GBPUSD is moving in the Symmetrical triangle pattern and the market has reached the top area of the pattern
GBPUSD – Holds Firm Above 1.2750, Investors Await New Developments
The BoE rate cut is delaying due to Election is going to happen in the UK in July Month. So Rate cut in the near term is not possible. August month is probably possible and it is based on Data dependent only. This news boosted GBP against counter pairs.
Market participants are eagerly awaiting several key events later in the day, including the release of the US Conference Board’s Consumer Confidence data, FHFA’s House Price Index, and speeches by Federal Reserve officials Neel Kashkari, Mary Daly, and Lisa Cook.
Investors have scaled back their expectations of interest rate cuts by the US Federal Reserve (Fed), with the probability of rate cuts in September now standing at 49%, down from 63% recorded a week earlier, according to the CME FedWatch tool. The upcoming US economic data releases this week are anticipated to provide insights into the economic outlook and inflation trajectory. Notably, the initial reading of US GDP growth for the first quarter is scheduled for Thursday, ahead of the release of the US Core Personal Consumption Expenditures Price Index (Core CPE), which is the Fed’s preferred inflation gauge. Any signs of higher-than-expected inflation could strengthen the US Dollar and potentially exert downward pressure on the GBP/USD pair in the short term.
Conversely, the Pound Sterling (GBP) is gaining momentum as traders speculate that the Bank of England (BoE) will opt to maintain its borrowing costs for a longer period to curb inflationary pressures. Citigroup strategist Jamie Searle noted that the upcoming UK election in July is expected to further reduce the likelihood of a near-term BoE rate cut. This, in turn, reduces the risk of potential election interference with the BoE’s monetary policy decisions, allowing the central bank to focus solely on data-dependency.
XAUUSD – Gold Bounces Back as US Dollar Weakens, Investors Await Key US Data
This week US Q1 GDP is expected to grow at 1.4% QoQ versus 1.6% QoQ in the previous quarter. Core PCE index is expected at 0.30% MoM and 2.8% in the April month. The World leaders urged World court to stop the Israel Attacks on Gaza and arrest the Israel PM and Hamas Leaders due to more than 35K civilians died by these 2 leaders conflict. The Gold prices are rebounded from lows after the news came.
XAUUSD is moving in the Box pattern and the market has fallen from the resistance area of the pattern
The recent resurgence in the price of gold can be attributed to several factors, including the weakening of the US Dollar (USD) and increased safe-haven demand amid ongoing geopolitical tensions in the Middle East. Conversely, the rise in short-term Treasury yields following the release of hawkish Federal Reserve (Fed) meeting minutes and stronger-than-expected US economic data may provide support to the Greenback in the short term. Traders may adopt a cautious approach as they await the release of key US inflation data later this week.
On the economic calendar, Tuesday will see the release of the US Conference Board’s Consumer Confidence data, alongside speeches from Fed officials Neel Kashkari, Mary Daly, and Lisa Cook. However, market focus will primarily shift to Friday’s release of the US Core Personal Consumption Expenditures Price Index (Core PCE), considered the Fed’s preferred inflation gauge. Any indications of persistent inflationary pressures, coupled with hawkish commentary from Fed officials, could prompt traders to reconsider the likelihood of an imminent Fed rate cut. Such sentiment shifts are expected to bolster the USD and potentially exert downward pressure on the price of gold, which is denominated in USD.
Recent events further underscore the market dynamics surrounding gold. An Israeli airstrike in the Gazan city of Rafah resulted in tragic casualties, prompting global leaders to call for intervention to halt the ongoing attacks. Additionally, minutes from the latest Fed meeting revealed that the central bank intends to take a more cautious approach in achieving its inflation target. This has led traders to scale back expectations of a Fed rate cut in September, as reflected in the reduced odds of such an outcome according to the CME FedWatch tool.
Looking ahead, preliminary estimates suggest a slight slowdown in US Gross Domestic Product (GDP) growth for Q1, with the Core PCE expected to show a modest increase in April. Despite recent market fluctuations, analysts from UBS and Citi remain optimistic about the outlook for gold prices, with projections of $2,600 and $3,000 per ounce, respectively, by the end of 2024 or within the next six to eighteen months.
EURUSD – ECB’s Schnabel Suggests QE May Have Hindered Monetary Policy Transmission
The ECB Member Isabel Schnabel said QE measures may harm the Monetary policy settings in the Euro zone. Focussed on Longer term refinancing operations will benefit the stable and sustainable growth in the Euro zone and not much affected.
EURUSD is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
Isabel Schnabel, a member of the European Central Bank (ECB), expressed her views on Tuesday, suggesting that quantitative easing (QE) measures may have hindered the transmission of monetary policy during the recent tightening cycle.
Schnabel highlighted the potential limitations of QE in economies that are primarily bank-based. She proposed that targeted longer-term refinancing operations (TLTROs) could offer significant support while maintaining a smaller impact on the economy.
USDJPY – BoJ: Japan’s April Inflation Gauge Falls to 1.1%
The Japan Weighted Median inflation index shows inflation trend in the Japan is 1.1% in the April, it is slower than 1.3% in the March month. The BoJ’s report shows all the three key measurements fall below expected 2% target. So BoJ is rising doubts over the rate hike whether to do or not in the policy settings.
USDJPY is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
According to the latest data released by the Bank of Japan (BoJ) on Tuesday, Japan’s Weighted Median Inflation Index, which serves as a significant indicator of the country’s trend inflation, recorded a rise of 1.1% in April. This marks a slowdown from the 1.3% increase observed in March.
This data is closely monitored as it provides insights into the breadth of price increases across various sectors of the economy.
Furthermore, the BoJ’s report revealed that all three key measurements of underlying inflation fell below the 2% threshold in April. This occurrence marks the first time since August 2022 that such a scenario has occurred, indicating a potential slowdown in inflationary pressures within the Japanese economy.
USDCAD – Slides to 1.3600 as US Dollar Weakens
The Canadian Dollar moved down after the Oil prices plunged to lows in the market after the Iran said yesterday they are going to rise the output by 4 Million Barrels per day from 3.6MPD. BoC is expected to cut the rates in the June month is the drawback for the Canadian Dollar in the market.
USDCAD is moving in the Descending channel and the market has fallen from the lower high area of the channel
This downward movement can be attributed to a weakening US Dollar (USD), despite expectations of the Federal Reserve (Fed) maintaining interest rates unchanged at the September meeting.
Despite the delay in Fed rate cuts, market sentiment remains positive, as evidenced by decent gains in S&P 500 futures during the Tokyo session. The US Dollar Index (DXY), which measures the USD against six major currencies, has extended its decline for the third consecutive trading session, hovering near 104.40.
Additionally, 10-year US Treasury yields have fallen to 4.64%, despite reduced speculation regarding Fed rate cuts in September. While historically lower yields are favorable for interest-bearing assets, they continue to struggle for stability in this environment.
Looking ahead, the trajectory of the US Dollar will be influenced by the release of the United States (US) Core Personal Consumption Expenditure Price Index (PCE) data for April, scheduled for Friday. The Fed’s preferred inflation gauge is anticipated to show steady growth on both a monthly and annual basis, with estimates of 0.3% and 2.8%, respectively. This data could further diminish expectations of Fed rate cuts in September.
Meanwhile, the Canadian Dollar (CAD) is benefiting from the positive market sentiment. However, the near-term outlook for the CAD remains uncertain as investors anticipate the Bank of Canada (BoC) to initiate interest rate reductions starting from the June meeting.
Concerns about persistent inflation in Canada have eased due to weak consumer spending and a bleak economic outlook, prompting expectations of rate cuts in June. This week, investors will closely monitor the release of Q1 Gross Domestic Product (GDP) data, which will provide insights into the economic health of Canada.
USDCHF – slips under 0.9150 as US Dollar softens, attention on Swiss GDP data
The Swiss Q1 GDP is scheduled this week and expected 0.30% in Q1, The Annual reading is expected at 0.10% in the April month. Gaza reported 45 Civilians killed by Israel Air Attack, World leaders urges the World court to stop the Israel Attacks on Gaza. This tensions makes Swiss Franc to moved higher.
USDCHF is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
During the early European session on Tuesday, the USD/CHF pair slipped to 0.9120, driven by selling pressure on the Greenback. Market sentiment remained cautious, lending support to the Swiss Franc (CHF) ahead of the release of Gross Domestic Product (GDP) data from both Switzerland and the US scheduled for Thursday.
Speculation surrounding the Federal Reserve’s (Fed) stance, as reflected in the minutes of their recent meeting, coupled with hotter-than-expected US inflation and robust PMI data, has led to speculation that the Fed may postpone interest rate cuts this year. According to the CME FedWatch tool, financial markets have priced in nearly a 50% chance of the Fed maintaining rates in September. Persistent inflation concerns in the US have prompted Fed policymakers to advocate for maintaining higher rates for longer periods to ensure inflation approaches the 2% target. This narrative could temporarily strengthen the Greenback and provide support for the USD/CHF pair.
Investors will closely monitor the release of the Personal Consumption Expenditures (PCE) index on Friday for further market direction. Forecasts suggest that the US headline PCE may indicate a 0.3% month-on-month increase and a 2.7% year-on-year rise in April. Similarly, the Core PCE, preferred by the Fed as an inflation measure, is expected to show a 0.3% month-on-month increase and a 2.8% year-on-year rise in April. Any confirmation of heightened inflationary pressures could further bolster the USD against the CHF.
Meanwhile, on the Swiss front, prevailing cautious sentiment and ongoing geopolitical tensions in the Middle East may drive safe-haven flows, lending support to the CHF. Reports emerged on Monday that an Israeli airstrike sparked a fire, resulting in the loss of 45 lives in a tent camp in the Gazan city of Rafah. Global leaders have called for the implementation of a World Court order to halt Israel’s attacks, as per Reuters. Additionally, expectations suggest that Swiss GDP figures may reveal a 0.3% quarter-on-quarter expansion in Q1, with annual GDP growth forecasted at 0.1% for the same period. Positive GDP data could further strengthen the CHF in the short term.
USD INDEX – Fed Officials Silent on Interest Rate Outlook
The FED Governor Michelle Bowman said either slow QT pace or do the tapering of Balance sheets to slow runoff. Reducing balance sheets and create ample reserves while US economy is doing well. This is the positive news for the US Dollar in the market.
USD INDEX is moving in the Box pattern and the market has fallen from the resistance area of the pattern
As markets fully resume activity, Federal Reserve (Fed) policymakers are gearing up for their scheduled appearances on Tuesday, amidst anticipation surrounding the forthcoming release of the high-impact US Personal Consumption Expenditures (PCE) inflation data later in the week.
The US Dollar has been under moderate selling pressure since the beginning of the week, extending losses from Friday. This trend was propelled by an unexpected easing in the University of Michigan’s 5-year Consumer Inflation Expectations for May, which dropped to 3.0% from April’s 3.1%, falling below market expectations.
Market sentiment reflects a 50% probability that the Fed will maintain interest rates in September, as indicated by the CME Group’s FedWatch Tool. Over the past week, Fed policymakers have leaned towards a cautious stance regarding the inflation outlook, raising concerns among market participants about potential Fed rate cuts later this year.
In the early American session, Federal Reserve Bank of Minneapolis President Neel Kashkari is scheduled to speak and participate in a panel discussion at the Barclays-CEPR International Monetary Policy Forum. Later on, Fed Governor Lisa Cook and San Francisco Fed President Mary Daly will share their insights at a panel discussion titled “AI and the Economy,” hosted by the Federal Reserve Bank of San Francisco.
In recent comments, Fed Governor Michelle Bowman expressed her support for either delaying the reduction in the pace of Quantitative Tightening (QT) or implementing a more gradual reduction in balance sheet runoff. She emphasized the importance of continuing to reduce the balance sheet size to achieve ample reserves as quickly as possible, particularly while the economy remains robust.
Meanwhile, Cleveland Fed President Loretta Mester refrained from discussing monetary policy directly. Instead, she focused on Fed communications, suggesting that it would be beneficial for Federal Open Market Committee (FOMC) statements to provide more detailed descriptions of the current economic assessment, its influence on the outlook, and the associated risks.
AUDUSD – Australia’s April Retail Sales Edge Up by 0.1% MoM, Below Expected 0.2%
The Australian Retail sales data came at 0.10% MoM in the April month versus -0.40% decline in the March month and 0.20% is expected. The Australian Dollar moved up after the release.
AUDUSD has broken the Descending channel in upside
According to data published by the Australian Bureau of Statistics (ABS) on Tuesday, Australia’s Retail Sales, which serve as a key measure of consumer spending in the country, recorded a modest increase of 0.1% month-on-month (MoM) in April. This uptick follows a previous decline of 0.4%.
However, the reported figure fell short of market expectations, which had anticipated a more substantial increase of 0.2%.
NZDUSD – Climbs Above 0.6150 as China’s Property Support Lifts Kiwi
The China Shanghai announced they are promoting Local real estate market in the stable, Sound manner from this plunges of Real estate market. China Government also supported $47 Billion for real estate recovery process. This news Boosted Kiwi currency against Counter pairs.
NZDUSD is moving in an Ascending channel and the market has rebounded from the higher low area of the channel
This surge to its highest level since March was driven by a softer US Dollar (USD). Market participants are eagerly awaiting fresh catalysts, including the release of the US Gross Domestic Product Annualized (GDP) and Core Personal Consumption Expenditures Price Index later in the week. Additionally, attention is focused on Reserve Bank of New Zealand’s (RBNZ) Governor Orr’s upcoming speech scheduled for Friday.
The market sentiment has shifted, with reduced expectations of interest rate cuts by the US Federal Reserve (Fed) following a more hawkish stance from Fed officials and better-than-expected US economic data. The upcoming US PCE inflation data on Friday is anticipated to show an increase in the US Core PCE of 0.3% month-on-month and 2.8% year-on-year in April. If inflationary pressures persist, it could diminish expectations of Fed rate cuts and bolster the Greenback.
Conversely, RBNZ Deputy Governor Christian Hawkesby emphasized that cutting interest rates is not currently under consideration. The RBNZ has maintained its cash rate at a 15-year high of 5.5% and suggested that a restrictive policy stance should be upheld for an extended period to ensure inflation returns to the target range of 1-3%.
Furthermore, China’s Shanghai recently announced support measures for the property sector aimed at optimizing the local real estate market and fostering stable and sustainable development, as reported by the Global Times. Analysts believe these measures will provide a significant boost to the housing market. The combination of the RBNZ’s hawkish stance and China’s stimulus plan continues to support the New Zealand Dollar (Kiwi) against the US Dollar (USD), as the Kiwi is often seen as a proxy for China’s economic performance.
CRUDE OIL – WTI Nears $78.50 Ahead of US PCE Inflation and OPEC+ Meeting
The Israel killed 45 people in Tent camps Civilians in the Gaza makes supportive for Oil prices to up move but it is calm down by Iran output rise by 4MBPD from 3.6MBPD announcement Yesterday. OPEC+ meeting is scheduled on June 01, Voluntary output cuts of 2.2MBPD is expected to extended till Second half of 2024.
XTIUSD Crude oil price is moving in the Descending channel and the market has reached the lower high area of the channel
West Texas Intermediate (WTI) oil prices are experiencing a slight uptick in anticipation of the upcoming Organization of the Petroleum Exporting Countries and its allies, including Russia (OPEC+) meeting, scheduled for June 2. During this meeting, member producers will deliberate on the extension of voluntary output cuts totaling 2.2 million barrels per day into the second half of 2024. Currently, WTI crude oil prices are hovering around $78.70 per barrel during the Asian trading hours on Tuesday.
The surge in oil prices is fueled by escalated geopolitical tensions in the Middle East. Reports from Reuters on Sunday revealed that an Israeli strike in the Gazan city of Rafah resulted in a fire that claimed the lives of 45 individuals. This incident has sparked international outcry and has sustained geopolitical risks, favoring higher crude oil prices. Furthermore, reports of the death of an Egyptian soldier due to Israeli strikes near Rafah have contributed to the risk premium associated with crude oil.
Market participants are eagerly awaiting the release of the Personal Consumption Expenditures (PCE) Price Index data on Friday, which serves as the Federal Reserve’s preferred measure of inflation. This data will be crucial in assessing future US monetary policy decisions. Last week, Fed officials tempered expectations for rate cuts, emphasizing the need for further evidence that inflation will eventually decline to the central bank’s 2% annual target. Prolonged elevated interest rates are expected to negatively impact the US economic outlook and potentially reduce oil demand.
Additionally, Reuters reported on Sunday, citing Iran’s Tasnim news agency, that an economic council led by Iran’s interim president, Mohammad Mokhber, has approved a plan to increase the country’s oil output from 3.6 million barrels per day (bpd) to 4 million bpd. This development is likely to further influence oil market dynamics in the near future.
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