EURUSD
- Current Trading Position: The EUR/USD pair is ranging below the 1.0750 level during Wednesday's European session.
- Impact of Fed Rate Cut Expectations: The reduced expectations for Fed rate cuts are supporting the US Dollar, which is limiting the potential upside for EUR/USD.
- ECB's Inflation Outlook: ECB officials Villeroy and Rehn have expressed confidence that the ECB will achieve its 2% inflation target by next year. Despite potential monthly data fluctuations, they suggest that the ECB's current monetary policies are effectively managing price pressures.
- ECB's Stance on Interest Rates: ECB Chief Economist Philip Lane indicated that inflation pressures in the euro zone are strong enough to justify maintaining interest rates at levels that restrict economic growth, demonstrating the ECB's commitment to controlling inflation.
- Market Caution Ahead of Key Data: Traders are cautious and avoiding new positions ahead of the release of the US CPI data and upcoming Fed policy announcements, which could significantly impact the US Dollar's performance.
| SMA (20) | Rising |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: The EUR/USD pair remains in a consolidation phase below the 1.0750 mark, influenced by the reduced likelihood of Fed rate cuts, which supports the USD. ECB officials' confidence in achieving their inflation target and their commitment to maintaining restrictive interest rates highlight a firm stance on inflation management. However, market participants are exercising caution, awaiting crucial US economic data and policy announcements that could lead to significant movements in the currency pair.
GBPUSD
- Current Trading Position: GBP/USD is maintaining its range near 1.2750 early Wednesday, showing little reaction to the mixed UK economic data.
- UK GDP and Economic Performance: The UK economy showed no growth in April, recording a 0% change following a 0.4% expansion in March, according to data from the Office for National Statistics (ONS).
- Industrial and Manufacturing Output: UK Industrial Production and Manufacturing Production both declined in April, by 0.9% and 1.4% respectively, indicating weakness in the industrial sector.
- UK Trade Balance: The UK Goods Trade Balance reported a larger deficit of GBP-19.607 billion in April, compared to expectations of GBP-14.20 billion and the previous month's GBP-13.967 billion.
- Market Caution Ahead of US Data: Market participants are adopting a cautious stance ahead of the release of key US inflation data and upcoming Federal Reserve policy announcements, which are critical for the pair's movement.
| SMA (20) | Rising |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: GBP/USD remains steady near 1.2750 despite mixed UK economic indicators, including stagnant GDP growth and declining industrial output. The wider-than-expected trade deficit adds to the economic concerns. However, the market's focus is on the upcoming US inflation data and Fed policy announcements, which are pivotal for the pair's future direction. Traders are currently on edge, awaiting these key events to guide their next moves.
GOLD
- Current Trading Position: Gold is consolidating its recent gains, holding steady above the $2,300 level early Wednesday.
- Market Caution: Traders are adopting a cautious stance ahead of the crucial US Federal Reserve interest rate decision and the US inflation data release.
- US CPI Expectations: The US CPI is anticipated to rise by 3.4% YoY in May, matching April's pace, with core CPI inflation expected to slightly decrease to 3.5% from 3.6%. Monthly headline CPI and core CPI are forecasted at 0.1% and 0.3% respectively.
- Impact of Inflation Data: An upside surprise in inflation could reinforce bets on delayed Fed rate cuts, potentially boosting the US Dollar and weighing on gold. Conversely, softer inflation could revive expectations for a Fed rate cut by September, supporting a gold price recovery.
- Fed Rate Cut Probability: Markets are currently pricing in a 48% chance of a 25-basis point Fed rate cut in September, up from 43% after the recent NFP data, according to the CME Group’s FedWatch Tool.
Closing statement: Gold prices are holding steady above $2,300 amid market caution ahead of key US inflation data and the Federal Reserve's interest rate decision. With US CPI expected to rise by 3.4% YoY, any deviation could significantly impact market expectations for Fed rate cuts. An upside surprise may strengthen the US Dollar, pressuring gold, while softer data could bolster gold prices by fuelling rate cut speculation. The market currently sees a nearly even chance of a Fed rate cut in September, adding to the cautious sentiment among traders.
CRUDE OIL
- Current Trading Position: West Texas Intermediate (WTI) oil prices are stable around $78.10 per barrel during European trading hours on Wednesday.
- EIA Forecast Revision: The Energy Information Administration (EIA) increased its 2024 world oil demand growth forecast to 1.10 million barrels per day (bpd), up from the previous estimate of 900,000 bpd.
- OPEC's Demand Outlook: The Organization of the Petroleum Exporting Countries (OPEC) maintained its 2024 forecast for robust global oil demand growth, expecting increased travel and tourism in the latter half of the year.
- Fed's Impact on Oil Demand: The Federal Reserve is anticipated to keep borrowing costs high for an extended period, potentially slowing economic growth and reducing oil demand.
- Upcoming Fed Decision and US Inflation Data: Investors are closely watching for the Federal Reserve's policy decision and the US inflation figures for May, due on Wednesday.
| SMA (20) | Falling |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: WTI oil prices remain stable around $78.10 per barrel as the market digests revised demand forecasts and awaits key economic indicators. The EIA's upward revision of its 2024 oil demand growth forecast to 1.10 million bpd and OPEC's positive demand outlook for the second half of the year support oil prices. However, the Federal Reserve's expected prolonged high borrowing costs could dampen economic growth and oil demand. Investors are keenly anticipating the Fed's policy decision and US inflation data, which will provide further direction for oil prices.
DAX
- ECB Stance on Rate Cuts: ECB Chief Economist Philip Lane indicated that the ECB is unlikely to cut rates in July, stating the bank would wait for inflation uncertainties to subside before making any further rate adjustments.
- Impact of French Politics and US Economic Indicators: Investor caution ahead of the US CPI Report and FOMC Economic Projections, coupled with political developments in France, contributed to market losses. French political instability had a notable impact on market risk appetite.
- German Inflation Data: Germany's year-on-year inflation rate, measured by the consumer price index (CPI), stood at +2.4% in May 2024. The slight uptick is attributed to continued increases in service prices, according to Ruth Brand, President of the Federal Statistical Office.
- Market Sentiment Influenced by ECB Commentary: Investors should closely monitor commentary from ECB Executive Board members Anneli Tuominen, Isabel Schnabel, Claudia Buch, Luis de Guindos, and Elizabeth McCaul for further insights into the ECB's economic outlook and policy trajectory.
- US CPI and FOMC Projections Awaited: The upcoming US CPI Report and FOMC Economic Projections are critical for market sentiment, with potential implications for global economic conditions and investor risk appetite.
| SMA (20) | Rising |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Falling |
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Closing statement: The DAX faced pressures amid a mix of economic signals and political uncertainties. ECB Chief Economist Philip Lane's comments dampened expectations of a July rate cut, emphasizing the need for clearer inflation data. German inflation ticked up to 2.4% in May, driven by rising service prices. Market sentiment was further impacted by French political developments and cautious anticipation of US CPI and FOMC projections. Investors should pay close attention to forthcoming ECB commentary and US economic data releases, which will be pivotal in shaping near-term market trends.