FUNDAMENTAL ANALYSIS REPORT WITH CHARTING TRENDS- 01 JUNE 2023
01 Jun 2023
US Stocks Fall on Rate Increase Worries – Nasdaq Down 0.6%
The overnight shift in investor attention to the Fed and the upcoming debt ceiling vote in Congress hurt US stock markets, with the Dow closing 0.41%, the S&P 0.61%, and the Nasdaq finishing negative 0.63%. Another erratic and volatile day for currencies saw the dollar rise sharply before falling again later in the day. The first of three significant updates on the US labour market this week showed that the market is still tight, and job postings increased to 10.1 million. As a result, Treasury yields in the US fell, with the benchmark US 10-year falling 6.7 basis points to 3.629%.
Today’s Trading Focus is on Data
As a slew of macroeconomic data releases come into focus today, investors are already beginning to leave worries over the US debt crisis in the past. Tier 3 data will mostly be released during the Asian session, but the European open is when things should start to become interesting. The newest CPI Flash estimate for the region, with an expectation of 6.3% y/y, will be the big event among a plethora of Manufacturing PMI statistics expected out in Europe. The US Day is expected to be busy once more with the release of the ISM Manufacturing PMI statistics, which the market anticipates will show a reading of 47.0, coming later in the day after the ADP Non-Farm Employment numbers, which are due at the same time as the weekly unemployment claims data.
What happened in the Asian Session?
A higher-than-expected Capital Spending at 11.0% (vs. predicted 6.1%, prior to 7.7%), showing an upbeat corporate mood, may contribute to the Japanese Yen’s sustained growth. The impact might be muted, nevertheless, by a modest decline in the Manufacturing PMI to 50.6 (from the anticipated and prior 50.8).
What does it mean for Europe & US Sessions?
A better-than-expected Private Capital Expenditure of 2.4% (vs. anticipated 1.1%) but lower than the previous 3.0%, signalling slowing growth in corporate investment, are among the mixed signals for the Australian Dollar in the report. A boost from the Chinese Manufacturing PMI, which rose to 50.9 from the previously reported and anticipated 49.5, maybe in the works.
The Dollar Index (DXY)
Key news events today
ADP Non-Farm Employment Change
ISM Manufacturing PMI
What can we expect from DXY today?
Unemployment Claims are predicted to be 236K (up from 229K), the US ADP Non-Farm Employment Change to be 173K (down from 296K), and the ISM Manufacturing PMI to be 47.0 (up from 47.1). If the actual data considerably differs from the predictions, it may cause market volatility and have an effect on the USD’s value.
Central Bank Notes:
- The committee raised the target range for the federal funds rate to 5 to 5-1/4 per cent. The U.S. banking system is sound and resilient.
- Tighter credit conditions for households and businesses may weigh on economic activity, hiring, and inflation.
- The committee is committed to returning inflation to its 2% objective
- The committee will adjust monetary policy as appropriate if risks emerge that could impede the attainment of goals
- Next meeting is on 14 June 2023
Next 24 Hours Bias
The Euro (EUR)
Key news events today
CPI Flash Estimate y/y
What can we expect from EUR today?
The predicted CPI Flash Estimate y/y for the Eurozone is 6.3%, which is less than the actual value of 7.0%. A short-term devaluation of the EUR may result if the actual statistics support the prediction, as a lower inflation rate may diminish expectations of interest rate increases by the ECB.
Central Bank Notes:
- The ECB has decided to raise the three key interest rates by 25 basis points as the inflation outlook continues to be too high for too long.
- The ECB will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction.
- Renewed financial market tensions and Russia’s war against Ukraine remain significant economic downside risks.
- The continued resilience of the labour market could lead to higher growth than anticipated.
- Next meeting on 15 June 2023
Next 24 Hours Bias
Key news events today
No major news events.
What can we expect from Oil today?
The Chinese Manufacturing PMI has decreased, indicating a probable slowdown in the economy and a potential drop in oil consumption because of decreased industrial activity. The Non-Manufacturing PMI, however, increased from 55.1 to 56.4, showing strong growth in the services and construction sectors, which may help offset some of the decline in manufacturing-related oil demand.
Next 24 Hours Bias
Asian Stock Markets: Nikkei is up 0.84%, Shanghai Composite is down 0.05%, Hang Seng is up 0.15%, ASX is up 0.27%
European equities, the DAX futures down 1.54%, CAC 40 down 1.54%, and FTSE down 1.01%.
US Stock Market: Dow Jones is down 0.41%, S&P 500 is down at 0.61%, and Nasdaq 100 is down at 0.63%.
Commodities: Gold at $1957.50 (-0.27%), Silver at $23.28 (-0.38%), Brent Oil at $73.03 (+0.59%), WTI Oil at $68.39 (+0.47%)
News & Data
- (AUD) Retail Sales (MoM) Actual 0.0%, Forecast 0.0%, Previous 0.4% at 07:00
- (CNY) Caixin Manufacturing PMI (May) Actual 50.9, Forecast 50.3, Previous 49.5 at 07:15
- (GBP) Manufacturing PMI (May) Forecast 46.9, Previous 47.8 at 14:00
- (EUR) CPI (YoY) (May) Forecast 7.0%, Previous 7.0% at 14:30
- (USD) ADP Nonfarm Employment Change (May) Forecast 170K, Previous 296K at 18:00
- (USD) Initial Jobless Claims Forecast 235K, Previous 229K at 18:00
The bearish momentum on the GBP/USD chart at the moment suggests a lower market trend.
As a key support level known as pullback support, the 1.2376 level is important. Previous evidence of this level’s significance as a price point where buyers have joined the market.
The second support level, located at 1.2305, is also recognised as a swing low support, adding to its significance.
The first resistance level at 1.2467, on the other hand, can serve as a transient barrier to upward price moves, possibly leading to a pause or retracement in the bearish trend.
Additionally, the second barrier at 1.2536 is another significant level to keep an eye on because it is also recognised as a multi-swing high resistance and lines up with the 61.80% Fibonacci retracement level.
The price is below a significant falling trend line, suggesting the presence of negative pressure, and the EUR/USD chart is currently showing a bearish momentum.
The price may react negatively from the first resistance level and decrease in the direction of the first support level given this bearish momentum. As a multi-swing low support, the 1.0535 level acts as a strong region of support. This price point has already demonstrated its importance as a point at which buyers have entered the market.
The initial resistance level at 1.0691, on the other hand, can serve as a transient barrier to upward price moves, possibly leading to a pause or pullback in the bearish trend. It is recognised as an overlap resistance, which increases its significance. Also recognised as an overlap resistance is the second resistance, which is located at 1.0793.
Currently, the AUD/USD chart is showing bullish momentum, which denotes a rising market trend. However, to fully confirm this bullish momentum, the price must cross over a significant falling trend line.
The price may perhaps rise towards the first barrier level given this bullish trend. An overlap support, or essential support zone, is located at the 0.6459 level.
The significance of the second support level at 0.6386 is increased by the fact that it serves as a retreat support.
On the other hand, the initial resistance level at 0.6545 can act as a temporary roadblock for continued price increases. Given its historical significance as a price level where selling pressure has occurred, this level is regarded as a multi-swing high resistance.
It is acknowledged that the second resistance at 0.6578 serves as a pullback resistance.
Additionally, a potential bullish market reversal is indicated by the RSI’s (Relative Strength Index) bullish divergence from the price.
Currently, the USD/JPY chart shows positive momentum, pointing to a rising market trend.
As an overlap support, the 138.79 level acts as a substantial support region. Previous evidence of this level’s significance as a price point where buyers have joined the market.
The significance of the second support level, which is at 137.71, is further increased by the fact that it is designated as an overlap support and coincides with the 50% Fibonacci retracement.
The first resistance at 140.89, on the other hand, can serve as a transient impediment to additional price increases, possibly leading to a stop or regression in the positive trend. This level has been designated as resistance to a downturn.
The second resistance, located at 142.26, is also designated as a swing high resistance, highlighting its historical significance as a price level where selling pressure has manifested itself.
Current DJ30 (Dow Jones Industrial Average) chart indicators point to a likely continuation of the negative trend with a weak bearish momentum and poor confidence.
Given this downward momentum, it is conceivable that the price will respond negatively and fall from the first resistance level to the first support level. As a multi-swing low support, the 32,799.47 level provides as a strong region of support.
In addition, the 78.60% Fibonacci projection and the 127.20% Fibonacci extension identify the second support level at 32,436.22 as a support level. Its significance as a potential support area is increased by these Fibonacci levels.
However, the first resistance level at 32,997.62 may serve as a temporary roadblock to further price increases. As an overlap resistance, this level is designated.
Also noted as an overlap resistance is the second resistance at 33,294.83.
WTI CRUDE OIL
The current positive momentum on the WTI (West Texas Intermediate) chart suggests that the upward trend may continue.
A positive continuation of the price towards the first resistance level is conceivable with this bullish momentum.
The fact that the first support level at 66.83 is multi-swing low support emphasises the importance of this location as a potential support area. Further highlighting its significance, the second support level, located at 64.21, is also designated as multi-swing low support.
On the upswing, an overlap barrier is represented by the first resistance level at 69.45. Further price increases may encounter a temporary obstacle at this level. Further supporting its status as a potential resistance level is the fact that the second resistance level, located at 71.94, is designated as a pullback resistance and lines up with the 61.80% Fibonacci retracement.
The silver chart is now trending downward.
The initial support level, known as overlap support, is located at 22.92.
The second support level, commonly known as overlap support, is located at 22.11.
On the resistance side, the 23.58 level is the initial resistance level and is considered a multi-swing high resistance. This level could operate as a short-term barrier to any price increases, possibly leading to a pause or pullback in the bearish trend.
The second resistance level, known as an overlap resistance, is located at 24.43 It has been demonstrated in the past that this level is significant as a price level when selling pressure has developed.
A swing high resistance level, or intermediate resistance level, is located at 26.00.
The current bearish momentum on the BTC/USD (Bitcoin/US Dollar) chart points to a likely continuation of the downward trend. The price is below a significant falling trend line, indicating the presence of bearish pressure, which is one of the contributing elements to this momentum.
Given this downward momentum, it is conceivable that the price will respond negatively and fall from the first resistance level to the first support level.
As an overlap support, the first support level at 26,562 serves as a major level. This level’s significance as a potential support zone is further increased by the fact that it coincides with the 78.60% Fibonacci retracement. The second support level, which is located at 25875 and is designated as multi-swing low support, is also significant.
On the other hand, an overlap resistance is represented by the first resistance level at 27,455. Further price increases may encounter a temporary obstacle at this level.
A stop or pullback in the bearish trend may occur since the second resistance level at 28,486 is a multi-swing high resistance.