We had some good news last week when both the CPI
and the PPI
came in on the soft side. This should help the stock market in the bigger picture
since it will give the Fed more confidence to begin decreasing rates in the
latter part of the year.

The FOMC decision last week was slightly more
hawkish than expected, but Fed
Chair Powell made it clear that their estimates are subject to change as
they are still very data dependent, so the market looked past the Fed’s
projections.

The risk sentiment remains a bit murky, but it appears that the negative
mood of the prior week is dissipating. We have US Retail Sales data today, and
good data should bolster the market and improve the risk sentiment.

Nasdaq
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the Nasdaq keeps making all-time highs as the path of least resistance
remains to the upside. From a risk management perspective, the buyers will have
a better risk to reward setup around the trendline where they will also find the confluence of the 61.8% Fibonacci retracement level. At the moment though, it’s
unlikely that we will see such a big pullback unless we get some really ugly US
data.

Nasdaq Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a good support zone around the 19800 level where we can find
the confluence of a minor trendline and the 38.2% Fibonacci retracement level.
If the price gets there, we can expect the buyers to lean on the trendline with
a defined risk below it to position for another rally with a 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 19000 level next.

Nasdaq Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have the lower bound of the average daily range for today right around the recent
resistance now turned support. If we get a dip into it on weak US Retail Sales
data, the buyers might step in around there to fade the reaction and position
for new highs.

Upcoming Catalysts

Today we have the US Retail Sales and US Industrial Production. On Thursday,
we get the US Housing Starts, Building Permits data and the latest US Jobless
Claims figures. On Friday, we conclude the week with the and US PMIs.

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

• The projections are updated every three months
• We’ll have new ones in September
• Those are the most significant and interesting moments from the point of view of monetary policy
• They are a very important indicator when it comes to deciding on rates

Once again, this continues to effectively rule out a chance of a move in July. That said, markets have also settled on that i.e. no rate cut in July, for a while now already.

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

Precious metals have lost much of their momentum from May trading but while silver has retraced the upside move by quite a bit, gold is still pretty much in consolidation territory. Granted, the run higher in gold largely came earlier in March and April. In May, gold threatened fresh record highs above $2,400 but ultimately settled lower during the month. So, where does that leave us now?

Even as major central banks are kicking the can down the road on rate cuts, gold is still holding up quiet well as of late. I mean, such sentiment is also reflected in equities, so it speaks to the broader market sentiment as well I guess.

That being said, gold’s surging run higher in March and April might be calling for a further correction down the road. And I still hold that view until today. I’d view such a retracement to be a healthier one for gold in the bigger picture. Not to mention, that will be another opportunity for dip buyers to get in on the action.

And while gold has been lingering between $2,300 to $2,400 mostly as of late, the perceived resilience may be a deceiving one if you go by the technicals.

As seen from the daily chart above, we can note that a head-and-shoulders pattern is emerging.

The most important part of that is the neckline around $2,280 to $2,295. As such, if we do get a break of that as the next key move in gold, the target looks to be a potential drop towards $2,100. That will coincide with a shove towards its 200-day moving average (blue line), at least for the time being.

The key technical level there is one where buyers can definitely lean on for support, should the structural narrative for gold continue to hold. And that is if we do see this head-and-shoulders pattern play out accordingly.

But as we know, things in markets are never that straightforward. However, this is one of the risks that should be acknowledged and could potentially pan out for gold price action in the short-term.

As for the longer-term outlook, I’m still one that is very much bullish on gold. Central banks are looking to rate cuts as the next step and the dollar will see some of its resilience over the last two years ebb once the Fed gets to that stage.

However, I’d much prefer if we do get a bit more of a retracement before that next leg arrives. That will make a more convincing argument for gold to really take off once the stars align.

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

We got some very good news last week as both the CPI and PPI came in on the softer
side. This should support the stock market in the bigger picture as it will
give the Fed more confidence to start cutting rates at some point in the last
part of the year.

The FOMC decision last week turned out to be a bit more hawkish than expected but Fed Chair Powell made it clear that their
forecasts can change as they remain very data dependent, so the market looked
past the Fed’s projections.

The risk sentiment is still a bit murky, but it looks like the negative
mood from the last week is starting to dissipate. We have the US Retail Sales data
today where positive figures should give the market a boost and support the
risk sentiment.

S&P 500
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the S&P 500 keeps making all-time highs despite other risk assets
finding it harder to rally. We got a strong push to the upside yesterday
without any catalyst as the path of least resistance remains to the upside.

From a risk management
perspective, the buyers will have a better risk to reward setup around the trendline where they will also find the confluence
of the previous all-time high and the 61.8% Fibonacci
retracement level. At the moment though, it’s unlikely that we will see
such a big pullback unless we get some really ugly US data.

S&P 500 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a good support
zone around the 5450 level where we can find the confluence of a minor
trendline and the 38.2% Fibonacci retracement level. If the price gets there, we
can expect the buyers to lean on the trendline with a defined risk below it to
position for another rally with a 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 next trendline around the 5350 level.

S&P 500 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have another minor support around the 5510 level. If we get a dip
into it on weak US Retail Sales data, the buyers might step in around there to
fade the reaction and position for new highs. The sellers, on the other hand,
will want to see a break to increase the bearish bets into the trendline around
the 5450 level. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the US Retail Sales and US Industrial Production. On Thursday,
we get the US Housing Starts, Building Permits data and the latest US Jobless
Claims figures. On Friday, we conclude the week with the and US PMIs.

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

• ECB’s Lane: There are still questions surrounding inflation momentum
• ECB’s Lane: We should not be too sensitive to monthly inflation data
• ECB’s Lane: If there is big movement in euro currency, it would be relevant for policy
• ECB reportedly have no plans to discuss emergency purchases of French bonds
• BOJ governor Ueda says will scrutinise FX moves, impact on prices
• BOJ likely to trim bond buying by ¥2 trillion per month, says former policymaker
• Swiss government raises 2024 economic growth forecast slightly
• Italy May final CPI +0.8% vs +0.8% y/y prelim
• SNB total sight deposits w.e. 14 June CHF 453.5 bn vs CHF 459.8 bn prior

Markets:

• EUR leads, NZD lags on the day
• European equities mixed; S&P 500 futures flat
• US 10-year yields up 3.3 bps to 4.246%
• Gold down 0.5% to $2,319.92
• WTI crude up 0.2% to $78.64
• Bitcoin up 0.1% to $65,800

It was a slower session overall as markets are settling down after the hustle and bustle last week.

Things should pick up later in the week amid some key central bank meetings but for today, we’re off to a slower one. The dollar is trading mixed with little to work with overall. EUR/USD is up 0.1% to 1.0713, after having started the session near 1.0700. Meanwhile, USD/JPY is up 0.3% to 157.78 as yields bounce back a little on the day.

Besides that, USD/CHF is up 0.2% to 0.8920 while AUD/USD is down 0.3% to 0.6595. That reflects some mixed flows overall, with little clear direction in major currencies.

Elsewhere, equities are a little more sluggish as well with European indices erasing early gains at the open. Political worries continue to plague the region and the mood music is not helped by flattish sentiment seen in US futures.

In the commodities space, precious metals are lower with gold down to just below $2,320 and silver down by 1% to $29.25 on the day. The push and pull there continues, as traders look to more US data later this week and major central bank decisions for more clues.

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

The USD last week lost
ground across the board following the soft US CPI report as the market priced back in two rate
cuts by the end of the year. The moves were reversed soon after though as we
got a bit more hawkish than expected FOMC decision where the dot plot showed that the Fed expected just one cut for
this year despite the soft US CPI report.

Fed Chair Powell backpedalled on the projections nonetheless
making them a bit less worrying as the central bank remains very data
dependent. The rally in the US Dollar eventually picked up steam as the risk
sentiment turned more cautious.

The AUD, on the other hand,
got pressured mainly because of the risk-off sentiment and the US Dollar
strength. This week, we have the RBA rate decision where the central bank is
expected to keep the Cash Rate unchanged and keep their hawkish stance.

AUDUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that AUDUSD spiked into the top of the range around the 0.67 handle
following the soft US CPI release but eventually dropped back into the bottom
of the range following the more hawkish than expected FOMC decision and the
risk-off sentiment.

This is where we can expect
the buyers to step in with a defined risk below the support to position for a
rally back into the resistance. The sellers, on the other hand,
will want to see the price breaking lower to increase the bearish bets into the
0.65 handle next.

AUDUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the rangebound price action between the 0.67 resistance and
the 0.66 support. These will be the key levels that the market will likely need
to break to start a more sustained trend. For now, will could keep bouncing
around as the market awaits new catalysts.

AUDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we are starting to consolidate around the support as the price action
became more rangebound. The buyers will want to see the price breaking above
the trendline and the 0.6620 level to gain more
conviction and increase the bullish bets into the 0.67 handle.

The sellers, on the other
hand, will likely lean on the trendline to position for a break below the key
support with a defined risk. The red lines define the average daily range for today.

Upcoming
Catalysts

Tomorrow we have the RBA Policy Decision and later in the day the US Retail
Sales and US Industrial Production. On Thursday, we get the US Housing Starts,
Building Permits and US Jobless Claims figures. On Friday, we conclude the week
with the Australian and US PMIs.

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

Let’s get straight into details and what can we expect from the respective policy meetings this week.

RBA – Not one for change

With Australian inflation still holding well above the RBA’s threshold range, don’t expect much fireworks from the decision this week. The central bank is expected to keep the bank rate unchanged. And the language in the statement is very much to remain as per the May meeting here.

Although markets are still seeing lingering risks of a rate hike with the RBA, they aren’t likely to lean towards that direction unless inflation stays much more stubborn in the months ahead. As such, the RBA is likely to keep their options open and stick with the forward guidance of „not ruling anything in or out“.

In terms of market pricing, traders are not pricing in any major changes all the way through until November for now. So, the aussie might not have much to work with barring any surprises from the RBA.

SNB – Once again, the propensity to surprise

The SNB surprised with a rate cut in Q1 here and they could surprise again with their policy decision this week. Although traders are largely anticipating another rate cut to follow, it might not be the case. Personally, I think the decision is closer to a coin flip rather than favouring a rate cut.

As an aside, the market pricing is implying a ~72% probability of the SNB cutting rates on Thursday.

The latest inflation report here is still an argument for the SNB to cut further but there is a caveat. Services inflation rose to 2.2% and Jordan was explicit in warning that a weaker franc is the most likely source of inflation now. Adding to that, the latest sight deposits data also suggest that the SNB might be intervening to prop up the franc in recent weeks.

So, if the SNB isn’t too comfortable with inflation risks, they could very easily just choose to not cut rates this week.

As such, I’d view the balance of risks to be for a higher Swiss franc. And that includes even if they do cut rates on Thursday. Considering the political climate in Europe, safety flows are likely to help underpin the franc in the short-term. So, the call would be to fade any overstretched EUR/CHF upside on the SNB this week.

BOE – A nothing burger or laying the ground work for after the summer?

This time last month, some had the June meeting pinned for when the BOE would start cutting rates. But hopes for that were dashed after the April CPI report here. In that lieu, we will be getting the May CPI report on Wednesday but it won’t change anything on what we should expect from the BOE this week.

The central bank is not going to cut rates and will be expected to maintain their current policy stance mostly.

The thing to watch out for will be whether or not they will begin teeing up a move for August. Policymakers had previously said that they were comfortable with markets pricing in such a move but traders are erring to the side of caution for now. A softer set of inflation numbers might bring August back on the table. But for now, traders are still having some reservations.

The market pricing implies a ~45% probability for a move in August, with September being more assuring at ~89%.

The bank rate vote is also one to be mindful of. However, it is expected that it will remain the same at 7-2. The two dissenters, being Ramsden and Dhingra, are still anticipated to vote for an immediate 25 bps rate cut.

If the BOE maintains its language and reiterates that policy needs to remain „restrictive for an extended period of time“, that will keep traders skeptical for a move in August. That especially if accompanied by stronger price pressures in the inflation data this week.

It would not be prudent for them to explicitly tee up a rate cut for August, but they could offer some subtle hints on that. We’ll see. But of course, that needs approval first from the May inflation data. Otherwise, one can safely rule out such a move for the BOE.

The way I see it, the UK CPI report this week might just steal the spotlight and we’re left with a nothing burger on Thursday. That unless the figures are softer than estimated.

Headline annual inflation is expected to fall back to the BOE’s target of 2% in May. That said, core annual inflation remains closer to 4% as per the April reading. Meanwhile, services inflation is still extremely stubborn and has been a thorn for the BOE in delivering further progress on policy. So, that remains a key spot to watch.

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

The USD last week lost
ground across the board following the soft US CPI report as the market priced back in two rate
cuts by the end of the year. The moves were reversed soon after though as we
got a bit more hawkish than expected FOMC decision where the dot plot showed that the Fed expected just one cut for
this year despite the soft US CPI report.

Fed Chair Powell backpedalled on the projections nonetheless making
them a bit less worrying as the central bank remains very data dependent. The
rally in the US Dollar eventually picked up steam as the risk sentiment turned
more cautious.

The NZD, on the other hand,
got pressured mainly because of the risk-off sentiment and the US Dollar
strength. Moreover, today the Services
PMI came in very weak which weighed on the Kiwi in the Asian session.

NZDUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that NZDUSD spiked into the key 0.6217 resistance following the soft US CPI report
and then sold off following the more hawkish than expected FOMC decision. We
have a strong support around the 0.6082 level where we have also 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 new highs with a 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 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 likely
need to break to start a more sustained trend. For now, will could keep
bouncing around as the market awaits new catalysts.

NZDUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that from a risk management perspective, the sellers have a good resistance
zone around the 0.6142 level where they will also find the confluence of the trendline
and the 38.2% Fibonacci retracement level.

The buyers, on the other
hand, will want to see the price breaking higher to gain some conviction and
start targeting the break above the 0.6217 resistance. The red lines define the
average
daily range for today.

Upcoming
Catalysts

Tomorrow we have the US Retail Sales and US Industrial Production. On Thursday,
we get the New Zealand GDP and later in the day the US Housing Starts, Building
Permits and the US Jobless Claims figures. On Friday, we conclude the week with
the US PMIs.

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

• A really big move would matter for CPI forecast
• But these are not big movements
• Do not think policy divergence with the Fed is any more of an issue than it was before
• The peak effect of rates on inflation hasn’t occurred yet

He’s offering plenty of remarks today, covering a broad range of topics. But the bottom line is that they are still going to be data-dependent, waiting to see if they can cut rates again in September next.

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

• Monday: PBoC
  MLF, New Zealand Services PMI, China Industrial Production and Retail
  Sales, Eurozone Wage Growth.
• Tuesday: RBA
  Policy Decision, Eurozone ZEW, US Retail Sales, US Industrial Production.
• Wednesday: UK
  CPI, US NAHB Housing Market Index, BoC Meeting Minutes.
• Thursday: New
  Zealand GDP, PBoC LPR, SNB Policy Decision, BoE Policy Decision, US
  Housing Starts and Building Permits, US Jobless Claims.
• Friday:
  Australia/Japan/Eurozone/UK/US Flash PMIs, Japan CPI, UK Retail Sales,
  Canada Retail Sales.

Monday

The PBoC is expected to keep the MLF rate
unchanged at 2.50%. There doesn’t seem to be any urgency to ease policy further
amid an improvement in the economic data. The central bank will also likely
keep the LPR rates unchanged at 3.45% for the 1-year and 3.95% for the 5-year
on Thursday.

Tuesday

The RBA is expected to keep the Cash Rate
unchanged at 4.35%. As a reminder, the central bank got a bit more hawkish amid
a lack of clear improvement in inflation and said that it couldn’t rule in or
out future changes to the cash rate.

The RBA’s forecasts were revised to show
that rates will likely stay at 4.35% until mid-2025. The recent data supports
the case to keep the policy unchanged as the monthly
inflation report surprised to the upside and the labour
market data came in stronger than expected.

The US Retail Sales M/M is expected at 0.3%
vs. 0.0% prior, while the ex-Autos measure is seen at 0.2% vs. 0.2% prior.
Consumer spending has remained stable which is something you would expect given
the solid wage growth and resilient labour market. We are getting some worrying
signals from the UMich
Consumer Sentiment which could suggest that consumer spending is likely to
soften a bit.

Wednesday

The UK CPI Y/Y is expected at 2.0% vs.
2.3% prior, while Core CPI Y/Y is seen at 3.5% vs. 3.9% prior. The last
report was a bit of a disappointment for the BoE as services inflation,
which is what the central bank cares most about, came in much higher than expected
at 5.9% Y/Y vs. BoE’s estimate of 5.5%.

This report won’t change anything for the upcoming
BoE decision on Thursday, but a surprisingly soft release should see the market increase
the rate cuts pricing and tilt the central bank’s decision on a more dovish
side.

Thursday

The SNB is expected to cut interest rates to
1.25% although the market pricing stands around 60%, so it’s more of a coin-flip
between 1.50% and 1.25%. The latest inflation
rate came in line with SNB’s estimate at 1.4% Y/Y (Core 1.2% Y/Y).

The Swiss Franc saw a strong appreciation
recently due to Chairman Jordan’s comments
where he said that if any inflation risk were to materialise, it would most
likely be associated with a weaker Franc which could be counteracted by selling
foreign exchange (buying CHF).

He also touched on the neutral interest
rate (r*) and said that they estimate it to be around 0%. So, even if they cut
rates, in theory their policy would still be restrictive and if inflation were
to rise somewhat in the coming months, they could just intervene by buying
Swiss Franc.

The BoE is expected to keep the Bank Rate
unchanged at 5.25%. As a reminder, the last meeting was a bit more dovish than
expected with Ramsden joining Dhingra voting for a rate cut and Governor Bailey
delivering some dovish comments like saying that they could cut more than
the market expected.

It’s pretty evident that the central bank
is eager to cut but nonetheless wants a bit more confidence before easing the
policy rate. The tone will likely be shaped by the UK CPI 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. Nonetheless, we got a notable
miss in both Initial and Continuing Claims last week although the culprit
might have been just a seasonal effect or measurement
adjustment.

This week Initial Claims
are expected at 240K vs. 242K prior, while there’s no consensus at the time of
writing for Continuing Claims although the prior release showed an increase to
1820K vs. 1790K previously.

Friday

The Japanese Core CPI Y/Y is expected at 2.6%
vs. 2.2% prior. The Tokyo CPI saw all inflation measures increasing compared to
the prior month, so we might see the same happening for the National readings.
It shouldn’t change much for the BoJ at the moment as they will likely need a
couple more reports before deciding on another rate hike.

As a reminder, the central bank
disappointed the market last week as it kept everything
unchanged despite expectations of a reduction in bond purchases. Nonetheless,
Governor Ueda in the press conference pre-committed
to a reduction immediately after the next meeting and mentioned that it will be
“substantial”.

Friday will also be the Flash PMIs Day
with the markets, as it usually the case, focusing more on the US readings:

• Eurozone Manufacturing PMI: 48.0 expected vs.
  47.3 prior.
• Eurozone Services PMI: 53.5 expected vs. 53.2
  prior.
• UK Manufacturing PMI: 51.0 expected vs. 51.2
  prior.
• UK Services PMI: 53.2 expected vs. 52.9
  prior.
• US Manufacturing PMI: 51.0 expected vs. 51.3
  prior.
• US Services PMI: 53.5 expected vs. 54.8
  prior.

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