Article by: ETO Markets
On Wednesday, the U.S. Bureau of Labor Statistics (BLS) reported that the annual CPI decreased from 3.4% to 3.3%, falling short of expectations for it to remain unchanged. The annual core Consumer Price Index (CPI), which excludes the more volatile food and energy prices, rose by 0.2% in the reporting month, also below the anticipated 0.3%. The continued weak economic data from the U.S. led to a surge in the stock market, while the U.S. Dollar Index (which measures the dollar against a basket of major currencies) fell from 105 to 104. In contrast, the prices of precious metals such as gold and silver saw a rebound.
However, unexpectedly hawkish comments from the Federal Reserve put pressure on gold prices. Policymakers had initially planned for three rate cuts in March but now anticipate only one rate cut in 2024. This shift is seen as a key factor driving funds out of gold. Despite the continued uncertainties due to geopolitical tensions, gold prices have continued their decline over the past two weeks.
Due to the Federal Reserve's hawkish comments, the Australian dollar did not gain support from strong employment data. Additionally, the widespread expectation that the Bank of Japan will maintain its current policy led to further depreciation of the yen. Following the European Central Bank's (ECB) rate cut announcement last week, the euro also temporarily halted its upward trend. Market participants are now awaiting new U.S. economic data to be released on Thursday, including the Producer Price Index (PPI) and the weekly initial jobless claims, to seek short-term trading opportunities.
Although the negative surprise in the U.S. May Consumer Price Index (CPI) inflation report pressured the dollar, the Federal Reserve's (Fed) hawkish stance limited its decline, causing GBP/USD to pull back after reaching a high of 1.28560. On the other hand, investors widely believe that the Bank of England (BoE) is unlikely to cut rates in June, shifting their expectations to August or September, which has provided new momentum for the pound.
The 20-day simple moving average (SMA) provides strong support for GBP/USD, keeping the price within an upward channel. The Relative Strength Index (RSI) is currently at … , indicating that there is still room for the pound to rise. The March high of … will offer new resistance, while the monthly low of … provides support for the pound.
The Bank of Japan (BoJ) will announce its new monetary policy on Friday, leading investors to adopt a cautious attitude, which has slowed the yen's decline. Although the market expects the BoJ to maintain its current interest rates, Japan's Producer Price Index (PPI) rose by 2.4% year-on-year, exceeding the anticipated 2%, sparking concerns about rising consumer inflation. Additionally, the BoJ's potential reduction in monthly bond purchases could also impact the yen.
On the daily chart, USD/JPY is consolidating within an ascending channel and shows a bullish tendency. Although there is a significant obstacle at … , breaking this level could turn it into support, pushing the price towards … , a 30-year high. On the downside, the yen is rising along the 50-day simple moving average, and if it breaks below … yen, it could increase downward pressure on USD/JPY, pushing the price towards the low of ...
