XAUUSD – Gold Price Stalled in Familiar Range Before US Services PMI
The US Job Openings data for the month of April came at 8.059Million Jobs and -296K down from the previous month. It is the three year lows according to the data. US Dollar dump down against Gold last day after the downbeat reading came.
XAUUSD is moving in the Box pattern and the market has reached the support area of the pattern
The attempted recovery of the US Dollar (USD) from a two-month low lacked momentum, reflecting the increasing conviction that the Federal Reserve (Fed) will commence interest rate cuts later in the year. This sentiment, supported by softer US macroeconomic data, kept US Treasury bond yields subdued, thereby benefiting the non-yielding Gold price during the European session on Wednesday.
Despite these supportive factors, the XAU/USD pair remained confined within a one-week-old trading range, as investors refrained from making aggressive directional bets and opted to await the release of crucial US monthly employment data, particularly the Nonfarm Payrolls (NFP) report scheduled for Friday. In the interim, the market’s attention turned to the US ADP report on private-sector employment and the US ISM Services Purchasing Managers’ Index (PMI), expected to provide some market impetus later in the day.
Regarding recent market movements, the US Dollar witnessed a modest rebound from its recent low, exerting downward pressure on Gold prices. However, the impact was mitigated by disappointing US macroeconomic data, including the Job Openings and Labor Turnover Survey (JOLTS) report, which revealed a larger-than-expected decline in job openings to 8.059 million in April, marking the lowest level in over three years. This followed the weak US ISM Manufacturing PMI released earlier in the week, indicating signs of a cooling US economy.
Moreover, concerns about the softening US economy and the possibility of a September rate cut by the Fed solidified bets, leading to a decline in US Treasury bond yields. Consequently, both the two-year US government bond and the benchmark 10-year Treasury yield hovered near a two-week low, restraining the US Dollar’s strength and providing support to Gold prices.
Traders awaited the release of the US ADP report on private-sector employment and the ISM Services PMI for short-term trading opportunities, but the spotlight remained on the upcoming Nonfarm Payrolls report, which is poised to guide the next significant move for the XAU/USD pair.
EURUSD – edges up amid weak USD demand, stays below 1.0900
The ECB is going to do rate cuts in this week meeting is huge expected from the economists side. Declining services and inflation prices in the Euro zone makes ECB to take rate cut decision since March 2016 rate cut has done.
EURUSD is moving in an Ascending channel and the market has reached the higher low area of the channel
The subdued performance of the US Dollar (USD) contributes to the pair’s ascent. Weaker-than-expected US macroeconomic data has raised concerns about a slowing economy, solidifying expectations for an interest rate cut by the Federal Reserve (Fed) later in the year. This sentiment has led to a decline in US Treasury bond yields, exerting downward pressure on the USD and providing some support to the EUR/USD pair.
However, the upside potential for the pair may be limited as traders exercise caution ahead of the European Central Bank (ECB) monetary policy meeting scheduled for Thursday. It is widely anticipated that the ECB will announce a 25-basis-point interest rate cut, marking the first reduction since March 2016. Market participants will closely analyze the accompanying economic projections and comments from ECB President Christine Lagarde for insights into future monetary policy adjustments in response to rising Eurozone inflation.
Attention will then turn to the release of the Nonfarm Payrolls (NFP) report on Friday, a key indicator of US employment trends. This data release is expected to influence market expectations regarding the Fed’s future policy decisions and could impact the direction of the USD. Against the backdrop of these upcoming central bank events and economic data releases, traders will closely monitor Wednesday’s US economic calendar, which includes the ADP report and ISM Services PMI, for potential trading opportunities in the short term.
USDJPY – JPY Depreciates Amid Investor Caution Before US Data
The Japanese Yen is depreciated after the BoJ Governor Ueda said Continue of Bond Buying Operations until 2% target inflation achieved in the economy. Jibun Bank Japan Services PMI came at 53.8 in the May month from 53.6 printed in the April month, but compared to last year April month 54.3 is printed, it is lower only.
USDJPY has broken the Descending channel in upside
The Japanese Yen (JPY) experienced a slight decline on Wednesday, with investors exercising caution ahead of the release of crucial US economic data later in the day. Among the awaited reports were the US ADP Employment Change and ISM Services Purchasing Managers’ Index (PMI), with attention also turning towards the highly anticipated Nonfarm Payrolls (NFP) report scheduled for Friday.
One factor contributing to the downward pressure on the JPY is the interest rate differential between the United States (US) and Japan, which tends to favor the USD/JPY pair. However, the potential for upside in the USD/JPY pair may be restrained by the release of stronger-than-expected data from Japan earlier in the day.
The Jibun Bank Japan Services PMI for May was revised upwards to 53.8 from the previous figure of 53.6. Despite this revision, it fell short of April’s 8-month peak of 54.3, signaling a moderation in the growth of the service sector. Additionally, Labor Cash Earnings surged by 2.1% year-on-year in April, surpassing expectations for a 1.7% gain and marking the highest level since June of the previous year.
Meanwhile, the US Dollar Index (DXY), which measures the USD against six other major currencies, saw a slight increase due to improvements in US Treasury yields. However, weaker US Manufacturing PMI data for May raised speculation about the possibility of the US Federal Reserve (Fed) implementing its first rate cut in September.
According to the CME FedWatch Tool, traders are now pricing in nearly a 64.9% probability of a Fed rate cut of at least 25 basis points, up from 46.3% observed a week earlier.
Additionally, recent developments impacting the Japanese economy and monetary policy include statements from Bank of Japan (BoJ) Governor Kazuo Ueda regarding the central bank’s readiness to adjust market operations and monetary support if necessary. Furthermore, Japan’s government is expected to address the challenges posed by a weak Yen in its long-term economic policy roadmap.
Other notable updates include the unexpected decline in the ISM Manufacturing PMI for May in the US, as well as statements from Japanese Economy Minister Yoshitaka Shindo regarding efforts to achieve surplus territory in the primary balance by FY 2025. Additionally, remarks from Federal Reserve officials Raphael Bostic and John Williams provided insights into the outlook for US monetary policy.
USDCHF – Vulnerable Near 0.8900 Before US Services PMI
The Swiss CPI data for the May month came at 1.4% YoY and 0.30% MoM, Exports are surging due to weak currency of CHF, this can impact the inflation reading in the economy. SNB Intervention will cool the currency strengthening in the near term.
USDCHF is moving in the Descending channel and the market has reached the lower high area of the channel
The Swiss Franc’s outlook appeared susceptible as the US Dollar’s recovery seemed to falter amidst increasing speculation that the Federal Reserve (Fed) would commence interest rate cuts starting from the September meeting.
Market sentiment leaned towards riskier assets due to strong expectations of a Fed rate cut. S&P 500 futures showed notable gains during the Asian session. Meanwhile, the US Dollar Index (DXY), which measures the performance of the Greenback against a basket of six major currencies, consolidated near a nearly two-month low of around 104.00.
Traders intensified their bets on a potential Fed rate cut in September as the US economic outlook exhibited signs of weakness. This sentiment stemmed from disappointing US ISM Manufacturing PMI data and downward revisions to Q1 Gross Domestic Product (GDP) figures.
Looking ahead, investor attention shifted towards the release of US ADP Employment Change and ISM Services PMI data for May, scheduled for 12:15 and 14:00 GMT respectively. Economists anticipated that private employers would have added 173K jobs, down from the previous reading of 192K. The Services PMI, a key indicator of service sector activity representing two-thirds of the economy, was forecasted to return to expansionary territory with an estimated reading of 50.5, up from the previous release of 49.4.
On the Swiss front, the Swiss Franc exhibited strength amid expectations that the Swiss National Bank (SNB) might intervene in currency markets to support the currency. The weaker Swiss Franc has made Swiss exports more competitive in global markets, raising concerns about potential upside risks to inflation.
Additionally, the Swiss Consumer Price Index (CPI) showed steady growth, with annual and monthly CPI increasing by 1.4% and 0.3% respectively in May. However, monthly inflation slightly missed estimates, coming in at 0.3% instead of the expected 0.4%.
USDCAD – BoC likely to cut rates after 6 meetings
The BoC is expected to do rate cut of 25Bps today after the Six Hold on meetings. Inflation in the Canada from January 2024, below 3% target only. Recent month inflation came at 1.6% YoY makes confidence for BoC to cut in the June month meeting.
USDCAD is moving in the Descending triangle pattern and the market has reached the lower high area of the pattern
There’s widespread anticipation that at its upcoming meeting on Wednesday, June 5, the Bank of Canada (BoC) will enact a 25 basis points reduction in its policy rate. This would mark the first rate cut after six consecutive meetings of maintaining rates at 5.00%.
Throughout the year, the Canadian Dollar (CAD) has been gradually weakening against its US counterpart (USD), although it has largely remained in a broader consolidation phase over the past couple of months.
In April, the annual domestic inflation measured by the headline Consumer Price Index (CPI) continued its downward trend. Additionally, the BoC’s Core CPI dipped below the 2.0% threshold, registering at 1.6% year-on-year.
The rationale behind the potential rate cut by the central bank lies in the persistent decline in consumer prices. Moreover, further cooling of the Canadian labor market is also expected to contribute to the decision to reduce rates.
Inflation has remained below 3% since January, aligning with the central bank’s forecast for the first half of 2024. Core consumer price indicators, which are closely monitored, have also been steadily declining.
It’s anticipated that the BoC will maintain its stance of data dependency regarding future rate adjustments. Currently, money markets project around 30 basis points of easing in July and nearly 42 basis points in September. The BoC is expected to adopt a cautious approach, possibly exhibiting flexibility in light of the ongoing decrease in domestic inflation.
Despite the expected rate cut, the BoC’s overall tone may lean towards caution, emphasizing its data-dependent stance while closely monitoring inflation developments. BoC Governor Tiff Macklem indicated in early May to the House of Commons finance committee that there’s a limit to how much US and Canadian interest rates can diverge. However, he emphasized they are not yet close to that limit. During his testimony to the Senate banking committee on May 1, Macklem acknowledged the decreasing inflation and indicated that Canadians were keen to know when the central bank would begin cutting interest rates, to which he responded, “the short answer is that we are getting closer.”
USD INDEX – USD Rises on Tuesday Ahead of US Labor Market Data
The US Dollar index dragged down after the US JOLTS Job Openings data came at 8.059 Million in the April month compared to 8.34Million Jobs openings in the March month. Continuous decline in the readings of Domestic data of US makes US Dollar dragged down against counter pairs.
USD INDEX is moving in an Ascending channel and the market has reached the higher low area of the channel
On Tuesday, the US Dollar Index (DXY) managed to eke out moderate gains, despite the release of soft labor market data by the US Bureau of Labor Statistics. The prevailing bearish sentiment in the market, primarily fueled by disappointing Institute for Supply Management (ISM) Purchasing Managers’ Index (PMI) data for May, seemed to stabilize. However, concerns are mounting regarding the weakening US economy, which could prompt the Federal Reserve (Fed) to implement rate cuts sooner than expected.
Market focus has now shifted towards forthcoming labor market indicators, including the ADP Employment Change figures, Nonfarm Payrolls report, wage inflation data, and unemployment figures for May. These data points are anticipated to provide further insights into the current state of the US economy.
In the daily market roundup, the USD exhibited resilience despite the soft Job Openings and Labor Turnover Survey (JOLTS) report, which revealed a decrease in job openings in April. The reported figure of 8.059 million job openings fell below market expectations of 8.34 million and March’s revised figure of 8.35 million. This decline in job openings contributed to market apprehensions, intensifying speculation of a potential Fed interest rate cut in September, with the likelihood reaching nearly 60%.
Market participants are eagerly awaiting the release of the upcoming Nonfarm Payrolls report for May and wage growth data. These indicators are expected to play a crucial role in shaping the Fed’s future policy direction, providing further clarity on the trajectory of US monetary policy.
GBPUSD – GBP Steadies as Investors Await US ISM Services PMI and Employment Data
The Bank of England is expected to do two more rate cuts in this year from economists view. US ISM Service data is expected as 50.5 in the May month from 49.4 Printed in the April month. Private Jobs is expected at 176K versus 192K printed in the April month. So US Dollar weakness is the positive for GBP in the market.
GBPUSD is moving in the Symmetrical triangle pattern and the market has reached the top area of the pattern
With a relatively quiet economic calendar in the United Kingdom (UK) this week, movements in the GBP/USD pair are likely to be influenced by developments surrounding the US Dollar (USD), which is poised for an eventful week with significant data releases.
The US Dollar Index (DXY), a measure of the USD against a basket of major currencies, holds steady above the critical support level of 104.00. However, the short-term outlook for the USD is uncertain amidst mounting speculation that the US Federal Reserve (Fed) will commence interest rate cuts as early as the September meeting.
According to the CME FedWatch tool, market pricing data suggests a 65% probability of a reduction in interest rates in September, a notable increase from 47% recorded just a week ago. This shift in sentiment follows weak US ISM Manufacturing Purchasing Managers’ Index (PMI) data for May and downward revisions in Q1 Gross Domestic Product (GDP) figures, fueling expectations of rate cuts by the Fed.
In the daily market roundup, the Pound Sterling consolidates near the 1.2770 level against the US Dollar, lacking clear direction. Investor attention turns towards key US economic indicators, particularly the ADP Employment Change and the Institute for Supply Management’s (ISM) Services PMI data for May, scheduled for release at 12:15 and 14:00 GMT respectively.
Forecasts anticipate that the ADP report will show a modest increase in private payrolls, while the ISM Services PMI is projected to rebound into expansion territory. Investors will closely scrutinize subcomponents such as New Orders and Prices Paid Indexes for insights into demand dynamics and input cost trends, with wages remaining a pivotal factor driving inflationary pressures.
Looking ahead, all eyes are on the upcoming Nonfarm Payrolls (NFP) data for May, set to be published on Friday. This report will offer fresh insights into the US labor market and could influence expectations regarding future interest rate movements. In the UK, investors are keenly monitoring developments related to potential interest rate cuts by the Bank of England (BoE), with markets anticipating policy normalization to commence as early as the August meeting.
AUDUSD – Australian Q1 GDP Grows 0.1% vs. 0.2% Forecast
The Australian Q1 GDP Came at 0.10% QoQ versus 0.30% printedin the Last quarter Q4 and 0.20% is expected. YoY data in Quarterly shows 1.1% QoQ versus 1.2% QoQ is expected and 1.6% QoQ is printed in the last quarter. Australian Dollar down after the downbeat data came.
AUDUSD is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
Australia’s Gross Domestic Product (GDP) grew by 0.1% quarter-on-quarter (QoQ) in the first quarter of 2024, according to the Australian Bureau of Statistics (ABS) report released on Wednesday. This growth rate was below the expected 0.2% and also lower than the 0.2% growth recorded in the fourth quarter of 2023.
On an annual basis, the GDP for the first quarter of 2024 expanded by 1.1%. This was a decrease from the 1.5% annual growth seen in the fourth quarter of 2023 and fell short of the projected 1.2% increase.
NZDUSD – Approaches 0.6200 on Improved Terms of Trade, China Services PMI
The NZ Exports are up in the Q1 2024, Prices up by 5.1% increase versus 3.1% increase is expected and 7.8% decline in the previous quarter. China Caixin Services reading for the May month came at 54.0 in the May month from 52.5 printed in the April month and 52.6 is expected. This is the 17th consecutive Upside reading in the market.
NZDUSD is moving in an Ascending channel and the market has reached the higher high area of the channel
This rebound was supported by positive data from New Zealand for the first quarter, which revealed a notable increase in export volumes and a robust rebound in the country’s Terms of Trade. The Terms of Trade index, which measures the ratio of export prices to import prices, surged by 5.1%, following a steep 7.8% decline in the previous quarter. This exceeded market expectations of a 3.1% increase.
Additionally, the Caixin China Services Purchasing Managers’ Index (PMI) for May came in at 54.0, surpassing expectations of 52.6 and the previous figure of 52.5. This marked the 17th consecutive month of expansion in services activity in China, indicating the fastest pace since July 2023. Given the close trade partnership between China and New Zealand, any positive developments in the Chinese economy tend to impact the New Zealand Dollar (NZD) positively.
The appreciation of the NZD/USD pair may also be attributed to growing speculation that the Federal Reserve (Fed) will commence interest rate cuts starting from the September meeting, following a series of disappointing economic data releases from the United States.
On Tuesday, the JOLTS US Job Openings report revealed a decline of 296,000 to 8.059 million in April, dropping from March’s figure of 8.355 million. This marked the lowest level recorded since February 2021 and fell short of market expectations of 8.340 million job openings.
According to the CME FedWatch Tool, the probability of a Fed rate cut by at least 25 basis points has surged to nearly 64.9%, up from 46.3% observed a week earlier.
CRUDE OIL – WTI nears $73.00 as US Oil stockpiles rise
The Crudeoil prices are dropped to $73.10 Per Barrel after the US EIA announced Stockpiles of 4.0 Million Barrels in the week end May 31 when compared to 1.9Million Barrels expected Stock inventory. The OPEC+ deal is Voluntary output cuts by 2.2 Million Barrels per day upto June 2025 also dragging Oil prices to down.
XTIUSD Crude oil price is moving in the Descending channel and the market has reached the lower low area of the channel
WTI Oil price falls to approximately $73.10 per barrel, hitting its lowest in four months. The American Petroleum Institute’s Weekly Statistical Bulletin reveals a significant increase in crude Oil stocks by 4.052 million barrels for the week ending May 31, contrasting with market expectations of a 1.9 million-barrel draw.
This decline is attributed to growing global supplies alongside uncertain demand forecasts. OPEC+ agreed to extend most supply cuts into 2025, but voluntary cuts by eight member countries are set to gradually unwind starting in October, potentially adding over 500,000 barrels per day to the market by December.
In the Middle East, Hamas demands a “clear” commitment to a permanent ceasefire and full withdrawal from the Gaza Strip for any deal with Israel. Qatar, mediating talks between Hamas and Israel, urges Israel to provide a unified government-backed position to facilitate an agreement. Oil markets closely monitor these developments, as failure to reach a peace deal could impact crude Oil prices.
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