FUNDAMENTAL REPORT FORECASTÂ
MARKET UPDATE:
Markets Mixed Ahead of Additional Debt Discussions
As they awaited any new information regarding the debt ceiling crisis, US markets yesterday had a mixed day. The Nasdaq completed the day up 0.5%, the S&P up 0.02%, and the Dow closed 0.42%. After the market closed, Speaker of the House Kevin McCarthy of the Republicans stated that negotiations will go forward and that they are “on the right path,” but he offered few new specifics for investors. As Fed policymakers once again moved more to the hawkish side of recent debates, the dollar continued to trade near recent highs and short-term government rates maintained their bid tone.
The week’s first data to reach markets
The US markets yesterday failed to excite traders as they sent conflicting signals ahead of what could be a highly hectic rest of the trading week. Today, when we receive our first wave of data, we will be inundated with several PMI statistics for both manufacturing and services. During the first few hours of trading, data from France, Germany, the United Kingdom, and the Eurozone are released for the European market. Following the opening of trade in New York, the US Flash PMI numbers are released. However, as we progress through the later sessions, anticipate the US debt discussions to rule public opinion.
What happened in the Asian Session?
Australia’s Manufacturing PMI registered at 48.0, which was in line with expectations. However, the Services PMI missed forecasts, dropping from 53.7 to 51.8 from the prior reading of 53.7. The Manufacturing PMI for the JPY reached 50.8, above expectations. Additionally, the Core CPI y/y for the Bank of Japan increased to 3.0%, exceeding both the 2.8% expected value and the 2.9% recorded previously. These findings point to the Australian dollar’s weakness and the Japanese yen’s gain.
What does it mean for Europe & US Sessions?
The Euro and the Cable may be range-bound prior to the release of the corresponding manufacturing and services data if the PMIs from Europe, the UK, and the US are significantly worse than anticipated. The uncertainty surrounding the US debt ceiling negotiations will probably prevent any decrease in the EUR or GBP caused by data.
The Dollar Index (DXY)
Key news events today
Flash Manufacturing PMI
Flash Services PMI
What can we expect from DXY today?
Both the US Flash Services PMI and the US Flash Manufacturing PMI are anticipated to climb from 52.6 to 53.6, respectively. These developments point to a potential benefit for the USD, rising investor confidence, and a slight strengthening of the currency.
Central Bank Notes:
- The committee raised the target range for the federal funds rate to 5 to 5-1/4 percent. 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
- The next meeting is on 14 June 2023
Next 24 Hours Bias
Weak bullish
The Australian Dollar (AUD)
Key news events today
No major news events.
What can we expect from AUD today?
The Australian dollar may decrease if the Australian Flash Manufacturing PMI fell below 48.0, which would indicate a downturn in manufacturing. An improved Flash Services PMI (last 53.7) shows service expansion and could support the AUD.
Central Bank Notes:
- The Official Cash Rate was increased by 25 basis points to 3.85%.
- Inflation in Australia has passed its peak but remains high at 7%, and it may take some time to return to the target range.
- GDP is forecast to increase by 1.25% this year and around 2% over the year to mid-2025.
- Next meeting on 6 June 2023
Next 24 Hours Bias
Mixed
The Euro (EUR)
Key news events today
French Flash Manufacturing PMI
French Flash Services PMI
German Flash Manufacturing PMI
German Flash Services PMI
What can we expect from EUR today?
French Flash Manufacturing PMI (46.1 forecasts, 45.6 previous), French Flash Services PMI (54.0 forecasts, 54.6 previous), German Flash Manufacturing PMI (44.9 forecasts, 44.5 previous), and German Flash Services PMI (55.0 forecasts, 56.0 previous) are among the upcoming data releases for the Eurozone. Positive PMI reading results could support the Euro, while unfavorable ones might cause higher volatility or a minor decline in the Euro.
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 labor market could lead to higher growth than anticipated.
- Next meeting on 15 June 2023
Next 24 Hours Bias
Mixed
Global Markets:
Asian Stock Markets: Nikkei down 0.42%, Shanghai Composite is down 1.19%, Hang Seng is down 0.96%, ASX is down 0.47%
European equities, the DAX futures down 0.32%, CAC 40 down 0.18%, FTSE up 0.18%.
US Stock Market: Dow Jones is down 0.42%, S&P 500 up at 0.02%, and Nasdaq 100 up at 0.50%.  Â
Commodities: Gold at $1962.55 (-0.30%), Silver at $23.46 (-0.74%), Brent Oil at $76.03 (+0.04%), WTI Oil at $72.12 (+0.17
%)
News & Data
- (GBP) Composite PMI Forecast 54.6, Previous 54.9 at 14:00
- (GBP) Manufacturing PMI Forecast 48.0, Previous 47.8 at 14:00
- (USD) Building Permits Forecast 1.416M, Previous 1.430M at 17:00
- (USD) Service PMI (May) Forecast 52.6, Previous 53.6 at 19:15
- (USD) New Home Sales (Apr) Forecast 663K, Previous 683K at 19:30
Technical Outlook
GBPUSD
The GBP/USD pair is currently in a bearish trend, indicating the possibility of more price declines approaching the main support level.
The first level of support, which is at 1.2392, has historically served as a multi-swing low support, highlighting its significance as a hub of market demand.
Like multi-swing low support, a secondary support level at 1.2340 also functions as resistance.
On the other hand, if the price turns upward, the first resistance level is at 1.2468. This level has served as a multi-swing high resistance in the past, indicating that the price has had trouble breaking above it on several occasions.
As a swing high resistance, a second resistance level at 1.2503 can obstruct upward price movements.
EURUSD
The price is moving in a bearish descending channel as the EUR/USD pair demonstrates a bearish trend at the moment.
The initial level of support is located at 1.0792 and functions as an overlap support, meaning that it has previously been both support and resistance.
At 1.0746, the second support level additionally serves as an overlap support.
The initial resistance level, which would be reached if the price changed course, is located at 103.63. This level has historically served as a multi-swing high resistance, indicating that the price has frequently found it difficult to break above it.
As an overlap resistance, the second resistance level is located at 104.10. This level coincides with the 61.80% Fibonacci retracement level, suggesting that it might serve as a big roadblock to price increases.
AUDUSD
The current trend for the AUD/USD pair is neutral, which means that it may swing between the first resistance and first support levels.
The initial support level, which serves as overlap support, is at 0.6639.
At 0.6606 is the second support level. Considered a swing low support level.
If the price were to move upward, however, the first resistance level would be at 0.6668. This level has previously served as a multi-swing high resistance, suggesting that breaking over it may be difficult for the pair.
The second resistance level is located at 0.6707 and acts as a multi-swing high barrier, indicating that the price has historically had trouble breaking through this level.
USDJPY
Given that the USD/JPY pair is now in a bullish trend, it is possible that the pair will continue to rise the direction of the first resistance level.
The first support level is located at 137.75 and serves as an overlap support. Historically, this level has served as both resistance and support.
At 136.25, a second support level can be located. Additionally serving as an overlap support, this level strengthens its potential to serve as a significant floor level for the pair.
If the bullish trend persists, the first level of resistance is around 139.40 on the upside. Since it has historically been a position at which upward price momentum has stopped and reversed, this level works as swing high resistance.
At 140.89 is where the second resistance level is situated. This level acts as a barrier to a pullback.
DOW JONES
There is currently only a little amount of positive momentum and confidence shown on the DJ30 chart, which suggests limited upward movement.
There is a chance of a positive continuation in the near term approaching the first resistance level at 33463.75.
As an overlap support, the first support level at 33244.17 is shown. If the price were to fall, this level might serve as a price floor.
On the resistance side, the overlap resistance at the initial resistance level of 33463.75 could act as a roadblock if the price tries to climb.
The importance of this resistance level in potentially limiting the price’s upward advance is increased by the presence of a second resistance level at 33741.88, known as an overlap resistance.
WTI CRUDE OIL
The WIT pair is presently showing a bullish trend, indicating that the price may proceed upward in the direction of the first resistance level.
The first support level is established at 70.99 and acts as an overlap support. Because this price level has previously served as both resistance and support, it may offer the price a lot of support.
The second level of support is at 69.15, which is also known as an overlap level of support, suggesting that it might act as a strong barrier to a price decrease.
On the other hand, if the price moves higher, the first resistance level is at 73.79. This level serves as an overlap barrier, indicating that it might be difficult for the price to overcome.
Also known as overlap resistance, the second resistance level is situated at 76.69 and could block additional price gains.
SILVER
The price is above a significant rising trend line on the silver chart, indicating the possibility of continued downward growth.
There is a chance of a bearish continuation in line with this bearish momentum towards the first support level at 23.22.
There are two levels of support for this perspective upward advance. A 38.20% Fibonacci retracement and the fact that the initial support level at 23.222 is designated as an overlap support point to its importance as a potential price floor.
The second level of support, which is at 22.26, is acknowledged as an overlap support, adding to the general bullish attitude.
The initial resistance level, which is at 24.00, is a multi-swing high resistance on the resistance side.
These levels of support and resistance point to possible regions where the price, as it maintains its bullish momentum, can find support or run into opposition.
ETHEREUM
The ETH/USD pair is presently displaying a bullish trend, suggesting that the price may increase further, possibly piercing the first barrier level and moving toward the second resistance level.
The initial support level, which is categorized as overlap support, is located at 1787.51.
The second support level, which acts as a swing low support and is located at 1736.66, is where the price has previously recovered, suggesting it may be able to halt further price decreases.
If the price rises, however, the first resistance level is at 1828.50. Given that it is an overlap resistance level, it may serve as a formidable obstacle to price rises.
The second resistance level is at 1876.00 and is similarly categorized as overlap resistance. Its ability to obstruct further price ascent is shown by its alignment with the 50% Fibonacci retracement level.
