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Outlook: This is a soft week for data, giving everyone time to second-guess the Fed the following week (June 15). Of great interest is the Reserve Bank of Australia meeting overnight tonight, with nary a soul having a faintest about whether the inevitable hike is 25 p, or 40 bp (to take it to 0.75%). Some say 50 bp. In addition, comments from the Gov can be confusing, or at least obfuscating. Inflation is running at around 2.1% q/q but various measures have it as high as 5.2%, so whatever else it may be, the real rate is badly negative. In addition, Australia has the highest home price inflation of any of the majors. The RBA “should” be as hawkish as it’s possible to get. For some reason, though, the RBA tends to be a bit wussy (sorry, mates). Not noted on the Econoday calendar is the Atlanta Fed GDPNow to be updated tomorrow. Last week it got cut to 1.3% from 1.9% on several factors but prominently personal spending down from 4.7% to 4.4% and real gross private domestic investment growth more negative from -6.4% to -8.2%. We need to be careful not to attribute too much meaning to… Read More »The question is not what the Fed will do, but what the ECB will

Key highlights EUR/USD remained well bid above the 1.0620 support zone. A major bullish trend line is forming with support near 1.0700 on the 4-hours chart. EUR/USD technical analysis Looking at the 4-hours chart, the pair traded as low as 1.0627 before it started a fresh increase. There was a move above the 1.0700 resistance level. The pair remained well bid above the 1.0650 level, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours). There was a move above the 50% Fib retracement level of the downward move from the 1.0787 swing high to 1.0627 low. However, the pair faced sellers near 1.0750. The 76.4% Fib retracement level of the downward move from the 1.0787 swing high to 1.0627 low acted as a hurdle. It is now consolidating below the 1.0750 resistance. The next major barrier could be near the 1.0800 level, above which EUR/USD could accelerate higher towards the 1.0880 resistance. If there is a downside correction, the pair could decline towards the 1.0700 support. There is also a major bullish trend line forming with support near 1.0700 on the same chart. The next major support sits near the 1.0650 level. The main… Read More »EUR/USD eyes fresh highs, oil price rallies

(Italics: Previous Analysis) U.S. Dollar Index (Daily Timeframe): Snapping a decisive two-week decline, dollar bulls surfaced last week and added 0.5 per cent. The 50-day simple moving average—circling 101.65—served as dynamic support in recent trading, with resistance demanding attention at 102.95. Space south of the current SMA brings light to resistance-turned support at 100.92, accompanied by an ‘acceleration’ trendline support, extended from the low 95.17. Technicians are also likely to acknowledge an additional layer of ‘psychological’ support nearby at 100.00. Trend studies back a dip-buying theme from the aforesaid support structure this week, demonstrating defined upward movement since price made contact with support from 89.69 in May 2021. The relative strength index (RSI) shaking hands with support between 40.00-50.00 (a ‘temporary’ oversold region since August 2021) also underpins a bullish perspective. Support around the 50.00ish neighbourhood is common in strong upward facing markets, similar to what we’re experiencing at present.   EUR/USD: It’s been a tough week for EUR/USD, finishing largely unchanged despite ranging 160 pips between $1.0787 and $1.0627. Having noted the U.S. Dollar Index (see above) trading from support and rooted within a clear uptrend, EUR/USD shaking hands with Quasimodo support-turned resistance at $1.0778 on the weekly chart… Read More »Weekly Technical Market Insight: Dollar bulls surfaced last week and added 0.5 per cent

Find out why a retreat in US price growth won't necessarily boost markets After Friday’s sell off in US stocks, this adds to our view that the bear market rally we have witnessed in recent weeks may have fizzled out. The bear market rally helped stocks regain some recent losses in the last full trading week of May, however, as we have mentioned, there are too many external risks to drive a sustained rally in risky assets. Rallies during a bear market can be tricky beasts to navigate. Firstly, you tend to see sharp rises in asset prices until they reach a certain resistance zone when the selling sets in once again. That is what we saw last week. Going forward, we may see further pops higher is risky assets in the coming days, as bear market rallies can last for several weeks. However, overall, we think that the market will lack direction for some time yet. The key driver of sentiment this week is likely to hinge on Friday’s US CPI report when we will learn if price growth in the US has finally peaked.  Key levels to watch for in the S&P 500  As we have already discussed, a… Read More »The week ahead: assessing the bear market rally as we wait for the US inflation report

Another day and another Commodity skyrockets to fresh record highs. That’s one of the most exciting trends of the current Commodities Supercycle that we find ourselves in right now! Commodity prices across the board from the metals, energies to agricultural markets started the week on an absolute tear as China – the world’s second-largest economy and biggest importer of Commodities – officially ended a two-month lockdown on June 1. Since March, China's lockdowns notably in Shanghai, have taken a toll on production, supply chains and spending – slightly easing momentum in the Commodities boom that has been on an unstoppable run since the world emerged from the pandemic in 2021. But once again, in true bull market fashion, as China comes out of lockdown – it comes as no surprise that the Commodities Supercycle is back on track and firing on all cylinders! Oil prices took the lead on Tuesday rallying back $120 a barrel, the highest level since March – on expectations that the Oil market may see an identical V-shape recovery in demand as seen in 2020 when China previously ended lockdown. That event triggered an historic bull run taking Oil prices from sub $40 a barrel in April 2020 to a decade high… Read More »Commodity prices surge as China emerges from COVID-19 lockdown [Video]

The USD strengthened, US yields rose and gold plunged after today's US jobs market data, which came out mixed. At the time of writing, gold was down 0.5%, trading at around 1,860 USD. US labor market remains strong In May the US added 390,000 jobs, which was a drop from last month's upward revised 436,000 and the lowest since April 2021 but was well above the 320,000 expected The unemployment rate remained unchanged at 3.6%, missing forecasts for a reduction to 3.5 percent, the lowest level since the financial crisis. The participation rate ticked up a notch, from 62.2% to 62.3%, in line with consensus estimates. Average hourly wages increased 5.2% on an annual basis, which was in line with predictions and down from 5.5% last month. The monthly wage growth stayed at 0.3%, below the 0.4% predicted. Bears defend strong resistance So far, gold has failed to jump above November highs of 1,875 USD, still giving bears a chance to defend the medium-term downtrend.  However, if gold jumps above that level, larger stop losses of short positions could be hit, likely sending the metal beyond 1,900 USD. On the downside, the significant support lies at the 200-day moving average… Read More »Gold slides following US jobs report

Gloominess persists after Robust Jobs report and Musk’s Super Bad Feeling, Oil's strong week, Gold eases, Bitcoin below $30,000. Robust hiring in May pretty much guarantees the Fed will move forward with a couple half-point rate hikes at the next two meetings. ​US stocks edged lower as the latest employment report showed slower job growth and potentially softening inflation, but still keeps the door open for the Fed to continue with its rate-hiking campaign well beyond the summer. Softer hiring and cooler wage data suggest that economic growth moderation is happening, but not fast enough to signal a change in course by the Fed. The consumer might be losing the battle with inflation, but spending won’t be weakening so quickly. Stocks may struggle here as the Fed needs to get rates closer to neutral before what seems to be a likely winter slowdown. NFP The May nonfarm payroll report showed that job growth is decelerating and wage pressures appear to be easing. A steady decline in job growth and a cooling of wage pressures should justify the Fed’s course of a couple rate hikes at both the June and July FOMC policy meetings. If Jamie Dimon and Elon Musk are… Read More »Gloominess persists after robust jobs report and Musk’s super bad feeling

The effects of soaring energy prices are being felt by almost all companies. Aviation, shipping and chemical firms are directly impacted by higher energy prices. The food industry, travel agencies and hospitality are impacted by second-round effects. Corporate decision-makers have some tools available to mitigate the impact. High energy prices are the new normal for business leaders European energy markets became very tight and volatile in the autumn of 2021 due to concerns about limited gas reserves for the winter months. Luckily, Europe was saved by a relatively mild winter, but by the time concerns in the market diminished, Russia invaded Ukraine. Energy markets have remained very volatile and tight with energy becoming part of the conflict. Europe has implemented a ban on coal and oil. In turn, Russia has reduced gas flows to the EU in several small steps that now amount to around 23 billion cubic metres (bcm), which is about 15% of the total Russian gas supply to the EU. The implication for corporate decision-makers is that energy prices are likely to remain high for much longer. Gas prices are expected to stay above €70/MWh until 2023 and oil prices well above $80 until 2024. We first… Read More »The sectors most affected by soaring energy prices

GBPJPY is attempting to push north of the high of 163.57 from the 5 May, coincidently where the upper Bollinger band is currently located. The pair is maintaining its bullish demeanour, forming its eighth daily consecutive green candle, after the price unearthed significant upside pressure from around the 158.00 region, where the 100-day simple moving average (SMA) formed a defence. The upward creeping SMAs are suggesting that the positive trend is intact.

The US economy increased the number of jobs by 390k in May, the fresh NFP showed, better than average expectations (325k) but worse than April's figures (436k). Total employment is only at 822k highs before the pandemic hit, and the labor market is increasingly bottoming out. However, we point to a few spots that add to the arguments of those who see a reversal of the economic cycle. The annual rate of wage growth has slowed down from 5.5% to 5.2% against an inflation rate of 8.3%. In other words, wages are hardly fuelling inflation in recent weeks. Manufacturing, often the flagship of business cycles, added 18,000 jobs, three times weaker than in the previous two months, clearly losing momentum. The share of the economically active population rose to 62.3% as more people struggled to find work amid rising prices and depleted savings accumulated during the pandemic thanks to stimulus packages. This is not sound economic news, indicating a slowing economy. Initially, the markets may well be at the mercy of a sell-off in risky assets. But the more weak data we see, the more attention we should pay to FOMC members' comments, which could dampen the pace of rate… Read More »The US labour market is no longer likely to push up inflation