Rate Halt Sparks Bullish Momentum: NASDAQ Hits 9-Month Highs.

Yesterday, US stock markets rose as Fed policymakers warned that the tightening cycle may take a break in June. The tech-heavy Nasdaq once again led the way to finish 1.28% higher than the previous closure, while the S&P gained 0.99% and the Dow added 0.47% to its final closes. The benchmark 10-year Treasury is currently trading at 3.6064%. The dollar reacted significantly, falling more than 0.5% on the day as major currencies rose from multi-month lows and US treasury rates continued to decline. Gold maintained its recent rebound from lows to trade back above $1,980/oz in the commodities sector, and WTI oil surged, returning to levels above $70 per barrel.

Upcoming Non-Farm Friday

Once again, it’s the first Friday of the month, which means that the day’s final trading session will include the release of Non-Farm Employment statistics. With the US debt crisis reaching a boiling point and daily swings in expectations for the Fed’s next rate decision, markets have already been active this week. Expect the focus to be on the important US jobs statistics released in the New York session because there isn’t much in the Asian or European sessions today to surprise the scores. The expectation is for a 193k print in the non-Farms and an increase in the unemployment rate to 3.5%.

What happened in the Asian Session?

The recent -1.5% decline in New Zealand’s Overseas Trade Index, which was in line with expectations, suggests that the NZD may fall as a result of decreased trade activity. However, Japan’s Monetary Base Decrease of -1.1%, which was better than the expected -1.4% and prior -1.7%, points to a probable short-term strengthening of the JPY because it signals that the monetary base has not contracted as much, which might potentially boost economic activity.

What does it mean for Europe & US Sessions? 

US labour data set that is worse than anticipated might push the EUR/USD to the round number barrier at 1.0800. In the alternative, the pair can reverse to the 1.0730 support before starting another attempt to reach the intraday highs of roughly 1.0770.

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

In contrast to the prior data, which showed a fall of 1.7%, the upcoming release of Japan’s Monetary Base y/y data is anticipated to show a decrease of 1.4%. The JPY may become more appealing to foreign investors as a result of tightening monetary policy and possibly higher interest rates. It might also indicate a slowdown in economic activity, which would lower demand for the currency.  

Central Bank Notes:

• The bank will continue with QQE with Yield Curve Control to achieve the price stability target of 2% 
• Japan’s economy is expected to recover gradually
• The bank will not hesitate to take additional easing measures if necessary
• Next meeting is on 15 June 2023 

Next 24 Hours Bias

Mixed

The Dollar Index (DXY)

Key news events today

Average Hourly Earnings m/m

Non-Farm Employment Change

Unemployment Rate

What can we expect from DXY today?

In contrast to the prior data, which showed a fall of 1.7%, the upcoming release of Japan’s Monetary Base y/y data is anticipated to show a decrease of 1.4%. The JPY may become more appealing to foreign investors as a result of tightening monetary policy and possibly higher interest rates. It might also indicate a slowdown in economic activity, which would lower demand for the currency.  

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

Mixed

Gold (XAU)

Key news events today

No major news events.

What can we expect from Gold today?

The US ADP Non-Farm Employment Change report will probably affect gold prices. A strong US labour market tends to bolster the dollar, which reduces demand for gold. As a result, there may be downward pressure on the price of gold.

Next 24 Hours Bias

Weak bearish

Global Markets:

Asian Stock Markets: Nikkei up 1.21%, Shanghai Composite up 0.79%, Hang Seng up 4.02%, ASX up 0.48%

European equities, the DAX futures up 0.79%, CAC 40 up 0.95%, FTSE up 0.67%.

US Stock Market: Dow jones up 0.47%, S&P 500 up at 0.99%, Nasdaq 100 up at 1.28%.   

Commodities: Gold at $1976.55 (-0.01%), Silver at $23.89 (+0.14%), Brent Oil at $74.64 (+0.48%), WTI Oil at $70.42 (+0.57%)

News & Data

• (USD) Average Hourly Earnings (MoM) (May) Forecast 0.4%, Previous 0.5% at 18:00
• (USD) Unemployment Rate (May) Forecast 3.5%, Previous 3.4% at 18:00
• (GBP) Manufacturing PMI (May) Forecast 46.9, Previous 47.8 at 14:00
• (USD) Nonfarm Payrolls (May) Forecast 180K, Previous 253K at 18:00
• (USD) ADP Nonfarm Employment Change (May) Forecast 170K, Previous 296K at 18:00

Technical Outlook

GBPUSD

GBP/USD is currently trading near the 1.2500 level. This level is a key support level, and a break below this level could signal a reversal of the current trend.

The next resistance level is at 1.2600. A break above this level could lead to further gains for GBP/USD.

The RSI (Relative Strength Index) is above 50, which indicates that the bulls are in control.

The MACD (Moving Average Convergence Divergence) is positive and is crossing above its signal line, which is a bullish signal.

The moving averages are all sloping upwards, which is a bullish trend.

GBP/USD is currently in a bullish trend. The technical indicators are signalling a bullish trend, and GBP/USD is trading near key support levels.

However, there are some key factors that could influence GBP/USD in the near future, such as UK economic data, US economic data, monetary policy decisions from the Bank of England and the Federal Reserve, and geopolitical events.

EURUSD

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.

AUDUSD

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. 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 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.

USDJPY

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.

S&P 500

The RSI (Relative Strength Index) is above 50, which indicates that the bulls are in control.

The MACD (Moving Average Convergence Divergence) is positive and is crossing above its signal line, which is a bullish signal.

The moving averages are all sloping upwards, which is a bullish trend.

The S&P 500 index is currently trading near the 4,100 level. This level is a key support level, and a break below this level could signal a reversal of the current trend

The next resistance level is at 4,200. A break above this level could lead to further gains for the index.

The S&P 500 index is currently in a bullish trend. The technical indicators are signalling a bullish trend, and the index is trading near key support levels. However, there are some key factors that could influence the index soon, such as economic data, corporate earnings reports, and monetary policy decisions from the Federal Reserve.

WTI CRUDE OIL

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 a 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 a 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.

GOLD

Gold is currently trading near the $1,800 level. This level is a key support level, and a break below this level could signal a reversal of the current trend.

The next resistance level is at $1,900. A break above this level could lead to further gains for gold.

The RSI (Relative Strength Index) is below 50, which indicates that the bears are in control.

The MACD (Moving Average Convergence Divergence) is negative and is crossing below its signal line, which is a bearish signal.

The moving averages are all sloping downwards, which is a bearish trend.

Gold is currently in a bearish trend. The technical indicators are signalling a bearish trend, and gold is trading near key support levels. However, there are some key factors that could influence gold in the near future, such as economic data, central bank monetary policy decisions, and geopolitical events.

LITECOIN

Litecoin is currently trading near the $100 level. This level is a key support level, and a break below this level could signal a reversal of the current trend.

The next resistance level is at $120. A break above this level could lead to further gains for Litecoin.

The RSI (Relative Strength Index) is above 50, which indicates that the bulls are in control.

The MACD (Moving Average Convergence Divergence) is positive and is crossing above its signal line, which is a bullish signal.

The moving averages are all sloping upwards, which is a bullish trend.

Litecoin is currently in a bullish trend. The technical indicators are signalling a bullish trend, and Litecoin is trading near key support levels. However, there are some key factors that could influence Litecoin in the near future, such as adoption by merchants and businesses, regulatory changes, technological developments, and overall market sentiment.