After weaker CPI, markets rise – S&P up 0.7%.

The market’s anticipated release of the week’s major economic data last night indicated that the Fed will likely pause today. Equity markets once again reacted strongly when the US CPI data came in slightly below expectations for both the monthly and yearly comparative readings. The Dow lagged once more, rising only 0.43% on the day, while the S&P and Nasdaq both reached new yearly highs, rising 0.69% and 0.83%, respectively. Even so, there were notable outliers, with the USDJPY rising by almost 1% on the day and US treasury rates returning to a somewhat better bid at the day’s close as the fixed income market became more cautious ahead of the Fed statement later today.

The Day Ahead of the Fed

In the upcoming trading sessions, the Fed won’t be the only topic of discussion, but let’s be honest, it will be! There aren’t many events scheduled for the Asian markets today, so it’s likely that they will continue the day’s strong momentum from the US. However, don’t be shocked if you see some profit-taking in all sessions before the major risk event. On the European Open, attention will once more be on the UK. After stronger job numbers yesterday, there were some significant changes, and today, the most recent GDP data will be announced; an m/m reading of +0.2% is anticipated. Before the FOMC announcement, we still must wait for the latest PPI data from the US session, which is expected to show a 0.2% gain for the Core PPI number and a 0.1% decrease for the PPI.

What happened in the Asia Session?

Recent figures on the New Zealand economy point to an improved scenario. The current account deficit decreased from -10.07 billion NZD to -5.22 billion NZD, outperforming the predicted -6.95 billion NZD performance and perhaps strengthening the NZD. The Food Price Index increased by 0.3%, which is less than the previous 0.5% increase and suggests that inflationary pressure is still present. This could lead to central bank initiatives that could affect the NZD. As a result, these numbers show that the NZD’s future is uncertain.

What does it mean for EUROPE & US Session?

A weaker-than-expected PPI data set might cause the DXY to drop below 103.00 and move towards a 20-pip support zone between 102.80 and 102.60 if it is in line with the most recent lower CPI statistics. A bullish retest of recent intra-day highs of about 103.75 would instead occur with higher PPI statistics.

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

There are no noteworthy news stories impacting the Australian dollar today. Future data releases, such as those on employment change and the unemployment rate, will be the market’s focus. 18.6K more jobs are likely to be added, according to the Employment Change prediction, while the unemployment rate is expected to stay at 3.7%.

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 is on 4 July 2023

Next 24 Hours Bias

Mixed

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

While the Food Price Index m/m was earlier reported at 0.5%, it is predicted that the Current Account deficit will decrease from -9.46 billion NZD to -6.95 billion NZD. By indicating a healthier economy and more inflationary pressures, a smaller current account deficit and a higher FPI might strengthen the NZD and possibly lead to a tightening of monetary policy by the Reserve Bank of New Zealand.

Central Bank Notes:

• The Monetary Policy Committee has raised the OCR from 5.25% to 5.50%
• The Committee believes that interest rates at a restrictive level for some time will bring inflation back within the target range while supporting maximum sustainable employment
• The Committee voted by a majority of five to two to increase the OCR by 25 basis points to 5.50%
• Interest rates must remain restrictive to ensure inflation returns to the target range while supporting maximum sustainable employment
• The next meeting is on 12 July 2023

Next 24 Hours Bias

Mixed

The Canadian Dollar (CAD)

Key news events today

No major news events.

What can we expect from CAD today?

No noteworthy news events will have a substantial impact on the Canadian Dollar (CAD) today. As a result, the Thursday data releases are likely to be what determine the currency’s movement. The Housing Starts, which originally recorded a value of 262K but are now expected to be 239K, and the month-over-month Manufacturing Sales, which increased by 0.7% but are now expected to decline by -0.2%, are important data points to pay attention to.

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.
• The next meeting is on 12 July 2023

Next 24 Hours Bias

Mixed

Global Markets:

Asian Stock Markets: Nikkei is up 1.47%, Shanghai Composite is down 0.14%, Hang Seng is down 0.65%, ASX is up 0.32%

European equities, the DAX futures up 0.20%, CAC 40 up 0.33%, and FTSE up 0.12%.

US Stock Market: Dow Jones up 0.43%, S&P 500 is up at 0.69%, and Nasdaq 100 is up at 0.83%.  

Commodities: Gold at $1950.32 (+0.38%), Silver at $23.87 (+1.1%), Brent Oil at $74.98 (+0.93%), WTI Oil at $69.96 (+0.76%)

News & Data

• (GBP) GDP (YoY) (Apr) Actual 0.5%, Forecast 0.6%, Previous 0.3% at 11:30
• (GBP) GDP (MoM) (Apr) Actual 0.2%, Forecast 0.2%, Previous –0.3% at 11:30
• (GBP) Monthly GDP 3M/3M Change (Apr) Actual 0.1%, Forecast –0.1%, Previous 0.1% at 11:30
• (USD) PPI (MoM) (May) Forecast –0.1%, Previous 0.2% at 18:00
• (USD) Fed interest Rate Decision Forecast 5.25%, Previous 5.25% at 23:30
• (USD) FOMC Statement at 23:30

Technical Outlook

GBPUSD

The bullish momentum on the GBP/USD chart at the moment suggests that the market is currently moving upward.

The price could move upward towards the first resistance level at 1.2676 after a bullish bounce off the first support level at 1.2588.

As overlap supports, the first and second support levels at 1.2588 and 1.2543, respectively, are noted for their importance in generating prospective buyer interest.

On the upside, the overlap resistance at the initial resistance level of 1.2676 may serve as a barrier to price movements in the direction of upward.

A probable area of resistance is further supported by the fact that an intermediate resistance level at 1.2651 exhibits Fibonacci confluence with a -27% Fibonacci Expansion and the 78.60% Fibonacci Projection.

TRADE SUGGESTION: BUY AT 1.26107, TP AT 1.26532, SL AT 1.25831

EURUSD

The bullish momentum on the EUR/USD chart now suggests that the market is moving upward.

Price is above a significant ascending trend line suggesting the possibility of a more bullish movement and supporting the momentum.

With a possible upward advance towards the first resistance level at 1.0829, there is a chance of a positive bounce off the first support level at 1.0783.

As overlap supports, the first and second support levels at 1.0783 and 1.0734, respectively, are highlighted as potential levels where buyers could enter.

The first resistance level, at 1.0829, is an overlap resistance on the upside,

Its significance as a potential resistance level is further increased by the fact that the second resistance level at 1.0861 coincides with the 50% Fibonacci retracement.

TRADE SUGGESTION: BUY AT 1.07935, TP AT 1.08297, SL AT 1.07645

AUDUSD

The current bearish momentum on the AUD/USD chart suggests a lower market trend.

A possible bearish extension towards the first support level at 0.6721 exists. This level is designated as overlap support, while the 23.60% Fibonacci retracement provides additional support.

On the upward, an area of overlap resistance is represented by the first resistance level at 0.6811.

Furthermore, a pullback resistance is provided by the second resistance level at 0.6870.

The price is anticipated to likely continue moving downward toward the first support level given the general bearish momentum.

TRADE SUGGESTION: SELL AT 0.67858, TP 0.67636, SL AT 0.67926

USDJPY

The current bearish momentum on the USD/JPY chart suggests a lower market trend.

The price could fall toward the first support level at 138.79 as a result of a bearish reaction from the first resistance level at 140.23.

In addition to serving as overlap supports, the first support level at 138.79 and the second support level at 137.71 also coincide with the 50% Fibonacci retracement level.

The first resistance level, which is at 140.23, is a multi-swing high barrier on the upswing.

Its significance is further increased by the fact that the intermediate resistance level at 140.91 is acknowledged as a swing-high resistance.

The chart’s overall negative momentum indicates a tendency towards the downside, with significant levels of support and resistance offering possible corridors for price movement.

TRADE SUGGESTION: SELL AT 139.938, TP AT 139.659, SL AT 140.104

DOW JONES

The DJ30 chart currently exhibits bullish momentum, signifying a market-rising trend.

A brief decline towards the first support level at 34153.44, which coincides with a 23.60% Fibonacci retracement and is a region of overlap support, is conceivable. Price could rebound and climb from there into the first resistance level at 34368.09.

The second support level, which is around 33806.69 and coincides with a 50% Fibonacci retracement, also acts as an additional area of overlap support.

On the upward, the initial resistance level at 34368.09 is notable because it is a zone of overlap resistance and falls at the point where the 61.80% and 78.60% Fibonacci projections confluence.

Additionally, a swing-high resistance is noted for the second resistance level at 34632.28 in the chart.

TRADE SUGGESTION: BUY AT 34183.71, TP AT 34469.91, SL AT 33985.57

WTI CRUDE OIL

The current bearish momentum on the WTI chart indicates a declining market trend.

The price may respond negatively at the first resistance level of 70.60 and fall in the direction of the first support level of 67.22.

The first support level, which is known as a multi-swing low support, is at 67.22, and the second support level, which is also a multi-swing low support and coincides with the 127.20% Fibonacci Extension level, is at 64.78.

On the upside, the 50% Fibonacci Retracement level and the initial resistance level at 70.66 serve as retreat resistance.

It’s also important to keep an eye on the overlap resistance at the second resistance level, which is 73.99.

TRADE SUGGESTION: SELL AT 70.33, TP AT 68.85, SL AT 71.17

GOLD

The market is currently trending downward, as seen by the bearish momentum on the XAU/USD chart.

At the first resistance level of 1967.23, there is a chance for a negative reaction. This would be followed by a decline towards the first support level of 1937.23.

There are two support levels, the first at 1937.23 and the second at 1914.16, both of which are designated as overlap support zones.

The first resistance level on the upward, at 1966.23, is a multi-swing high resistance, while the second resistance level, at 1992.49, is an overlap resistance zone.

TRADE SUGGESTION: BUY AT 1949.76, TP AT 1953.06, SL AT 1947.28

BITCOIN

The market is currently moving downward, as shown by the bearish momentum on the BTC/USD chart.

The price could move back and forth between the first support level at 25607 and the first resistance level at 26105.

The first support level, which is designated as a multi-swing low support, is located at 25607, while the second support level, which is designated as a swing low support and coincides with a 61.80% Fibonacci projection, is located at 25252.

Additionally, there is overlap resistance at the first resistance level at 26105.

Similar to the first resistance level, the second resistance level at 26778 likewise denotes an overlap resistance area.

TRADE SUGGESTION: SELL AT 25963, TP AT 25802, SL AT 26044