Markets Rise Following Jobs Data – Nasdaq Up 1%

US equities surged sharply yesterday after the market anticipated a Fed pause next week after monthly jobs data revealed a slowdown in the economy. The number of weekly jobless claims increased by 25k to 261k. The S&P ended up 0.62%, the Nasdaq up 1.02%, and the Dow up 0.5%. Since the S&P has increased by almost 20% from its October low, some market participants are already referring to this as a new bull market. US Treasury yields decreased, with the benchmark 10-year yield falling 6.8 basis points and the 2-year yield falling 2.9 basis points. With the exception of the Canadian dollar, the dollar suffered after the Bank of Canada unexpectedly raised interest rates.

Fed Will Be in Focus Next Week

Due to the FOMC’s attention on the schedules of the majority of players, investors anticipate a hectic week. The market currently expects a 72% chance of a Fed pause next Wednesday, down from an 85% chance one month ago. US stock markets are rising, but if the Fed were to press the button once more, markets might experience a dramatic drop. On Tuesday, the US CPI statistics are expected to show a year-over-year decline to 4.2%, but if this estimate disappoints, the dollar may rise before the rate announcement.

What happened in the US Session?

According to the most current US Unemployment Claims report, 261K claims were actually filed, above both the predicted total of 236K and the previous figures of 233K. The rise in unemployment claims weakened the USD because it might cause the Fed to change its monetary policy in a dovish direction.

What does it mean for Asian Session?

The USD/JPY pair is projected to go towards 138.50 after breaking through the lower boundary of a prior range at 139.20. The expectation of a declining trend would be supported by good Japanese M2 Money Stock y/y data.

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

Italian Industrial Production m/m statistics will soon be released, and growth of 0.2% is predicted. If the predicted data turns out to be accurate, it might increase trust in the Eurozone’s economy. Nevertheless, the preceding statistics showed a fall of -0.6%, which would dim the positive outlook.

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

Weak bullish

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

According to the projected numbers, employment is likely to grow by 21.2K jobs, and the unemployment rate would drop from 5.1% to 5.0%. If the actual data comes in at or above these projections, it will probably have a favourable effect on the CAD, indicating a strong labour market and a stronger economy. If the data is inadequate, it could weaken the CAD and cause worry about the health of the Canadian economy.

Central Bank Notes:

• The Bank of Canada increased its target for the overnight rate to 4.75%.
• Canada’s economy was more substantial than expected in the first quarter of 2023, with GDP growth of 3.1%.
• The Bank expects CPI inflation to ease to around 3% in the summer, but concerns have increased about inflation staying above the 2% target.
• Next meeting on 12 July 2023

Next 24 Hours Bias

Weak bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

The JPY could be positively or neutrally affected if Japan’s M2 Money Stock y/y data surpasses or matches the expectation of 2.7%. The currency could suffer if the figure is lower than the previous reading of 2.5%. 

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
• The next meeting is on 15 June 2023

Next 24 Hours Bias

Mixed

Global Markets:

Asian Stock Markets: Nikkei is up 1.97%, Shanghai Composite is up 0.55%, Hang Seng is up 0.51%, ASX is up 0.32%

European equities, the DAX futures down 0.08%, CAC 40 down 0.02%, and FTSE down 0.04%.

US Stock Market: Dow Jones is up 0.50%, S&P 500 is up 0.62%, and Nasdaq 100 is up at 1.02%.  

Commodities: Gold at $1961.54 (-0.21%), Silver at $24.38 (+0.54%), Brent Oil at $75.86 (-0.13%), WTI Oil at $71.17 (-0.15%)

News & Data

• (CNY) CPI (YoY) (May) Actual 0.2%, Forecast 0.3%, Previous 0.1% at 07:00
• (CAD) Unemployment Rate (May) Forecast 5.1%, Previous 5.0% at 18:00
• (CAD) Employment Change (May) Forecast 23.2K, Previous 41.4K at 18:00
• (RUB) Interest Rate Decision (May) Forecast 7.50%, Previous 7.50% at 16:00
• (EUR) ECB`s Enria Speaks at 14:00

TECHNICAL OUTLOOK

GBPUSD

The bearish momentum on the GBP/USD chart at the moment suggests a price trend with a downward bias.

Despite the overall bearish momentum, it is important to keep in mind that the price is above a significant ascending trend line, suggesting the possibility of future bullish momentum.

Given that it falls at the same time as a pullback support level and the 50% Fibonacci retracement, the initial support level at 1.2467 is noteworthy.

The second support level at 1.2392 can be viewed as an extra region of support and acts as an overlap support level if the price keeps falling.

The initial resistance level at 1.2575 serves as a pullback resistance on the upward, which might lead to selling pressure on the price.

The potential for a price reversal or a stall in upward advance is further reinforced by the fact that the second resistance level, located at 1.2651, also functions as a pullback resistance.

EURUSD

The current bullish momentum on the EUR/USD chart suggests a general positive bias in price movement.

The initial resistance level around 1.0822, which is a strong area of overlap resistance, may see a positive continuation.

The first support level at 1.0739 serves as a crucial area of support in the event of a retreat and is referred to be an overlap support level.

Similar to the first support level, the second support level at 1.0671 can be seen as an additional source of assistance and serves as an overlap support level.

The second resistance level at 1.0901, which stands in as a pullback resistance level, might serve as a point of resistance if the price were to maintain its upward momentum.

A further intermediate support level is located around 1.0759 and may offer momentary assistance during mild price retracements.

AUDUSD

The current bearish momentum on the AUD/USD chart suggests that price movement will be biased downward.

Overlap support exists at the initial support level of 0.6639.

Its potential as a dependable region of support is further highlighted by the fact that the second support level, at 0.6576, is also overlap support.

The initial resistance level on the upswing is at 0.6708 and is a multi-swing high barrier.

Furthermore, a retreat resistance exists at the second resistance level at 0.6744, which also happens to be the level of the 78.60% Fibonacci retracement.

Additionally, the relative strength index (RSI) against price bearish divergence indicates a potential reversal in the short term. This increases the chance that there will be a momentum change.

USDJPY

The current bullish momentum on the USD/JPY chart suggests a positive bias in price movement.

A bullish extension towards the first resistance level at 140.23 is possible.

As an overlap support level, the first support level at 138.79 is regarded as important.

Further enhancing its potential as a dependable region of support is the fact that the second support level, at 137.71, is also another overlap support level.

The initial resistance level on the upward, at 140.23, is a multi-swing high resistance, indicating that it has historically served as a strong roadblock to price movement upward.

Additionally, the second resistance level, which is located at 140.89, is a swing-high resistance, demonstrating its past utility in reversing price increases.

S&P 500

There is now no discernible trend direction on the US500 chart, which is enjoying neutral momentum.

Between the first support level at 4226.9 and the first resistance level at 4298.8, the price may change.

Its historical relevance as a level where price has previously found support and the fact that the initial support level at 4243.24 is an overlap support point to its importance.

The second support level, which is located at 4189.68, is a similar overlap support level.

To the upside, the first resistance level, which is located at 4293.99, is a multi-swing high resistance, indicating its significance in preventing price moves.

The second resistance level, which is located at 4339.10, is also a swing-high resistance, indicating that it may obstruct further upward progress.

Between these levels, there is a multi-swing low support at 4260.2, which corresponds to the 61.80% Fibonacci retracement level and serves as an intermediate support.

WTI CRUDE OIL

The WTI (West Texas Intermediate) chart is currently showing bullish momentum, which denotes a rising market trend.

Since the price is above a significant ascending trend line, more bullish momentum may be anticipated.

The price might make a positive reversal off the first support level at 70.42 and move up to the first resistance level.

The first support level is significant as a potential region where buyers may supply support because it is indicated as an overlap support and lines up with the 50% Fibonacci retracement level.

Additionally, the second support level at 67.38 is acknowledged as multi-swing low support, highlighting the significance of this level as a potential entry point for buyers.

On the upswing, an overlap resistance is discovered at the initial resistance level of 74.42.

The significance of the second resistance level, which is located at 76.90 and acts as an overlap resistance as well as being at the 61.80% Fibonacci retracement level, is further increased.

GOLD

A bearish momentum is currently visible on the XAU/USD chart, pointing to a price decline.

The fact that the price is below a significant falling trend line is one of the causes causing this momentum. This indicates that the bearish momentum is probably going to persist.

A possible bearish extension to the first support level at 1930.37 exists.

The fact that the second support level at 1910.91 is also an overlap support level adds to its significance as a possible area where the price may find support.

To the upside, the initial resistance level is a multi-swing high resistance level and is located at 1965.41. This resistance level is significant since the price has historically encountered resistance there.

Furthermore, the overlap resistance level at 1983.58, the second resistance level, exists. The price may encounter resistance at this level if it moves upward.

BITCOIN

There is presently no discernible trend direction on the BTC/USD chart, which is moving in a neutral way.

Between the first support level at 26118 and the first resistance level at 27457, the price may change.

Its historical relevance as a level where price has previously found support and the fact that the initial support level at 26103 is an overlap support point to its importance.

The second support level, which is located at 25516, is multi-swing low support.

The initial resistance level at 27437 is an overlapping barrier on the upside, indicating its significance in preventing price increases.

The fact that the second resistance level at 28131 is a multi-swing high resistance level further suggests that it has the ability to obstruct further upward progress.

In addition, a symmetrical triangle is shown on the chart, which denotes a time of consolidation before the price is compelled to break out or crash. A breakthrough in favour of the bulls would require a break above the pattern’s upper trend line, while a breakout in favour of the bears would require a break below the pattern’s lower trend line.