart below, we can see that we have an even tighter range between the
4175 resistance and the 4120 support. Such compressions generally lead to big
moves once the market breaks out. The big spike yesterday was due to positive
news on the debt ceiling front, but it’s more likely that in case of a deal
we get a “sell the fact” reaction rather than a rally. The risk events to watch next are the US Jobless Claims
today and Fed Chair Powell speech tomorrow.
In the 1
hour chart below, we can see more closely the tight range we’ve been stuck into
since the start of May. A break above the 4175 level should lead to a quick
rally into the 4206 high. That will be the last line of defence for the sellers
as a break beyond that will lead to further upside into the 4300 area. On the
downside, the sellers may lean again on the 4175 resistance and target the 4120
support first, and 4061 support next. Keep close eye on these levels.
This article was written by ForexLive at www.forexlive.com.
On the daily chart below for
EURUSD, we can see that the market has finally turned around and the trend has
now changed. The multiple failures to break above the 1.1033 high were
significant and once the price fell below the red long period moving
average, the sellers started to pile in aggressively, eventually pushing the
price much lower.
The moving averages have now
crossed to the downside in a further confirmation that we are in a downtrend.
We could also have a major double
top pattern
with the neckline at 1.0533. The first support for the buyers should be at the
1.0750 level, where we may see the first deeper pullback after such a quick
selloff.
EURUSD
technical analysis
On the 4 hour chart below, we can
see that the market was trading within a rising channel diverging with the MACD. This is generally a sign of
weakening momentum and it’s often followed by pullbacks or reversals. The
divergent rally into the 1.1033 high was in fact meaningful as the rally
stalled there and started to range until we eventually got a breakdown. The
moving averages are acting as resistance for the current downtrend and the
sellers should keep on leaning on them until the 1.0750 support.
On the 1 hour chart below, we can
see that the price has recently pulled back into the 1.0845 resistance before
falling again towards the 1.0810 low. The sellers should pile in more heavily
once the price breaks below the low, targeting the 1.0750 support. It’s worth
noticing that the price has started to diverge with the MACD, and we are
getting closer to the key support.
This may be a sign that we are
about to see a deeper pullback to the upside before the next selloff. The
buyers, on the other hand, should be waiting at that 1.0750 support to target a
rally towards the 1.09 handle or wait for the price to break above the
trendline before piling in.
This article was written by ForexLive at www.forexlive.com.
Markets:
It was a quiet session in terms of headlines but there were some decent and light moves during the session at least.
The handover from Asia saw major currencies stuck in very narrow ranges but that extended in European morning trade, as the dollar gathered a bit of poise – particularly against the euro, pound and yen.
EUR/USD fell from 1.0860 to 1.0820 while GBP/USD declined from 1.2480 to 1.2425 before a light bounce after as dollar gains ease up. It can be seen as price action stretching its muscles, awaiting further conviction by traders. However, mixed markets are not really helping.
USD/JPY also moved up to a high of 137.17 but is keeping just below the 137.00 mark now alongside its 200-day moving average.
That comes despite bond yields looking a tad softer but equities are keeping marginally positive as US futures are higher while European indices are little changed mostly.
The mood in stocks is at least helping to see the antipodeans hold up with AUD/USD up 0.1% to 0.6660 after hitting a low of 0.6630 earlier while NZD/USD is up 0.5% to 0.6260 as price moves back just above its own 100-hour moving average.
It’s one of those days where traders are still largely sorting out their feet, awaiting some form of headline to really firm up any convictions out there.
This article was written by Justin Low at www.forexlive.com.
A rise in rates in the past week led to a notable decline in mortgage activity with both purchases and refinancing also falling. This just continues to rebuff the narrative that housing conditions remain rather challenging and troubled, with mortgages in particular suffering amid tighter financial conditions brought about by the Fed.
This article was written by Justin Low at www.forexlive.com.
On the daily chart below, we can
see that after tapping into the record high at 2076, Gold started to fall as
better than expected economic data lifted treasury yields and boosted the US
Dollar. The price yesterday broke below a key trendline which is the base of an expanding
wedge pattern.
We should now see the price
falling towards the 1930 level where we can also find the 50% Fibonacci
retracement level and the major trendline. That support zone is expected to be really strong,
and the buyers are likely to pile in there with defined risk below the
trendline. The sellers, on the other hand, will want to see the price breaking
below the support zone before piling in more aggressively and extend the
selloff towards the 1800 level.
XAUUSD
technical analysis
On the 4 hour chart below, we can
see the breakout that happened yesterday after the better than expected US
Retail Sales data. The sellers are now clearly in control and
barring any negative news like a big miss in Jobless
Claims tomorrow or Fed Chair Powell being dovish on Friday, gold should
continue to fall towards the 1930 level.
On the 1 hour chart below, we can
see more closely the recent price action. The sellers should keep on piling in
at the break of the swing low at 1985. If the breakout fails, the likely
pullback should run towards the 2000 resistance where we can also find the
38.2% Fibonacci retracement level. The sellers will be waiting there with
defined risk just above the resistance zone and the 1930 level as target. The
buyers, on the other hand, will need a break above the trendline to regain some
control and target the 2076 high.
This article was written by ForexLive at www.forexlive.com.