XAUUSD – Gold Surges Above $2,370 as Traders Await Key US Nonfarm Payrolls Report
The Gold prices are moved higher on the rate cut bets of FED and Domestic data of US economy is weak in the recent days. The Main thing is Job numbers are more declining and wage pressures are cooling, it will down the inflation numbers in the upcoming months. US NFP is scheduled today and expected 182K from 175K last month printed.
XAUUSD has broken the Descending channel in upside
The US jobs data emerged as a primary market mover following the release by the Bureau of Labor Statistics (BLS), which revealed that the number of Americans filing for unemployment benefits surpassed both the consensus forecast and the previous week’s figure. Additionally, the European Central Bank (ECB) opted to cut interest rates, initially sparking an uptick in US Treasury yields before they retraced from their earlier gains.
The US 10-year benchmark, although poised for weekly losses, retreated from its daily high of 4.32% to 4.285% in response to the ECB’s decision. Meanwhile, the US Dollar Index, gauging the performance of the Greenback against a basket of six currencies, experienced a slight decline of 0.12% to 104.14.
In the aftermath of the latest US employment figures, traders are now turning their attention to Friday’s release of the May Nonfarm Payrolls report. Forecasts indicate an addition of 185,000 individuals to the workforce, exceeding April’s figure of 175,000. The Unemployment Rate is anticipated to remain at 3.9%, while Average Hourly Earnings are projected to hold steady at 3.9%.
Key highlights from the daily market movements include Gold prices benefiting from declining US Treasury yields. Initial Jobless Claims for the week ending May 31 exceeded expectations at 229,000, surpassing both estimates of 220,000 and the previous reading of 221,000. The ADP Employment Change report indicated a rise in private US hiring for May, albeit below forecasts at 152,000 and missing April’s 188,000.
The possibility of softer-than-expected Nonfarm Payrolls data could heighten expectations for Federal Reserve rate cuts. Data from the Chicago Board of Trade (CBOT) suggests that traders anticipate a 39 basis points (bps) reduction in interest rates by the end of 2024, as reflected in the December fed funds rate futures contract. Additionally, the CME FedWatch Tool indicates that traders are currently pricing in a 57% likelihood of a rate cut in September.
Last week, the US Core Personal Consumption Expenditure Price Index (PCE), the Fed’s preferred inflation measure, stabilized, instilling hopes for potential rate cuts in the future.
EURUSD – ECB’s Šimkus: Potential for Multiple Rate Cuts This Year
The ECB Governing Council member Gediminas Simkus said one more rate cut this year is possible, More disinflation in the Euro zone currently now. Data dependent approach is based on rate cuts from ECB Side.
EURUSD is moving in an Ascending channel and the market has fallen from the higher high area of the channel
During a statement on Friday, Gediminas Šimkus, a member of the European Central Bank (ECB) Governing Council, expressed the possibility of multiple rate cuts occurring within the current year.
He further noted that the data starkly indicates disinflation trends. However, he cautioned that the path forward may be fraught with challenges.
USDJPY – Japanese Yen Consolidates as Japan’s Suzuki Hints at No Fund Limit for FX Intervention
The Japan Ministry of Finance released Foreign currency reserves for the May month, data shows $1231 Billion from $1229 Billion last month. Japan Finance Minister Shunuchi Suzuki said we do more Foreign intervention in the market no limits to stabilize the JPY currency in the international market. Japan Jibun Services PMI data came at 53.8 in the May month from 53.6 printed in the April month, it is lower than last year April month printed reading of 54.3. So Sevices Sector growing in the Slower pace in the Japan.
USDJPY is moving in an Ascending channel and the market has reached the higher low area of the channel
On Friday, the Japanese Yen (JPY) held steady after the release of Japan’s Foreign Reserves data by the Ministry of Finance for May. The reserves dropped significantly to $1,231 billion, marking the lowest level since February 2023. This decline was attributed to the government’s foreign exchange intervention operations aimed at defending the JPY.
Japanese Finance Minister Shunichi Suzuki emphasized the government’s commitment to addressing excessive currency volatility and assessing the effectiveness of intervention measures. He underscored the importance of maintaining market trust in public finances, stating that there is no set limit for FX intervention.
Meanwhile, the US Dollar (USD) faced challenges as lower employment data fueled expectations of two interest rate cuts by the US Federal Reserve (Fed) in 2024. A Reuters poll revealed that nearly two-thirds of economists anticipate an interest rate cut in September, while the CME FedWatch Tool indicates an increased probability of such a cut.
In market movements, Japanese bond yields retreated from recent highs, with the benchmark 10-year government bond yield dropping below 1% for the first time in two weeks. Additionally, Bank of Japan (BoJ) Governor Kazuo Ueda commented on inflation expectations and monetary policy, stating that while inflation expectations are gradually rising, they have yet to reach the 2% target. BoJ board member Toyoaki Nakamura suggested maintaining current policy settings for the time being.
In the US, the ISM Services PMI for May reached a nine-month high of 53.8, surpassing forecasts, while the ADP Employment Change report indicated subdued job growth. Similarly, the Jibun Bank Japan Services PMI for May, while revised higher, fell short of April’s peak, signaling the softest growth in the service sector since February.
USDCAD – Consolidates Above Mid-1.3600s as Traders Await US NFP
The Bank of Canada recently did rate cut at this week, Canadian Dollar moved down against counter pairs. Yesterday Ivey PMI data came at 10 month low of 52.0 in the May month from 63.5 in the April month. Most significant drop in all economic data shows Bank of Canada is going in the right track on the economy decisions.
USDCAD is moving in the Descending triangle pattern and the market has fallen from the lower high area of the pattern
The widely anticipated Nonfarm Payrolls (NFP) report is anticipated to reveal an addition of 185,000 jobs to the US economy in May, surpassing the previous figure of 175,000, while the unemployment rate is expected to remain steady at 3.9%. These figures, alongside the data on Average Hourly Earnings, will have a significant impact on the inflation trajectory and subsequent policy decisions by the Federal Reserve (Fed), thereby influencing demand for the US Dollar (USD) and providing fresh direction for the USD/CAD pair.
Ahead of this pivotal data release, market participants have increasingly priced in the likelihood of the Fed implementing interest rate cuts starting in September, prompted by indications of a slowdown in the US economy. Consequently, US Treasury bond yields and the USD have experienced downward pressure. Additionally, the recent rebound in Crude Oil prices is bolstering the Canadian Dollar (CAD), which is commodity-linked, and restraining the upside potential of the USD/CAD pair.
Meanwhile, the Bank of Canada (BoC) recently lowered its benchmark rate for the first time in four years, reversing a trend of maintaining rates at a more than two-decade high, citing concerns over slowing economic growth. Although the central bank noted an improvement in underlying inflation, speculations abound regarding the possibility of another rate reduction next month. This could limit the strength of the Canadian Dollar (CAD) and provide support for the USD/CAD pair.
Given this mixed fundamental backdrop, prudent traders may exercise caution, suggesting that the USD/CAD pair is likely to continue its range-bound trading pattern on the final day of the week. Nonetheless, spot prices are poised to record modest weekly gains, albeit remaining within a familiar range observed since early May.
USDCHF – on the Backfoot as US Dollar Subdued Ahead of US NFP
The SNB is bolstering the currency from Currency intervention, Exports of Swiss economy is higher due to Lower Swiss Franc levels against counter pairs. US Domestic data showing declining numbers proving US Dollar weaker against Swiss Franc.
USDCHF is moving in the Descending channel and the market has fallen from the lower high area of the channel
In recent trading sessions, the Swiss Franc has faced downward pressure, coinciding with the US Dollar’s struggle to make gains amidst mounting speculation of an interest rate cut by the Federal Reserve (Fed) starting from the September meeting.
The firm anticipation of the Fed’s interest rate reduction in September has led to increased investor appetite for risky assets. S&P 500 futures have recorded notable gains during the Tokyo session, while the US Dollar Index (DXY) remains subdued around the 104.00 level ahead of the release of the United States Nonfarm Payrolls (NFP) data for May. Meanwhile, 10-year US Treasury yields have rebounded to 4.30%, though significantly lower than the previous week’s high of 4.62%.
Traders are increasingly betting on the Fed’s decision to lower its key borrowing rates starting in September, citing a normalization in the strength of the labor market. Weakness in the JOLTS Job Openings data for April and the ADP Employment Change for May suggested a softening in labor demand.
Moreover, the higher-than-expected number of initial jobless claims for the week ending May 31, totaling 229,000 compared to estimates of 220,000 and the previous release of 221,000, adds to concerns about the potential easing of labor market strength. The upcoming US NFP report is expected to provide crucial insights into the health of the US labor market.
In contrast, the Swiss Franc has exhibited relative strength against the US Dollar in recent trading sessions. This strength is attributed to expectations that the Swiss National Bank (SNB) could intervene in currency markets to bolster the Swiss Franc, thereby exerting pressure on inflation. The competitive Swiss exports have prompted a surge in global demand for Swiss exports, aided by the weakening Swiss Franc.
USD INDEX – US Nonfarm Payrolls Forecast: Latest Employment Data Raises Doubts on Expected 185K Increase for May
The ECB did rate cut yesterday to 4.25% from 4.50% in the last meeting. Today NFP data is scheduled, expected 182K from 175K printed in the April month, Unemployment rate expected 3.9%, Average Hourly earnings expected 3.9%, 0.30% increase in the Monthly basis from 0.20% printed in the last month. US Dollar already depreciated against counter pairs due to lower inflation data, lower Job numbers and other factors.
USD INDEX is moving in an Ascending channel and the market has reached the higher low area of the channel
The European Central Bank (ECB) made an expected move on Thursday, cutting interest rates by 25 basis points (bps) each, bringing rates on the main refinancing operations, marginal lending facility, and deposit facility to 4.25%, 4.5%, and 3.75%, respectively. Despite this aggressive decision, European policymakers struck a relatively hawkish tone in their statement, which helped limit the decline of the EUR/USD pair.
Looking ahead to the upcoming Nonfarm Payrolls (NFP) report, expectations are for the US economy to have added 185,000 new jobs in May, surpassing the 175,000 gained in April. The Unemployment Rate is predicted to remain steady at 3.9%, while Average Hourly Earnings, a key measure of wage inflation, are anticipated to have increased by 0.3% from the previous month’s 0.2%. The annual reading for Average Hourly Earnings is forecasted to hold steady at 3.9%.
Throughout the week, various US economic indicators provided insights into the labor market. The April Job Openings and Labor Turnover Survey (JOLTS) revealed a decrease in job openings, while the Automatic Data Processing (ADP) survey showed a slowdown in private sector job creation. Despite this, annual pay saw an increase of 5%, suggesting solid but moderating growth.
The Federal Reserve (Fed), with its dual mandate of achieving maximum employment and stable prices, is closely monitoring these developments. The latest Personal Consumption Expenditures (PCE) Price Index report indicated steady inflation, with the Fed’s preferred gauge holding at 2.7% year-over-year in April.
Regarding monetary policy, the Federal Open Market Committee (FOMC) is expected to maintain the funds rate between 5.25% and 5.50%, with speculation leaning towards a rate cut in September at the earliest. The Fed is also anticipated to initiate tapering of its balance sheet asset roll-off.
The impact of the US May Nonfarm Payrolls report on the EUR/USD pair will largely depend on its headline reading and wage pressures. A robust report, coupled with increased wage inflation, could delay expectations of interest rate cuts and bolster the US Dollar. Conversely, a disappointing report, especially if accompanied by easing wages, may accelerate the decline of the USD, as it would signal a higher likelihood of imminent rate cuts.
GBPUSD – Pound Sterling Remains Range-Bound as US NFP Data Approaches
The UK Unemployment numbers is scheduled on next week Tuesday, Average earning Growth is higher in the UK, Wage Growth higher costs the services inflation higher in the UK. The UK Country employed people declined hurts more for UK economy for lowering inflation in the April month.
GBPUSD is moving in the Symmetrical triangle pattern and the market has reached the top area of the pattern
The GBP/USD pair is currently grappling with uncertainty as investors eagerly anticipate the release of the United States (US) Nonfarm Payrolls (NFP) report for May. This report is seen as a crucial indicator of the health of the US labor market and is expected to provide new insights into its trajectory.
Market analysts anticipate that the NFP report will reveal an addition of 185,000 payrolls by employers, surpassing the 175,000 jobs added in April. The Unemployment Rate is projected to hold steady at 3.9%. Investors are particularly keen on the Average Hourly Earnings data, which measures the momentum of wage growth. Annual Average Hourly Earnings are forecasted to maintain a steady growth rate of 3.9%. On a monthly basis, wage growth is expected to accelerate, with an estimated increase of 0.3% compared to the previous month’s 0.2%.
The outcome of the NFP report is poised to influence market sentiment regarding the Federal Reserve’s (Fed) future monetary policy decisions. Stronger-than-expected wage growth and payroll data could dampen expectations for the Fed to initiate interest rate reductions starting from the September meeting, while weaker numbers may bolster such expectations.
AUDUSD – Aussie Dollar Rises on China’s Trade Surplus, US NFP in Focus
The China Trade surplus came at $82.65 Billion in the May month from $72.35 Billion printed in the April month and $73 Billion is expected. The Australian Dollar appreciated after the data printed. RBA Governor Michelle Bullock said yesterday RBA ready to increase the rates if the inflation rates did not return to 1-3% target.
AUDUSD is moving in the Box pattern and the market has fallen from the resistance area of the pattern
The Australian Dollar (AUD) edges higher following the release of China’s Trade Balance data on Friday. The National Bureau of Statistics of China reported a Trade Surplus of $82.62 billion in May, exceeding the expected $73.00 billion and the previous $72.35 billion. Given the close trade relationship between Australia and China, changes in China’s economy can significantly impact the Australian market.
AUD traders are also anticipating a speech by Andrew Hauser, Deputy Governor of the Reserve Bank of Australia (RBA), regarding Australia’s economic outlook later in the day. Additionally, attention is on the upcoming US employment data releases, including Average Hourly Earnings and Nonfarm Payrolls.
The Australian Dollar gained support from the widened Trade Surplus reported on Thursday. Furthermore, a hawkish statement by RBA Governor Michele Bullock on Wednesday bolstered the AUD’s strength. Bullock indicated that the central bank is prepared to raise interest rates if the Consumer Price Index (CPI) does not fall within the target range of 1%-3%, as reported by NCA NewsWire.
Meanwhile, the US Dollar (USD) weakened due to lower employment data in the United States, raising hopes for two interest rate cuts by the US Federal Reserve (Fed) in 2024. On Thursday, Initial Jobless Claims showed an increase of 8,000 to 229,000 for the week ending May 31, surpassing market expectations of 220,000. This is the highest level since the eight-month high of 232,000 recorded in early May.
Market Update: The Australian Dollar remains steady due to investor caution.
The ASX 200 Index climbed towards 7,850 on Friday, with mining and energy stocks driving the market higher due to stronger commodity prices. This movement was influenced by signs of a cooling US labor market, which raised expectations for two Fed interest rate cuts this year.
A Reuters poll conducted from May 31 to June 5 indicated that nearly two-thirds of economists now predict an interest rate cut in September. Additionally, the CME FedWatch Tool shows a nearly 70.0% probability of a Fed rate cut by at least 25 basis points in September, up from 51.0% a week earlier.
Australia’s Trade Balance widened to 6,548 million AUD ($4,321.68 million USD) month-over-month (MoM) in May, surpassing the expected 5,500 million AUD and April’s balance of 5,024 million AUD. Imports dropped by 7.2% MoM in May, reversing April’s 4.2% increase. Exports declined by 2.5%, following a 0.6% decrease previously.
On Wednesday, the ISM US Services PMI rose to 53.8 in May, the highest in nine months, significantly beating the forecast of 50.8. Conversely, the ADP US Employment Change report showed an addition of 152,000 new workers in May, the lowest in four months and below the forecast of 175,000 and the revised April figure of 188,000.
Australia’s Gross Domestic Product (GDP) for the first quarter grew by 0.1%, below the expected 0.2%. On an annual basis, the economy grew by 1.1%, slightly below the anticipated 1.2%.
In recent times, the Pound Sterling has been fluctuating around the 1.2800 level against the US Dollar as traders await the US NFP report, which will shape speculation regarding potential Fed rate cuts in September. Additionally, the Pound’s performance will be impacted by the release of employment data for the February-April period in the United Kingdom, scheduled for Tuesday. Persistent declines in the number of employed individuals in the UK could weigh on the Pound, signaling potential early rate cuts by the Bank of England (BoE).
Furthermore, investors will closely monitor the UK Average Earnings data, which serves as a gauge of wage growth. The UK’s robust wage growth momentum has been a significant contributor to high service inflation, posing a challenge for price pressures to return to the 2% target set by the BoE.
NZDUSD – Price Analysis: Maintains Position Near 0.6200 Ahead of US NFP
The RBNZ planned is no rate cuts this year as per Three Governors of RBNZ in the latest speech in the last month. US is scheduled today to release Non-Farm Payrolls data of May month and expected 182K from the 175K printed last month. Average earning Growth expected 3.9% in the May month.Kiwi Currency is enjoying upside after the China domestic data came in higher than expected today.
NZDUSD is moving in the Descending triangle pattern and the market has reached the lower high area of the pattern
The Kiwi asset is holding onto its recent gains, hovering near the key resistance level of 0.6200, buoyed by expectations surrounding interest rate differentials. The Reserve Bank of New Zealand (RBNZ) is anticipated to maintain interest rates unchanged throughout the year, in stark contrast to the expected trajectory of the Federal Reserve (Fed), which is projected to implement two rate cuts. Market participants foresee the September meeting as the earliest opportunity for the Fed to initiate its policy normalization process.
The New Zealand Dollar has also benefited from a positive market sentiment. However, this sentiment could turn uncertain following the release of the United States (US) Nonfarm Payrolls (NFP) report for May, scheduled for 12:30 GMT. Projections suggest that the US NFP report will indicate an addition of 185,000 fresh payrolls by employers, surpassing the previous release.
Investors will closely monitor the Average Hourly Earnings data for May, which serves as a barometer of wage growth momentum. Annual growth in Average Hourly Earnings is expected to remain steady at 3.9%. The official US Employment data, reflecting the health of the country’s labor market, will play a significant role in shaping expectations regarding Fed interest-rate cuts in September.
CRUDE OIL – WTI Extends Gains, Nears $75.50 as Sentiment Improves with Increased Fed Rate Cut Speculation
The Crudeoil prices are surging to $75 due to rate cuts expected from FED in the September month and 2 more rate cuts this year. ECB last day did rate cuts, BoC did on Wednesday rate cuts, So Rate cuts measures are really helpful for Crudeoil prices to move up against USD. The US Initial Jobless claims came at 229K in the May 31 endig from 220K printed in the last week, 9k is higher in the Jobless claims data.
XTIUSD Crude oil price is moving in the Descending channel and the market has rebounded from the lower low area of the channel
The recent surge in crude oil prices can be attributed to growing speculation of an interest rate cut by the US Federal Reserve (Fed) in September, which was prompted by the European Central Bank (ECB)’s decision to implement a 25-basis points rate cut on Thursday.
A Reuters poll conducted from May 31 to June 5 revealed that nearly two-thirds of economists now anticipate an interest rate cut by the Fed in September. Furthermore, the CME FedWatch Tool indicates that the probability of a 25-basis points rate cut by the Fed in September has surged to nearly 70.0%, up from 51.0% just a week earlier.
The decline in employment data from the United States (US) has fueled expectations for two interest rate cuts by the Fed within this year. Lower interest rates in the US, the largest oil consumer country, have the potential to stimulate economic activity and subsequently increase oil demand.
Notably, the ADP US Employment Change report for May revealed that only 152,000 new workers were added to payrolls, marking the lowest figure in four months and significantly below both the forecast of 175,000 and the downwardly revised figure of 188,000 for April. Additionally, Initial Jobless Claims in the US rose by 8,000 to reach 229,000 for the week ending May 31, surpassing market expectations of 220,000. This represents the highest reading since the eight-month high of 232,000 recorded in early May. Traders are eagerly awaiting the release of various US employment data on Friday, including Average Hourly Earnings and Nonfarm Payrolls.
Furthermore, on Sunday, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to extend most of their supply cuts into 2025. However, the group has allowed for voluntary cuts from eight member countries to be gradually unwound starting in October. By December, it is expected that more than 500,000 barrels per day (bpd) will re-enter the market, with a total of 1.8 million bpd returning by June 2025, according to Reuters.
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