EURUSD
- EUR/USD Consolidation: The EUR/USD is consolidating below 1.0900 early Wednesday, reflecting a modest uptick in the US Dollar.
- US Macro Data and Fed Rate Cut Bets: Recent softer US macroeconomic data indicate signs of a cooling economy, solidifying expectations for an imminent interest rate cut by the Federal Reserve later this year.
- ECB Rate Cut Expectation: The ECB is expected to cut interest rates by 25 basis points at the end of its June 6 meeting, a move that would be its first rate cut since March 2016.
- Economic Projections and ECB Commentary: The rate cut will be accompanied by the latest economic projections, with ECB President Christine Lagarde's comments being closely scrutinized for indications about future rate cuts, especially in light of rising Eurozone inflation in May.
- Impact on EUR/USD: The ECB's rate decision and accompanying comments will play a crucial role in influencing the shared currency and the EUR/USD pair, as investors look for signals on the future monetary policy path.
| SMA (20) | Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: The EUR/USD is consolidating below 1.0900 amid a slight rise in the US Dollar, with recent US macroeconomic data supporting expectations of a Fed rate cut later this year. The upcoming ECB meeting on June 6 is pivotal, as the central bank is widely expected to cut interest rates by 25 basis points, the first cut since 2016. This decision, coupled with ECB President Lagarde’s comments and economic projections, will be critical in shaping the future trajectory of the EUR/USD pair, particularly in the context of rising Eurozone inflation.
GBPUSD
- GBP/USD Paring Back Gains: GBP/USD is paring back gains toward 1.2770 in European trading on Wednesday.
- Lack of UK Economic Events: The UK economic calendar lacks top-tier events this week, meaning that the GBP/USD pair's movements will be primarily guided by the US Dollar's performance.
- Fed Rate Cut Expectations: The CME FedWatch tool indicates a 65% chance of interest rates declining from their current levels in September, according to 30-day Fed Funds futures pricing data.
- Impact of Weak US Data: Weak US ISM Manufacturing PMI report for May and downwardly revised Q1 GDP data have increased expectations for a Fed rate cut in September.
- ADP Employment Data: The ADP agency is expected to report that private payrolls increased by 173K, which is lower than the 192K reported in April.
| SMA (20) | Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: The GBP/USD is paring back gains towards 1.2770 in Wednesday's European trading session. With no major UK economic events scheduled this week, the pair's direction will largely depend on the performance of the US Dollar. Market participants are pricing in a 65% chance of a Fed rate cut in September, influenced by weak US ISM Manufacturing PMI data and revised Q1 GDP figures. Additionally, upcoming ADP employment data, expected to show a slowdown in private payroll growth, will further shape market expectations and potentially impact the GBP/USD pair's movement.
GOLD
- Technical Perspective on Gold Price: From a technical point of view, the gold price has found acceptance below the 50-day Simple Moving Average (SMA).
- Geopolitical Risks and Safe-Haven Demand: Geopolitical risks from ongoing Middle East conflicts have lifted the safe-haven gold price closer to the 50-day SMA.
- Lack of USD Recovery Follow-Through: The attempted USD recovery from over a two-month low lacked follow-through due to growing acceptance that the Federal Reserve will cut interest rates later this year.
- XAU/USD Trading Range: Despite supporting factors, XAU/USD remains confined in a one-week-old trading range as investors are reluctant to place aggressive bets ahead of the crucial US Nonfarm Payrolls (NFP) report on Friday.
- Upcoming US Economic Data: The US ADP report on private-sector employment and the US ISM Services PMI are expected to provide some market impetus later today.
Closing statement: The gold price, from a technical standpoint, is currently accepted below the 50-day Simple Moving Average (SMA). Geopolitical risks from ongoing conflicts in the Middle East have bolstered the safe-haven demand for gold, nudging it back towards the 50-day SMA. However, the USD recovery has been subdued due to expectations of Federal Reserve interest rate cuts later this year. Despite these factors, XAU/USD remains in a one-week-old trading range as investors await the crucial US Nonfarm Payrolls report on Friday. Meanwhile, today's US ADP employment report and ISM Services PMI are anticipated to influence market dynamics and provide further direction for gold prices.
CRUDE OIL
- WTI Oil Price Decline: West Texas Intermediate (WTI) oil price has dropped to four-month lows, trading around $73.40 per barrel on Wednesday.
- API Weekly Statistical Bulletin: The American Petroleum Institute’s (API) Weekly Statistical Bulletin (WSB) reported that crude oil stocks surged by 4.052 million barrels for the week ending May 31, reversing a prior week's decline of 6.490 million barrels.
- Rising Global Supplies and Uncertain Demand: Crude oil prices are under pressure from signs of rising global supplies coupled with an uncertain demand outlook.
- OPEC+ Supply Cuts Extension: On Sunday, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to extend most of their supply cuts into 2025 but allowed for voluntary cuts from eight member countries to be gradually unwound starting in October.
- Market Re-entry of Oil: By December, more than 500,000 barrels per day (bpd) are expected to re-enter the market, with a total of 1.8 million bpd returning by June 2025, according to Reuters.
| SMA (20) | Falling |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: The WTI oil price has plummeted to four-month lows, trading around $73.40 per barrel on Wednesday. This decline follows the American Petroleum Institute’s (API) report that crude oil stocks surged by 4.052 million barrels for the week ending May 31, reversing a previous week's decline of 6.490 million barrels. The increase in global oil supplies, coupled with an uncertain demand outlook, is putting downward pressure on prices. Additionally, OPEC+ has agreed to extend most of their supply cuts into 2025, allowing for voluntary cuts from eight member countries to be gradually unwound starting in October. By December, over 500,000 barrels per day are expected to re-enter the market, with a total of 1.8 million bpd returning by June 2025, according to Reuters.
DAX
- German Unemployment Figures: Unemployment figures from Germany affected investor hopes of a pickup in German economic activity, with unemployment increasing by 25k in May after rising by 10k in April.
- Inflation Figures and Interest Rate Uncertainty: Recent inflation figures for Germany and the Eurozone created uncertainty about the Thursday interest rate decision and post-June plans.
- Eurozone Producer Prices Forecast: Investors should consider producer prices for the Eurozone, with economists forecasting a fall of 5.1% year-on-year in April after decreasing 7.8% in March.
- Upcoming Economic Data: Later in the Wednesday session, ADP Nonfarm Employment and ISM Services PMI numbers will attract investor attention.
- Near-term Trends: Near-term trends for the DAX remain hinged on Services PMIs, the ECB interest rate decision, and the US Jobs Report.
| SMA (20) | Rising |
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| RSI (14) | Neutral | ||
| MACD (12, 26, 9) | Falling |
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Closing statement: Unemployment figures from Germany, showing an increase of 25k in May after a rise of 10k in April, affected investor hopes for a pickup in economic activity. Recent inflation figures for Germany and the Eurozone have created uncertainty about the upcoming interest rate decision and post-June plans. Additionally, investors should consider Eurozone producer prices, with economists forecasting a year-on-year fall of 5.1% in April after a 7.8% decrease in March. Later in the Wednesday session, ADP Nonfarm Employment and ISM Services PMI numbers will draw investor attention. Near-term trends for the DAX will depend on Services PMIs, the ECB interest rate decision, and the US Jobs Report.