Article by: ETO Markets
Australia's GDP grew by 0.1% in the first quarter, as announced on Wednesday, falling short of the expected 0.2%. On an annual basis, the economy grew by 1.1%, slightly below the anticipated 1.2%. Meanwhile, the expansion of Australia's trade surplus in May provided support for the Australian dollar. Furthermore, Reserve Bank of Australia (RBA) Governor Michele Bullock indicated that the central bank might continue to raise interest rates if the Consumer Price Index (CPI) does not return to the target range of 1%-3%. Michele's hawkish remarks also contributed to the Australian dollar's rise.
Following the release of the ADP non-farm employment changes on Wednesday, the U.S. Dollar Index (which measures the dollar against a basket of major currencies) fell below 104 once again. Additionally, investors will be closely watching Friday's upcoming reports on non-farm payrolls, average hourly earnings, and the unemployment rate.
Amid mixed economic data from the U.S., the dollar has entered a downturn, with increasing speculation about a Federal Reserve rate cut. The likelihood of at least a 25-basis point cut by the Fed has risen from 47.5% last week to nearly 70%. On Wednesday, the ISM Services Purchasing Managers' Index (PMI) for May surged to a nine-month high of 53.8, while the final Manufacturing PMI released on Monday also exceeded expectations, rising from 50.9 to 51.3. Meanwhile, the ISM Manufacturing PMI, JOLTS job openings, and ADP non-farm employment numbers all fell short of expectations. The ADP report indicated that the U.S. private sector added 152K jobs in May, compared to the anticipated 173K.
Multiple central banks have signaled interest rate cuts, reflecting concerns about slowing economic growth. The Bank of Canada (BoC) lowered its benchmark interest rate for the first time in four years on Wednesday. These signals have heightened expectations of a rate cut by the Federal Reserve. Additionally, the decline in U.S. Treasury yields has posed a significant challenge to the dollar.
This week, the European Central Bank (ECB) announced the much-anticipated 25 basis point rate cut, which also increased market confidence in the Federal Reserve's first rate cut in September. On Thursday, the number of initial jobless claims for the past week exceeded the expected 220K, reaching 229K. This is consistent with U.S. employment data released earlier this week, all reflecting a worsening employment environment in the United States, which could help the Federal Reserve achieve its inflation target.
The continuous disappointments in U.S. employment data have led gold investors to hold a pessimistic outlook on tonight's non-farm employment change and unemployment rate announcement. The market appears to be pricing in this news in advance. As a result, gold prices continued their strong performance from the past two days in the Asian session this morning, reaching a new two-week high of around $... The non-farm employment report, which will influence the Federal Reserve's future policy decisions, is expected to provide new momentum for gold tonight.
Gold buyers have taken control, completely reversed the trend and firmly positioned gold above the 20-day simple moving average (DMA) level of $... Meanwhile, the Relative Strength Index (RSI) has not yet reached the overbought zone and remains bullish. Buyers maintain strong momentum and are poised to challenge the $… resistance level, followed by the high of $... The 50-day simple moving average (DMA) at $… provides support for gold; a break below this level would be needed to attract more sellers.
The West Texas Intermediate (WTI) crude oil price continued its upward trend from the previous day, rising to around $74.80 per barrel during Thursday's Asian trading session. This increase is attributed to growing expectations of a September interest rate cut by the Federal Reserve, which could lower borrowing costs and stimulate economic activity, thereby boosting demand for oil.
However, the Energy Information Administration (EIA) crude oil inventory report for the week ending May 31st showed an unexpected increase of 1.233 million-barrels, sharply contrasting with market expectations of a 2.300 million-barrel decrease. As a result, the upside potential for oil prices may be limited. Currently, the downward trend in crude oil has not reversed, and $… may serve as resistance for WTI crude oil.
