EURUSD
- EUR/USD Performance: EUR/USD began the Nonfarm Payrolls (NFP) week on a strong note, reaching its highest level against the US Dollar in nearly ten weeks, surpassing the 1.0900 mark.
- ECB Rate Cut Expectations: The European Central Bank (ECB) is widely anticipated to reduce its Main Refinancing Operations Rate by 25 basis points to 4.25%.
- Investor Focus on ECB Report: With the first rate cut nearly priced in, investors will scrutinize the ECB’s Monetary Policy Report for indications of the timing of subsequent rate cuts.
- German and US Economic Data: Final German unemployment figures for May will be released early during European market hours, followed by US Factory Orders and JOLTS Job Openings during the US market session on Tuesday.
- Upcoming US NFP Data: The trading week will conclude with the release of fresh US NFP labor data on Friday. The US is expected to report an addition of 190K new jobs in May, slightly higher than the 175K added in the previous month.
| SMA (20) | Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: The EUR/USD pair has kicked off the Nonfarm Payrolls week with strong momentum, reaching levels not seen in almost ten weeks. The focus is on the ECB, which is expected to cut rates by 25 basis points, with investors eagerly awaiting the Monetary Policy Report for clues on future rate cuts. Key economic data from Germany and the US, including unemployment figures, Factory Orders, and JOLTS Job Openings, will provide further direction. The week will culminate with the US NFP report, anticipated to show a modest increase in job additions, influencing the pair's performance.
GBPUSD
- GBP/USD Performance: GBP/USD is struggling to build on its recent move to a nearly three-month high reached on Tuesday.
- Impact of Fed Rate Cut Bets: Expectations of potential Fed rate cuts are keeping USD bulls on the defensive, providing some support to the GBP/USD pair.
- Support from US Dollar Weakness: The pair's near multi-week highs are supported by a softer US Dollar, which has been impacted by weaker-than-expected US Manufacturing PMI data.
- Fed Commentary: Ahead of the FOMC blackout period, Minneapolis Fed President Neel Kashkari emphasized the need to keep interest rates on hold for an "extended" period, warning that reducing borrowing costs before inflation is under control could undermine US economic stability.
- Bank of England Rate Cut Expectations: Market anticipation is growing that the Bank of England (BoE) might begin cutting interest rates from its August meeting, following a significant easing in UK annual headline inflation in April.
| SMA (20) | Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: The GBP/USD pair is facing difficulty in maintaining its recent gains near a three-month high, despite support from Fed rate cut expectations and a softer US Dollar following weak US Manufacturing PMI data. Fed President Neel Kashkari's comments on maintaining interest rates add to the cautious sentiment. Concurrently, market expectations are building for potential rate cuts by the Bank of England starting in August, driven by a notable reduction in UK inflation. These factors collectively influence the pair's performance, with upcoming central bank actions being key to future movements.
GOLD
- Gold Price Performance: Gold is experiencing modest selling pressure near $2,350 in European trading on Tuesday, after a strong rebound on Monday.
- Impact of US ISM Data: ISM data released on Monday indicated a drop in the main PMI index from 49.2 in April to 48.7 in May, missing expectations of 49.6. Additionally, ISM Manufacturing Prices Paid decreased to 57.0 in May from 60.9 previously, also below the expected 60.0.
- Fed Rate Cut Expectations: Markets are pricing in a 52% chance of a 25 basis points (bps) Fed rate cut in September, up from a 47% probability last Friday, according to CME Group’s FedWatch tool.
- US JOLTS Job Opening Forecast: The US JOLTS Job Opening is anticipated to show a slight decrease to 8.34 million on the last day of April, compared to the previous reading of 8.488 million.
- Upcoming Employment Data: The ADP employment report is scheduled for release on Wednesday, followed by the Nonfarm Payrolls data on Friday, which are key indicators for market participants.
Closing statement: Gold prices are facing mild selling pressure near $2,350, pausing their solid rebound from the previous day. The drop in the ISM PMI index and lower-than-expected ISM Manufacturing Prices Paid data have influenced market sentiment. Expectations of a Fed rate cut in September have increased slightly. Additionally, the anticipated decrease in the US JOLTS Job Opening figures adds to the cautious market outlook. Investors are now focusing on the upcoming ADP employment report and Nonfarm Payrolls data, which will be crucial in shaping future market dynamics for gold.
CRUDE OIL
- WTI Oil Price Decline: West Texas Intermediate (WTI) oil price continues its decline for the fifth consecutive day, trading around $73.40 per barrel on Tuesday.
- Impact of OPEC+ Production Plans: The drop in crude oil prices is attributed to OPEC+ announcing a gradual plan to ease some of their oil production cuts.
- OPEC+ Production Cuts Phase-Out: OPEC+ plans to phase out voluntary production cuts of 2.2 million barrels per day (bpd) over the next year, starting in October. By December, over 500,000 bpd are expected to re-enter the market, with a total of 1.8 million bpd returning by June 2025.
- US Strategic Petroleum Reserve Purchase: According to a Reuters report, the United States is purchasing an additional 3 million barrels of oil for the Strategic Petroleum Reserve (SPR), as announced by the Department of Energy on Monday.
- US Oil Sale Background: US President Joe Biden had ordered the sale of 180 million barrels over six months in 2022 to control fuel prices following Russia's invasion of Ukraine.
| SMA (20) | Falling |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: WTI oil prices continue to decline, trading around $73.40 per barrel, marking the fifth consecutive day of losses. This decline is primarily driven by OPEC+'s announcement to gradually ease production cuts, planning to phase out 2.2 million barrels per day by June 2025. Additionally, the US has announced the purchase of an extra 3 million barrels for its Strategic Petroleum Reserve, following President Biden's previous directive to sell 180 million barrels to manage fuel prices post the Russia-Ukraine conflict. These developments contribute to the current bearish sentiment in the oil market.
DAX
- China Caixin Manufacturing PMI: Yesterday, China’s Caixin Manufacturing PMI for May increased from 51.4 to 51.7, setting a positive tone for the European session.
- German Manufacturing PMI: The German Manufacturing PMI rose from 42.5 to 45.4 in May, aligning with the preliminary PMI figures of 45.4, indicating an improvement in the manufacturing sector.
- Eurozone Manufacturing PMI: The Eurozone Manufacturing PMI also saw an increase from 45.7 to 47.3, slightly below the flash PMI estimate of 47.4, reflecting a modest recovery in manufacturing activities across the Eurozone.
- German Unemployment Forecast: Investor interest is drawn to the unemployment figures from Germany, with economists forecasting an increase in unemployment from 2.732 million to 2.880 million in May.
- Eurozone Consumer Inflation: Eurozone consumer inflation numbers for April are also under scrutiny, with expectations for consumer inflation to decrease from 3.0% to 2.8%.
| SMA (20) | Rising |
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| RSI (14) | Neutral | ||
| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: Positive PMI numbers from China and improved manufacturing figures from Germany and the Eurozone set an optimistic tone for the DAX. However, the focus will shift to German unemployment data and Eurozone consumer inflation figures on Tuesday, with expectations of rising unemployment and falling inflation. These mixed economic indicators will likely influence investor sentiment and market movements in the coming sessions.