Fundamental Analysis Report With Charting Trends – 07 June 2023
07 Jun 2023
Markets Take a Diversion Before Data
The bulk of the main stock indices had reasonably calm days yesterday, which gave the global financial markets a brief respite. In the US, the major indices all closed slightly higher on the day, with the Dow up 0.03%, the S&P up 0.24%, and the Nasdaq up 0.36%. The RBA’s unexpected rate increase for the second time in a row and news from the US that the SEC is still targeting cryptocurrency companies, this time with Coinbase facing charges, were the day’s major highlights. With the exception of the Australian dollar following the RBA decision, the dollar rose against the majority of the major currencies on the day.
Yet Another Central Bank, Another Day
Yesterday was a pretty calm day for the markets, and as the trading day goes on, investors will be turning to the event calendar for some new vigour. With the announcement of the most recent GDP figures this morning, the Asian market will once more turn its attention to Australia first. A 0.3% increase in quarter-over-quarter statistics is anticipated. Investors will be watching today’s release of Chinese trade data in hopes of some encouraging results. Again, there aren’t many data releases during the European session, but the Bank of Canada’s most recent rate announcement will shift attention back to Canada at the start of the New York session.
What happened in the Asian Session?
Australia’s GDP growth for the quarter was 0.2% as opposed to the predicted 0.3% and the prior 0.6%, which is less than anticipated. This slower economic expansion could harm the AUD. Chinese trade balance data are mixed, with a lower USD-denominated trade balance of 65.8 billion dollars (compared to a forecast of 95.2 billion dollars and previous 90.2 billion dollars) and a higher CNY-denominated trade balance of 452 billion dollars (compared to a projection of 676 billion dollars and previous 618 billion dollars), which may indicate AUD volatility.
What does it mean for Europe & US Sessions?
Prior to the BoC’s publication of its interest rate and rate statement, the USD/CAD pair oscillates around 1.3400. The Loonie would test 1.3460 before reaching the round figure barrier at 1.3500 if the Canadian central bank came up with a surprise that gave traders the impression that it was being hawkish. In the case that perceived dovishness occurs, the pair may instead fall to 1.3420.
The Australian Dollar (AUD)
Key news events today
RBA Gov Lowe Speaks
What can we expect from AUD today?
Based on their perspectives on monetary policy, RBA Governor Lowe and Deputy Governor Bullock’s statements could have an impact on the Australian Dollar. The Q/Q GDP report, which is expected to increase by 0.3% from the previous 0.5%, is also quite important. While dovish comments or a slower-than-expected GDP may depress the AUD, the RBA’s hawkish tone and GDP growth above expectations may support it.
Central Bank Notes:
- The RBA increased the cash rate target by 25 basis points to 4.10%.
- Inflation in Australia has passed its peak but remains high at 7% and needs to return to the target range.
- Further tightening of monetary policy may be necessary.
- Next meeting on 4 July 2023
Next 24 Hours Bias
The Canadian Dollar (CAD)
Key news events today
BOC Rate Statement
What can we expect from CAD today?
The Labour Productivity is scheduled to be released soon, with an estimated increase to 0.1% from -0.5%, and the Trade Balance is anticipated to decline to 0.5B from 1.0B. The overnight rate at the Bank of Canada is anticipated to stay constant at 4.50%. While an increase in productivity would help the CAD, the predicted decline in the trade balance and the perhaps unclear BOC Rate Statement might put downward pressure on the currency.
Central Bank Notes:
- Bank of Canada holds its target for the overnight rate at 4.5%
- Labour markets remain tight with persistent price pressures, especially for services
- Economic growth in Q1 looks to be stronger than projected; to be weak through the remainder of this year before strengthening gradually next year
- Prepared to increase the policy rate further to return inflation to the 2% target.
- Next meeting on 7 June 2023
Next 24 Hours Bias
Key news events today
No major news events.
What can we expect from Oil today?
Crude oil stockpiles are predicted to climb by 1.2 million barrels in the US Energy Information Administration (EIA) report, which is less than the 4.5 million barrel increase seen last week. This may indicate increased demand or decreased supply, which could raise oil prices.
Next 24 Hours Bias
Asian Stock Markets: Nikkei down 1.82%, Shanghai Composite up 0.08%, Hang Seng up 0.66%, ASX down 0.16%
European equities, the DAX futures down 0.33%, CAC 40 down 0.33%, FTSE down 0.18%.
US Stock Market: Dow jones up 0.03%, S&P 500 up at 0.24%, Nasdaq 100 up at 0.36%.
Commodities: Gold at $1955.89 (-0.38%), Silver at $23.41 (-0.71%), Brent Oil at $75.61 (-0.89%), WTI Oil at $71.08 (-0.92%)
News & Data
- (AUD) GDP (QoQ) (Q1) Actual 0.2%, Forecast 0.3%, Previous 0.5% at 07:00
- (CAD) BoC Interest Rate Decision Forecast 4.50%, Previous 4.50% at 19:30
- (USD) Crude Oil Inventories Forecast 1.022M, Previous 4.488M at 20:00
- (CAD) Labor Productivity (QoQ) (Q1) Forecast 0.2%, Previous –0.5% at 18:00
- (EUR) ECB`s Panetta Speaks at 14:40
The price is currently above a significant ascending trend line on the GBP/USD chart, indicating the possibility of additional upward movement.
This momentum suggests that the price may continue to rise in the direction of the first resistance level at 1.2467. The 50% Fibonacci retracement serves as support for this level, which is designated as an overlap resistance level.
While the second support level at 1.2305 is a swing low support, the first support level at 1.2376 is known as an overlap support.
Furthermore, the second resistance level at 1.2536 is a high resistance with several swings.
The price has broken above a declining resistance line on the EUR/USD chart, signalling the possibility of a bullish rise.
This momentum suggests that the price may continue to rise in the direction of the first resistance level at 1.0759. This level is classified as a high resistance with several swings.
While the second support level at 1.0535 is a multi-swing low support, the first support level at 1.0638 is known as an overlap support.
Its significance is further increased by the fact that the second resistance level, at 1.0822, is an overlap resistance and coincides with the 38.20% Fibonacci retracement.
The current bullish momentum on the AUD/USD chart suggests a potential rising trend in the market.
The price is above a significant ascending trend line, indicating the potential for additional positive swings, which adds to the momentum.
A bullish continuation towards the first resistance level is possible given this bullish environment.
The first support level at 0.6639 and the second support level at 0.6576 are both considered overlap supports, which increases their relevance as prospective entry points for buyers into the market.
The first resistance level on the upside is identified as a multi-swing high resistance at 0.6708, while the second resistance level is identified as a pullback resistance at 0.6744, which corresponds to the 78.60% Fibonacci retracement level. Furthermore, the intermediate barrier at 0.6684 is a multi-swing high resistance and lines up with the projection and 61.80% retracement levels of the Fibonacci sequence.
The price has broken below an ascending support line on the USD/JPY chart, displaying bearish momentum and raising the possibility of additional decline.
The price may continue its downward trend in the direction of the first support level at 138.79 with this bearish momentum. It is known as an overlap support at this level. The second support level, which is located at 137.71, also coincides with the 50% Fibonacci retracement, adding to its relevance as a potential support zone.
On the other hand, the first and second resistance levels at 140.23 and 140.89, respectively, are known as swing high and multi-swing high resistances.
A probable upward trend in the market is indicated by the US500 (S&P 500) chart’s current weak bullish momentum and low confidence, albeit there is some ambiguity.
There is a chance of a bullish continuation into the first barrier level with this sluggish bullish momentum.
Pullback support is designated as the first support at 4,227.24, and overlap support is designated as the second support at 4,164.81
On the upside, the first resistance is a swing high resistance at 4,297.47, and the second resistance is likewise a swing high resistance at 4,326.08
Additionally, overlap support and the 23.60% Fibonacci retracement level are located at the intermediate support level at 4,265.8.
WTI CRUDE OIL
An increasing trend in the market is currently visible on the WTI (West Texas Intermediate) chart, which displays bullish momentum.
There is a chance that the price may continue to rise in this bullish environment towards the first barrier level.
The 50% Fibonacci retracement level and the overlap support level make the initial support level at 70.58 particularly significant as a potential area where buyers might offer support.
Further highlighting its significance as a potential price level where buyers may enter, the second support level at 67.35 is acknowledged as a multi-swing low support.
On the upside, an overlap resistance at the initial resistance level of 74.22 is seen, and it may serve as a barrier to further price increases.
Another significant key to watch is the second resistance level at 70.65, which is identified as a swing high barrier and coincides with the 61.80% Fibonacci retracement level.
The current strong momentum on the XAU/USD (Gold/US Dollar) chart suggests an uptrend in the market.
The initial support level, which is designated as an overlap support and acts as a prospective region where buyers might offer support, is located at 1953.73.
Its significance as a prospective price level where buyers may enter is further strengthened by the fact that the second support level at 1930.37 is acknowledged as a multi-swing low support.
On the upside, the 1983.58 initial resistance level is recognised as an overlap resistance and may serve as a barrier to additional price increases.
Furthermore, a pullback resistance is detected at the second resistance level at 1999.15, signalling possible selling pressure at this level.
The relevance of an intermediate resistance level at 1967.23, which coincides with the 61.80% Fibonacci retracement level and is also defined as a multi-swing high resistance, is increased.
The LTC/USD chart is now trending downward. This suggests that sellers are in control of the market and that a price increase is less likely than a price decrease.
87.97 is the initial support level. This level is an overlap support, which suggests that buyers have previously expressed interest there.
82.69 is the second support level. This overlap support represents another price level where buyers have previously entered the market and is another overlap support.
94.63 is the initial resistance level. This level is an overlap resistance, which means that historically, sellers have entered the market at this level. Its potential as a resistance level is further increased by the fact that it coincides with the 23.60% Fibonacci Retracement level.
At 99.73, there is a second resistance level. Another overlap resistance is there here, and since it is also located around the 38.20% Fibonacci Retracement level, sellers may decide to intervene at this level.