EURUSD is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
EURUSD – German Manufacturing PMI Surges to 45.4 in May, Exceeding Expectations
The German Manufacturing PMI Data came at 45.4 in the May month from 42.5 printed in the April month, Services PMI data came at 53.9 in the May month from 53.2 printed in the April month, Composite PMI data came at 52.2 in the May month when compared to 50.6 in the April month. Overall Germany economy is recovering from contraction in the last month data.
According to the preliminary business activity report released by the HCOB survey on Thursday, the German manufacturing sector exhibited a deceleration in its pace of contraction in May, while the services sector demonstrated notable performance.
The HCOB Manufacturing Purchasing Managers’ Index (PMI) for the Eurozone’s economic powerhouse surged to 45.4 this month, marking a significant improvement from April’s reading of 42.5. This figure surpassed market expectations, which had anticipated a reading of 43.1. The index reached its highest level in four months, indicating a potential turnaround in the manufacturing sector.
In contrast, the Services PMI saw a positive trajectory, rising from 53.2 in April to 53.9 in May. This exceeded the market consensus of 53.5 for the reported period, reaching an 11-month peak. The uptick in the Services PMI suggests resilience and strength in the services sector amid ongoing economic challenges.
The HCOB Preliminary German Composite Output Index, which combines both manufacturing and services sectors, stood at 52.2 in May. This surpassed market expectations of 51.0 and the April reading of 50.6. The gauge achieved a yearly high, reflecting an overall improvement in business activity and economic performance in Germany.
XAUUSD – Gold Prices Fall Due to Hawkish FOMC Minutes
US FOMC Meeting minutes Hawkish tone on delaying rate cuts makes US Dollar stronger against Gold. US Existing Home sales data decreased to -1.9% from -3.7% contraction in the previous month makes US Dollar strengthened against Gold. Housing prices are still higher in the US economy contributed higher inflation in the market according to FED Members speech.
XAUUSD Gold price has broken the Ascending channel in downside
Gold Prices Decline Amid Hawkish FOMC Minutes and Rising Treasury Yields
This move came amid ongoing weakness in the US housing market and a period of relative calm among Fed officials following a busy start to the week.
US Treasury bond yields saw an uptick, influenced by a higher-than-expected inflation report from the UK, which led to an overall increase in US yields. Concurrently, US equities displayed a mixed performance ahead of NVIDIA’s earnings report, while the US Dollar Index (DXY) saw a slight rise.
In addition, a report by The Wall Street Journal highlighted that gold prices had rallied due to increased central bank buying. According to data from the World Gold Council, central banks in emerging markets had accumulated approximately 2,200 tons of gold since the third quarter of 2022, with the imposition of Western sanctions on Russia after its invasion of Ukraine serving as a potential catalyst.
Despite these factors, US Existing Home Sales declined in April, dropping from 4.22 million to 4.14 million, representing a contraction of -1.9%. However, Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), remained optimistic, noting that record-high home prices in April were positive news for homeowners.
Following the release of the FOMC Minutes, it was revealed that Fed officials remained uncertain about the extent of policy restrictiveness. Some participants expressed a willingness to tighten policy further if risks to the economic outlook materialized. This stance contributed to a rise in US Treasury yields and bolstered the US Dollar Index, acting as headwinds for gold prices.
Looking ahead, market sentiment regarding future Fed policy actions remains mixed. While some investors are pricing in expectations of Fed easing later in the year, the overall tone of recent Fed communications suggests a cautious approach to monetary policy adjustments in response to evolving economic conditions.
USDJPY – BoJ Maintains Previous JGB Buying Amounts
The BoJ announced that they are going to buying JGB levels are no changes from the previous month. JPY 375 Billion in 1-3 Yrs Bond, JPY 425 Billion in 3-5 Yrs Bond, JPY 425 Billion in 5-10 Yrs Bond. Japanese Yen weakness persists in the market after no changes in the Bonds purchasing program.
USDJPY is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
The Bank of Japan (BoJ) made a recent announcement on Thursday, confirming its decision to maintain the amounts allocated for the purchase of Japanese government bonds (JGB) at levels consistent with the previous operation.
Here are the key details of the BoJ’s buying amounts:
– JPY375 billion (bn) for 1-3 Year JGBs.
– JPY425 bn for 3-5 Year JGBs.
– JPY425 bn for 5-10 Year JGBs.
It’s worth noting that the BoJ had reduced the amount allocated for the purchase of 5-10 Year JGBs in a scheduled operation over a month ago.
USDCHF – Switzerland Leads Europe in AI Workplace Integration
The Swiss zone employees work more pleasure use of AI technology in their workspace when compared to Europe Employees. The AI works more in the employees work contribution, So Employees more preferable to work in the AI related companies work in Swiss zone, So employment index rose 10% this year. 69% of Workspace used AI Technologies in the Switzerland when compared to Europe region of 52% using AI.
USDCHF is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
The results of the Michael Page Candidate Pulse Study corroborate Switzerland’s leading position in Europe regarding the integration of artificial intelligence (AI) in the workplace. According to the study, over two-thirds of employees (69%) express confidence that AI will positively impact their career trajectory. Simultaneously, 80% of employees express a desire to enhance their understanding of AI to bolster productivity and adapt to evolving job demands.
Significant disparities in expectations between employers and employees emerge. Nearly three out of five respondents anticipate that AI will shape their long-term career plans—a proportion highest among European countries. Notably, younger employees assign greater importance to AI in shaping their career trajectory. The eagerness to upskill in AI transcends age demographics.
Moreover, the study underscores the criticality of transparent communication from employers regarding AI integration plans and potential ramifications. Addressing ethical concerns surrounding AI’s use, such as data protection and copyright issues, is paramount. Given AI’s industry-specific and job-specific application, employers must articulate how AI can enhance specific facets of the organization and elucidate the benefits for employees.
Yannick Coulange, Managing Director of Page Group Switzerland, emphasizes the expectation gap arising from employers’ failure to proactively communicate AI integration strategies.
Effective management of expectations regarding flexibility and compensation emerges as pivotal. A reduction in flexibility coupled with dissatisfaction with wages propels nearly 60% of Swiss employees to seek new job opportunities. Consequently, there is a surge in temporary and fixed-term employment contracts, constituting 10% of all advertised jobs, as per the Michael Page Swiss Job Index (April 2024).
The Talent Trends Study underscores that flexibility and work-life balance rank as decisive factors in employee employer selection. Notably, 69% of Swiss employees engage in hybrid work, surpassing the European average by 17%. However, more than a third (37%) now spend more time in the office compared to the previous year, primarily due to shifts in company policies. This diminished flexibility has engendered tensions between employees and employers striving to align operational imperatives with employee preferences.
Nicholas Kirk, CEO of PageGroup, emphasizes the importance of fostering open dialogue and collaborative problem-solving to bridge the gap between employee expectations and employer imperatives. By prioritizing a culture of mutual understanding and adaptability, both companies and their workforce can navigate the dynamic landscape of the evolving world of work effectively.
USDCAD – CAD weakens on FOMC boost for USD
The Canadian Dollar moved down after the FOMC meeting minutes is hawkish outcome and US Existing home sales came at slight contraction when compared to previous month, This week Friday Canada retail sales data is scheduled for the further direction of Canadian Dollar against counter pairs.
USDCAD is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
The Canadian Dollar (CAD) saw a decline in value on Wednesday amid a broader market sentiment downturn. This downturn pushed the CAD lower, leading to increased demand for the US Dollar (USD). As a result, the Canadian Dollar dropped to its lowest level against the Greenback in a week, marking the USD’s third consecutive gain against the CAD.
Looking ahead, Canada is set to release primarily mid-tier data for the remainder of the trading week, with the highlight being March’s Canadian Retail Sales report scheduled for Friday. However, investors will be closely monitoring US data releases, which are expected to have a significant impact on market sentiment for the rest of the week.
The latest Meeting Minutes from the Federal Reserve (Fed) revealed the FOMC’s ongoing skepticism regarding progress in inflation, particularly after disappointing price growth figures in the first quarter.
Investors exhibited risk-off behavior, favoring the Greenback, following internal discussions at the Fed that expressed concerns about the potential restrictiveness of monetary policy, rather than discussions about the timing of rate cuts.
While the FOMC didn’t rule out the possibility of rate cuts in 2024, they emphasized the necessity for further indications of progress in addressing disinflation concerns.
US Existing Home Sales experienced a second consecutive monthly decline, falling to 4.14 million, below the forecasted 4.21 million and down from the previous figure of 4.22 million (which was slightly revised upward from 4.19 million).
Fitch Ratings issued a warning regarding persistent services inflation globally, indicating that stubborn prices are likely to impede the pace of rate cuts.
Investor focus shifts to the upcoming release of Purchasing Managers Index (PMI) data for the US on Thursday, with hopes for a stable reading.
The trading week will conclude with the release of Canadian Retail Sales data and US Durable Goods Orders on Friday, shaping market sentiment as investors assess the economic landscape.
USD INDEX – USD Steady Post-FOMC, PMIs Awaited Tomorrow
The FOMC Meeting minutes shows hawkish speech from FED side, Rate cuts is mostly pointed on September by the economists, but FED members did not agree to do rate cuts this year. US economy is growing resilient, tight Job market and Growing House hold spending more. The Home prices are increasing in the inflation rates at higher in the US economy, this is great benefit for Home sellers.
USD INDEX is moving in the Box pattern and the market has fallen from the resistance area of the pattern
DXY showing slight gains during Wednesday’s American trading session. Despite soft inflation data reported last week, the Greenback has remained resilient, buoyed by cautious statements from Federal Reserve (Fed) officials. The recently released Federal Open Market Committee (FOMC) Minutes from May’s meeting did not provide any new insights but confirmed the uncertainty among members regarding the duration of monetary policy adjustments required to bring inflation down to the 2% target, although they remain confident that it will eventually be achieved.
Overall, the US economy is experiencing steady growth, as evidenced by diminishing expectations of Fed easing despite subdued labor market and inflation indicators. The hawkish tone from Fed officials indicates that rate cuts are unlikely in the near term, which is helping support the strength of the US dollar.
In a daily market summary:
– The FOMC meeting minutes for May revealed that several participants expressed uncertainty about the appropriate level of policy restriction.
– Some participants signaled a willingness to further tighten policy if risks to the economic outlook emerge and justify such measures. Additionally, participants acknowledged that it would take longer than anticipated to gain greater confidence that inflation is moving sustainably towards the 2% target.
– However, members expressed confidence that inflation would eventually ease to the long-term target of 2%.
– According to the CME FedWatch Tool, there is no expectation of a rate cut in June or July, but there is a 37% probability of maintaining the current policy in September.
GBPUSD – Sterling stands strong as traders reduce BoE rate cut expectations
The UK Annual inflation reading came at 2.9% and Core inflation came at 3.9% in the April month. It is the welcome one for UK Economy, But Services inflation remained at 5.9% versus 6.0% printed in the last month. The UK manufacturing, Services and composite PMI Data is scheduled today for further direction of GBP in the market.
GBPUSD is moving in the Symmetrical triangle pattern and the market has reached the lower high area of the pattern
The Pound Sterling (GBP) maintains its position above the critical support level of 1.2700 in the London trading session on Thursday. The GBP/USD pair demonstrates strength as traders adjust their expectations regarding the Bank of England’s (BoE) stance on interest rates, moving away from anticipating an imminent shift towards policy normalization.
The likelihood of the BoE implementing interest rate cuts in its June meeting has diminished following the release of the April Consumer Price Index (CPI) report, which indicated a slower-than-expected decline in inflation.
The CPI report revealed that both annual headline and core inflation figures decreased to 2.3% and 3.9%, respectively. Notably, the service price index, a crucial inflation metric, saw a slight decline to 5.9% from the previous 6.0%. Persistent service inflation has posed a significant obstacle to disinflation efforts driven by wage growth in the UK.
Market Digest: Pound Sterling Maintains Strength Despite Firm US Dollar
The Pound Sterling retains its strength against the US Dollar as investors reassess their expectations of BoE rate cuts, considering the slower-than-expected decline in UK inflation. Further insights into the UK’s economic health are anticipated with the release of the preliminary S&P Global/CIPS PMI data for May, scheduled for 08:30 GMT. Forecasts suggest marginal improvements in the Manufacturing PMI to 49.5, though remaining below the expansionary threshold of 50.0. The Services PMI is expected to moderate to 54.4 from April’s 55.0.
Attention also turns to the UK’s Office for National Statistics (ONS) Retail Sales data for April, due on Friday. Retail Sales figures provide valuable indications of household spending and inflation outlook. On a month-on-month basis, Retail Sales are projected to decline by 0.4%, contrasting with the previous month’s stagnation. Annually, Retail Sales are anticipated to contract by 0.2% compared to the 0.8% growth recorded in March.
Meanwhile, the US Dollar maintains its upward trajectory amid concerns that progress towards achieving the Federal Reserve’s 2% inflation target has stalled. The recent release of the Federal Open Market Committee (FOMC) minutes for May indicated diminished confidence in considering rate cuts, influenced by disappointing inflation data.
Looking ahead, investors will closely monitor the preliminary S&P Global PMI for May and the Initial Jobless Claims data for the week ending May 17. Persistent elevated jobless claims in recent weeks suggest a potential easing in labor market strength.
AUDUSD – Australia’s Judo Bank Manufacturing PMI Holds Steady at 49.6 in May, Services PMI Falls to 53.1
The Australian Judo Bank Manufacturing Purchasing manager PMI data came at 49.6 in the May same as 49.6 printed in the April month. Services PMI contracted to 53.1 in the May month from 53.6 printed in the April month. Composite PMI printed at 52.6 in the May month from 53.0 printed in the last month.
AUDUSD is moving in an Ascending channel and the market has reached the higher low area of the channel
According to the latest data released by Judo Bank and S&P Global on Thursday, the preliminary reading of Australia’s Judo Bank Manufacturing Purchasing Managers Index (PMI) held steady at 49.6 in May, unchanged from April’s figure of 49.6.
In contrast, the Judo Bank Australian Services PMI declined to 53.1 in May, down from the previous reading of 53.6. Additionally, the Composite PMI, which combines both manufacturing and services sectors, eased to 52.6 in May compared to the previous month’s reading of 53.0.
NZDUSD – NZ Retail Sales Up 0.5% QoQ in Q1, Surpassing -0.3% Expectation
NZ Retail sales Q1 data came at 0.50% more than expected -0.30% from -1.9% fall in the last quarter data. Core retail sales Q1 came at 0.40% better than previous quarter data of -1.8%. NZ Dollar moved up after the upbeat data came today.
NZDUSD is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
In the first quarter of 2024, New Zealand’s Retail Sales, a key indicator of consumer spending trends, saw a notable increase of 0.5% quarter-on-quarter (QoQ), rebounding from a previous decline of 1.8%.
This data was released by Statistics New Zealand on Thursday. The reported figure surpassed market forecasts, which had anticipated a decrease of 0.3% for the same period.
CRUDE OIL – WTI Crude Dips Below $78 on Increased Supply and Fed Caution
The US Energy information Agency said May 17 ending week Crudeoil stockpile is 1.825 Million Barrels when compared to -2.5 Million Barrels last week, and expected -3.0 Million Barrels. The Russia announced accidentally produced over production in the Crude Oil due to Technical difficulties. Russia is deal with Voluntary output cuts along with OPEC+ members.
XTIUSD Oil price is moving in the Descending channel and the market has reached the lower low area of the channel
West Texas Intermediate (WTI) crude oil, a benchmark for US oil prices, faced its third consecutive day of decline on Wednesday, dropping below the $78.00 per barrel mark once again. This decline followed an increase in US crude oil inventories, reversing the previous week’s decrease. The latest Meeting Minutes from the Federal Reserve’s Federal Open Market Committee (FOMC) further exacerbated the situation, as they indicated the committee’s continued commitment to waiting for stronger indications that US inflation is on track to ease towards the Fed’s 2% annual target. This stance dashed hopes of potential rate cuts and contributed to a decrease in risk appetite during the midweek trading session.
Data from the Energy Information Administration (EIA) revealed that US crude oil stocks rose by 1.825 million barrels for the week ending May 17, significantly exceeding the market’s median forecast of a 3.1 million barrel decline. This increase in inventories offset most of the previous week’s decrease of 2.508 million barrels, renewing concerns about the potential imbalance between US crude oil production and demand.
Adding to worries about oversupply, Russia reported an accidental overproduction of its crude oil, attributing it to technical issues. The Russian Energy Minister is reportedly considering options for voluntary output cuts to address the situation. It is anticipated that Russia will present a plan to the OPEC+ alliance, which includes countries outside the core membership of the Organization of the Petroleum Exporting Countries (OPEC), to counteract the excess production.
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