EURUSD
- EUR/USD Under Pressure: The EUR/USD pair is trading below 1.0850 early Monday, impacted by the French election results suggesting a hung parliament and renewed fiscal concerns.
- US Nonfarm Payrolls (NFP): Data from the US Bureau of Labor Statistics (BLS) showed that US Nonfarm Payrolls rose by 206K in June, following a revised increase of 218K (from 272K) in May.
- Unemployment Rate and Earnings: The US Unemployment Rate edged higher to 4.1% in June from 4% in May. Average Hourly Earnings declined to 3.9% year-over-year in June from 4.1%, matching market expectations.
- Eurozone Sentix Investor Confidence: On Monday, the Eurozone Sentix Investor Confidence for July will be released.
- Upcoming US CPI Data: Traders are awaiting the US Consumer Price Index (CPI) inflation data on Wednesday for fresh impetus, which is expected to ease to 3.1% year-over-year in June from 3.3% in May.
| SMA (20) | Falling |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: The EUR/USD is facing downward pressure below 1.0850 early Monday, influenced by the French election outcomes and fiscal concerns. The latest US labour market data showed a mixed picture, with an increase in Nonfarm Payrolls but a rise in the Unemployment Rate and a decline in Average Hourly Earnings. Investors are keenly awaiting the Eurozone Sentix Investor Confidence data for July and the upcoming US CPI inflation data on Wednesday, which is expected to show a slight easing, for further market direction.
GBPUSD
- GBP/USD Range Trading: GBP/USD is maintaining its range around 1.2800 in early European trading on Monday.
- US Dollar Recovery: The pair is being dragged lower by a recovering US Dollar, with traders remaining cautious following the UK elections.
- US Nonfarm Payrolls (NFP): The US Bureau of Labor Statistics (BLS) reported on Friday that the US Nonfarm Payrolls added 206K net new jobs in June, stronger than expected.
- Fed Rate Cut Bets: Traders have increased their bets on a Federal Reserve rate cut this year, as employment growth in the United States showed signs of slowing in June.
- Upcoming Fed Chairman Appearance: Investors will shift their focus to Federal Reserve Chairman Jerome Powell's appearance next Tuesday.
| SMA (20) | Slightly Falling |
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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 trading around 1.2800 early Monday, influenced by a recovering US Dollar and cautious sentiment following the UK elections. The latest US labour market data showed a stronger-than-expected increase in Nonfarm Payrolls, prompting traders to raise their bets on a Fed rate cut this year. Investors will now look forward to Federal Reserve Chairman Jerome Powell's appearance next Tuesday for further insights into the Fed's policy outlook.
GOLD
- Gold Price Correction: Gold price is correcting lower from near six-week highs of $2,393 set on Friday, despite a broadly subdued US Dollar.
- Technical Outlook: The short-term technical outlook for gold remains constructive, as the 14-day Relative Strength Index (RSI) continues to hold above the 50 level.
- China's Gold Reserves: China's Gold reserves fell to $169.70 billion from $170.96 billion, according to Reuters. This marks the second consecutive month that the People's Bank of China (PBOC) has refrained from adding Gold to its reserves.
- Risk Aversion and Currency Movements: Increased risk-aversion during the European session, spurred by French political uncertainty, could cause the Euro to fall further, lifting the US Dollar across the board. This could accelerate the gold price correction.
- Upcoming Fed Testimony: The next significant event for gold prices is Federal Reserve Chairman Jerome Powell’s testimony on the Semi-Annual Monetary Policy Report before the Senate Banking Committee on Tuesday. Powell is expected to reiterate dovish Fed expectations.
Closing statement: Gold prices are experiencing a pullback from recent highs, but the short-term technical outlook remains positive with the RSI holding above 50. China's decision to maintain its gold reserves without further additions for the second month in a row has also influenced the market. Political uncertainty in France could drive risk aversion, potentially boosting the US Dollar and further correcting gold prices. All eyes will be on Fed Chairman Jerome Powell's testimony on Tuesday, which could provide further direction for gold prices based on his comments about the Federal Reserve's monetary policy stance.
CRUDE OIL
- Price Correction: West Texas Intermediate (WTI) extends its correction to around $82.70 in Monday’s European session after posting a fresh two-month high near $84.00 on Thursday.
- Storm Concerns: The oil price comes under pressure as investors worry about Storm Berly, which could disrupt United States energy supplies.
- Rate Cut Expectations: Oil demand worries have eased significantly as a rate cut move by the Federal Reserve (Fed) in its September meeting appears to be a done deal. Expectations for the Fed to begin reducing interest rates from September improved after the US Nonfarm Payrolls (NFP) report of June showed that the strength in the US labor market is easing.
- Rising US Oil Demand: US Oil demand rose this week on strong summer demand expectations in the United States, the world's largest oil consumer. According to the American Automobile Association (AAA), travel during this period is projected to be 5.2% higher than in 2023, with car travel alone rising by 4.8% compared to the previous year, Reuters reports.
| 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: WTI crude oil prices are correcting from recent highs, driven by investor concerns over potential disruptions from Storm Berly. However, expectations of a rate cut by the Federal Reserve in September have alleviated worries about oil demand. The easing labour market strength, as indicated by the latest NFP report, supports these rate cut expectations. Additionally, strong summer travel demand in the US is bolstering oil demand, with projections of increased travel further underpinning oil prices. The market will continue to monitor these developments closely, as they will play a significant role in shaping crude oil price movements in the near term.
DAX
- Economic Indicators: On Friday, economic indicators from Germany sent more warnings. German industrial production unexpectedly slid by 2.5% in May after a revised 0.1% increase in April.
- Rate Cut Expectations: A deteriorating macroeconomic environment could support investor bets on multiple ECB interest rate cuts over the remainder of the year. Also, the US Jobs Report raised investor expectations of a September Fed rate cut.
- Bank Stock Performance: Deutsche Bank slid by 1.30% amid uncertainty about the French election run-off. The possibility of disruption to the Euro area economy and destabilization of the EU Project influenced buyer demand for bank stocks.
- Trade Surplus: Germany's trade surplus expanded slightly in May, but both exports and imports fell, indicating subdued recent demand for German goods.
- Inflation Expectations: Later today, US consumer inflation expectations could affect investor expectations of a September Fed rate cut.
| SMA (20) | Slightly Falling |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: The DAX is navigating through a challenging macroeconomic environment, highlighted by a significant decline in German industrial production. These economic concerns may bolster investor expectations for multiple ECB rate cuts throughout the year. Concurrently, the US Jobs Report has increased the likelihood of a September Fed rate cut. Bank stocks are under pressure due to uncertainties surrounding the French election run-off, which could potentially disrupt the Euro area economy. Investors will also keep an eye on US consumer inflation expectations, as they could further shape market sentiment regarding upcoming Fed rate decisions.