MARKET UPDATE:

Markets Boosted by Deal Optimism for Debt

Yesterday’s bullish day for the world’s markets was fuelled by hope for a Washington, DC, debt ceiling agreement. Numerous important financial markets were closed due to bank holidays, but futures markets managed to edge up. The S&P futures were up 0.3%, and the Nasdaq futures moved up by 0.4%. These advances came on top of big gains on Friday when Wall Street was last open. As markets begin to further price in another rate hike from the Fed, Treasury futures have likewise adopted a more aggressive tone. The dollar experienced a rather stagnant session as FX traders took advantage of the holidays to relax, but things might pick up today.

After a long weekend, markets are expected to move.

Today’s opening of the financial markets follows a long weekend for several major cities. Although a significant portion of the European and North American markets were closed yesterday, the Asian market was open, and investors anticipate that today’s markets will be more liquid and volatile than usual. The agreement on the debt ceiling was undoubtedly the main news over the weekend coming out of the US, and further reports yesterday have been encouraging, so anticipate that attitude to lead as markets reopen. In the Asian and European sessions, there aren’t many data releases today, but the CB Consumer Confidence data will start the tier 1 figures in the New York session, with the market anticipating a 99.1 print.

What happened in the US Session?

There was no news announced throughout the session, and as anticipated, DXY consolidated within a 50-pip band between 103.80 and 104.30.

What does it mean for Asian Session?

The NZD and JPY may consolidate more against the USD due to the session’s second-tier data releases. Due to the anticipated increase in Building Approvals m/m, the Australian dollar may end up leading the session in terms of gains. Bulls may decide to try the 0.6560 area again.

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

It is anticipated that the Spanish Flash CPI y/y data would drop from 4.1% to 3.6% in the upcoming release. As the inflation rate in the Eurozone begins to ease, this may have an impact on the ECB’s previously hawkish tone towards interest rate increases. An ECB rate rise path review may result from a lower-than-anticipated Spanish CPI figure, which might delay or alter anticipated interest rate increases.

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.
• The next meeting is on 15 June 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?

The Canadian Current Account data, which will be released soon and shows a drop from -10.6 billion to -9.9 billion, indicating a deepening deficit and might force the CAD lower. It can be interpreted as an indication of deteriorating economic fundamentals, which could result in the CAD losing value relative to other important currencies.

Central Bank Notes:

• Bank of Canada holds its target for the overnight rate at 4.5%
• Labor 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.
• The next meeting is on 7 June 2023

Next 24 Hours Bias

Weak bearish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

It is anticipated that the Unemployment Rate in Japan would drop from 2.8% to 2.7% in the upcoming data release. A stronger economy, which is reflected in a lower unemployment rate, may result in higher JPY demand. Due to the fact that investors see low unemployment rates as a sign of stability and growth, this may raise its value relative to other currencies. 

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

Weak bullish

Global Markets:

Asian Stock Markets: Nikkei is up 0.30%, Shanghai Composite is up 0.09%, Hang Seng is up 0.02%, ASX is down 0.11%

European equities, the DAX futures down 0.20%, CAC 40 down 0.42%, and FTSE down 0.19%.

US Stock Market: Dow Jones is up 1.00%, S&P 500 is up at 1.30%, and Nasdaq 100 is up at 2.19%.  

Commodities: Gold at $1937.02 (-0.3%), Silver at $23.04 (-0.48%), Brent Oil at $76.52 (-0.75%), WTI Oil at $72.31 (-0.50%)

News & Data

• (USD) CB Consumer Confidence (May) Forecast 99.0, Previous 101.3 at 19:30
• (AUD) Building Approvals (MoM) (Apr) Actual –8.1%, Forecast 2.0%, Previous –0.1% at 07:00
• (CAD) Current Account (Q1) Forecast –10.9B, Previous –10.6B at 18:00
• (NZD) Building Consents (MoM) (Apr) Actual –2.6%, Forecast 1.6%, Previous 7.0% at 04:15

TECHNICAL OUTLOOK

GBPUSD

A bearish symmetrical triangle pattern on the GBP/USD chart indicates a bearish momentum now.

A considerable support area, known as overlap support, is provided by the first support level at 1.2279.

A second support level at 1.2192 similarly overlap support, and it is also present. This level’s usefulness as a possible support region is further supported by prior occurrences of price movement bouncing off it.

On the resistance side, an overlap resistance is represented by the first resistance level at 1.2377. The bearish trend may temporarily stall or retrace because this level acts as a temporary barrier to price increases.

A second resistance level at 1.2470 is also present and is known as an overlap resistance. It has been demonstrated in the past that this level is significant as a price level when selling pressure has developed.

EURUSD

In a bearish falling channel, the EUR/USD chart at this time is showing a bearish momentum.

A considerable support area, known as overlap support, is provided by the first support level at 1.0695.

A second support level at 1.0623, which is also an overlap support, is also present. This level’s usefulness as a possible support region is further supported by prior occurrences of price movement bouncing off it.

On the resistance side, an overlap resistance is represented by the first resistance level at 1.0747. The bearish trend may temporarily stall or retrace because of this level acts as a temporary barrier to price increases.

A second resistance level that is designated as an overlap resistance is located at 1.0794 as well. It has been demonstrated in the past that this level is significant as a price level when selling pressure has developed. It also coincides with the 23.60% Fibonacci retracement, strengthening its potential to act as a resistance zone.

AUDUSD

Strong bearish momentum is currently seen on the AUD/USD chart, pointing to the possibility of the downward trend continuing.

On the support side, a key support level, known as a swing low support, is the first support level at 0.6498.

The first resistance level, which is an overlap resistance at 0.6579, is on the resistance side. The bearish trend may temporarily stall or retrace because of this level acts as a temporary barrier to price increases.

A second resistance level at 0.6607 is also present and is known as an overlap resistance. It has been demonstrated in the past that this level is significant as a price level when selling pressure has developed. It also lines up with the 61.80% Fibonacci retracement, strengthening its ability to act as resistance.

USDJPY

The USD/JPY chart is now showing positive momentum as it is in an ascending bullish channel. This indicates a likely continuation of the rising trend and bullish market sentiment.

A bullish continuation in the direction of the intermediate resistance level at 140.89 is conceivable.

The initial support level at 138.80, also known as overlap support, serves as a substantial support region on the support side.

There is a second support level that likewise overlaps support at 137.71. This level’s usefulness as a possible support region is further supported by prior occurrences of price movement bouncing off it.

On the resistance side, an overlap resistance is represented by the first resistance level at 142.26. This level can serve as a short-term roadblock to additional price increases, possibly leading to a break or retracement in the bullish trend.

S&P 500

The current positive momentum on the US500 chart is sluggish, but there is some optimism. This signals that the upward trend may continue, although there is some doubt about how strong the optimistic attitude is right now.

The initial support level at 4180.70 acts as an important support area and is designated as an overlap support. There is an intermediate support level at 4210.40.

At 4152.60, the second support level additionally acts as an overlap support. This level’s usefulness as a possible support region is further supported by prior occurrences of price movement bouncing off of it.

A bullish break of the ascending channel with a rally towards the first resistance level at 4257.12 is conceivable. This level can serve as a short-term roadblock to additional price increases, possibly leading to a break or retracement in the bullish trend.

An overlap resistance is the second resistance level, which is located at 4304.50. It has been demonstrated in the past that this level is significant as a price level when selling pressure has developed.

WTI CRUDE OIL

Crude oil price data for WTI (West Texas Intermediate) shows a bullish momentum, pointing to a likely price move toward the first resistance.

At $71.41, the initial line of support serves as overlap support. This price point can attract purchasers, preventing the price from falling much lower.

The second line of support, often referred to as multi-swing low support, is located around $69.44 if the price declines below this level. This level, which has previously served as a support and been challenged several times, might draw buyers once more and halt further loss.

Looking upward, the overlap resistance and 61.80% Fibonacci retracement level are located at $74.21, respectively. This may be a pivotal level where there may be some selling pressure on the market.

The 50% Fibonacci retracement level and another overlap resistance serve as the intermediate resistance level at $74.21. Before the price reaches the first resistance level, this level can offer some resistance.

The second resistance, which also overlaps, is located at $76.68. Due to its history of acting as a turning point, this level may experience significant selling pressure.

SILVER

The technical indicators suggest that silver is currently in a bearish trend. The RSI is below 50, which indicates that the market is oversold.

The MACD is also in a bearish trend, which suggests that the momentum is still to the downside.

However, there are some bullish signs. The price is currently trading above the 50-day moving average, which is a sign of support.

The 200-day moving average is also sloping upwards, which suggests that the long-term trend is still to the upside.

Overall, the technical indicators suggest that silver is currently in a bearish trend. However, there are some bullish signs that suggest that the price could rebound in the near future.

BITCOIN

The positive momentum on the BTC/USD chart is now weak, but it is confident.

This signals that the rising trend may continue, although there is some doubt about how strong the optimistic attitude is right now.

A bullish movement towards the first resistance level at 28325.57 is conceivable. This level can serve as a short-term roadblock to additional price increases, possibly leading to a break or retracement in the bullish trend.

An overlap resistance is the second resistance, located at 29847.69. It has been demonstrated in the past that this level is significant as a price level when selling pressure has developed. On the support side, the initial support level, which is designated as overlap support, at 27447.43, serves as a significant support area.

A second support level that overlaps the first one and lines up with the 78.60% Fibonacci retracement is located at 26276.57. Its significance as a potential support area is strengthened by the convergence of technical variables.