EURUSD
- EUR/USD declined by 0.2% to 1.0692, following a decrease in expectations for further tightening by the European Central Bank (ECB) due to last week's lower-than-expected eurozone CPI.
- ECB President Christine Lagarde emphasized the possibility of future interest rate hikes, highlighting that there is still progressed to be made in the tightening cycle. However, other ECB officials have expressed more dovish views.
- Lagarde is scheduled to speak before the Committee on Economic and Monetary Affairs later today, and her remarks will be closely scrutinized. Additionally, market participants will pay attention to the release of May eurozone producer price data.
- The U.S. dollar strengthened in early European trading on Monday, driven by positive sentiment following a robust jobs report, which led traders to anticipate the Federal Reserve maintaining its hawkish stance.
- Market focus will be on Lagarde's speech, the eurozone producer price figures, and further developments in monetary policy expectations from the ECB and the Federal Reserve.
| SMA (20) | Falling |  |
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| RSI (14) | Slightly Falling | | ||
| MACD (12, 26, 9) | Slightly Falling | |
Closing statement: The decline in EUR/USD continued as market expectations for ECB tightening diminished. ECB President Christine Lagarde's upcoming remarks and the release of eurozone producer price data will provide further insights. The U.S. dollar gained strength on positive jobs data, while investors closely monitor central bank actions and statements for future market direction.
GBPUSD
- GBP/USD experienced a successful week, supported by expectations of higher UK interest rates, resulting in a strong performance against various currencies.
- GBP/USD declined by 0.28% to 1.2412 today, ahead of the release of May's services PMI data. Analysts anticipate the data to reflect the resilience of this sector within the UK economy.
- The DXY, which measures the strength of the dollar against six other major currencies, traded 0.22% higher at 104.274, approaching its highest level in nearly three months.
- The Federal Reserve will enter its blackout period this week, limiting official statements. However, investors will still analyse key data points, such as the ISM services PMI scheduled for release later today. The PMI is expected to indicate a continued solid pace of expansion.
- Market focus will be on the performance of GBP/USD, the upcoming services PMI data, the strength of the dollar, and the impact of the Federal Reserve's blackout period on market sentiment.
| SMA (20) | Slightly Falling | |
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| RSI (14) | Falling | |
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| MACD (12, 26, 9) | Neutral |
Closing statement: The British Pound experienced a positive week, driven by expectations of higher UK interest rates. GBP/USD saw a slight decline ahead of the release of services PMI data, while the dollar maintained its strength against other currencies. Investors will closely monitor upcoming data releases and the effects of the Federal Reserve's blackout period on market dynamics.
GOLD
- Gold prices experienced a slight decline on Monday, driven by uncertainty surrounding the Federal Reserve's upcoming decision on interest rates. Copper prices also weakened due to concerns about economic growth.
- The dollar received a boost from the release of strong U.S. jobs data, causing U.S. Treasury yields to surge. The robust labor market, coupled with higher-than-expected figures on the Fed's preferred inflation index, suggests that the central bank may maintain higher interest rates for an extended period.
- With the Federal Reserve meeting scheduled for next week, expectations of another rate hike are increasing. The recent approval of a debt ceiling deal by Congress has further fuelled hopes of a "soft landing" for the U.S. economy, reducing the likelihood of a default.
- Regardless of the Fed's decision in June, it is anticipated that interest rates will remain elevated for an extended period. This scenario poses a challenge for non-yielding assets like gold.
- Market focus will revolve around the trajectory of gold prices, the Federal Reserve's interest rate decision, the strength of the dollar, and the potential impact on non-yielding assets.
Closing statement: Gold prices experienced a minor decline amid uncertainty surrounding the Federal Reserve's interest rate decision. The dollar's strength, driven by impressive U.S. jobs data, has raised expectations of a prolonged period of higher interest rates. The central bank's upcoming meeting will attract significant attention, as its decision will influence market dynamics. Investors will closely monitor gold prices and the impact of the Fed's stance on non-yielding assets.
CRUDE OIL
- Crude oil prices surged in early Asian trade on Monday following Saudi Arabia's announcement of significant production cuts in July and the extension of supply cuts by the Organization of Petroleum Exporting Countries and Allies (OPEC+).
- Saudi Arabia declared a reduction of approximately 1 million barrels per day (bpd) in production for July, bringing their output to 9 million bpd. This reduction supplements the existing cuts of at least 3.66 million bpd implemented by OPEC+ since October 2022. During the weekend meeting, these cuts were extended until the end of 2024, instead of the initially planned end of 2023.
- OPEC+ also agreed to lower overall production targets by 1.4 million bpd, starting from January 2024. However, most of these reductions will align production targets for Russia, Nigeria, and Angola with their current production levels.
- The decision to implement deeper production cuts aims to boost crude oil prices and safeguard the value of OPEC's primary export. Additionally, Saudi Arabia intends to discourage speculators from betting against crude oil prices.
- Market focus will revolve around the impact of these production cuts on crude oil prices, OPEC's ability to influence the market, and the stability of global oil supply.
| SMA (20) | Neutral | |||
| RSI (14) | Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: Crude oil prices experienced a significant surge as Saudi Arabia announced substantial production cuts for July, complementing the extended supply cuts by OPEC+. These measures seek to support crude oil prices and preserve the value of OPEC's key export. The decision to reduce overall production targets from 2024 onwards, aligning with current production levels of specific countries, further highlights OPEC's commitment to market stability. Market participants will closely monitor the impact of these developments on crude oil prices and the global oil supply landscape.
DAX
- European stock markets traded cautiously higher on Monday, with investors closely monitoring central bank policies and a range of economic data.
- The DAX index in Germany remained flat, the CAC 40 in France experienced minor losses, while the FTSE 100 in the U.K. recorded a 0.3% increase.
- Investor attention is now focused on the upcoming decisions of the European Central Bank and the U.S. Federal Reserve regarding future interest rate hikes, especially amidst slowing economic growth.
- Recent data released earlier in the session revealed that Germany's trade surplus surged to €18.4 billion in April, compared to €14.9 billion in March, driven by declining energy prices and high order backlogs. Surprisingly, exports increased by 1.2% month-on-month, while imports declined by 1.7%.
- Market participants will closely monitor central bank actions and economic indicators for further insights into the direction of European stock markets and the broader global economic landscape.
| SMA (20) | Neutral | |
| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Neutral |
Closing statement: European stock markets traded cautiously higher as investors turned their attention to central bank decisions and economic data. With the European Central Bank and the U.S. Federal Reserve taking center stage, market participants will closely analyze their plans for interest rate hikes in the coming months amidst a backdrop of slowing growth. Additionally, the release of Germany's trade surplus data highlights the impact of energy prices and order backlogs on the country's trade performance. Investors will continue to assess these factors for potential implications on market dynamics and investment strategies.