EURUSD
- EUR/USD experienced a decline of 0.53% to 1.0787 as investors awaited the release of eurozone industrial production data for April. The data is anticipated to show a recovery following a significant decline in the previous month.
- The decline in EUR/USD comes a day before the European Central Bank meeting, where a quarter-point interest rate hike is widely expected to be announced.
- The U.S. dollar struggled to gain momentum in early European trade on Wednesday, as market participants awaited the conclusion of the Federal Reserve's latest policy meeting.
- The post-decision press conference and the language used by Fed Chair Jerome Powell for guidance on the future interest rate path are likely to be the focal points of attention.
- Investors will closely analyse the Fed's decision and Powell's remarks for any insights into the future trajectory of monetary policy and its potential impact on EUR/USD.
| SMA (20) | Slightly Falling |  | ||
| RSI (14) | Neutral | |||
| MACD (12, 26, 9) | Slightly Rising |
|
Closing statement: Ahead of the eurozone industrial production data release and the European Central Bank meeting, EUR/USD witnessed a decline, while market participants eagerly awaited the conclusion of the Federal Reserve's policy meeting and the subsequent press conference. The language used by Fed Chair Jerome Powell will be closely scrutinized for clues about the future direction of interest rates and its implications for EUR/USD.
GBPUSD
- GBP/USD moved higher to 1.2617, following a significant 0.8% surge in the previous session, reaching its highest level since May 11.
- The release of Wednesday's data revealed that the UK's gross domestic product (GDP) grew by 0.2% month-on-month in April, meeting expectations. However, there were contractions in the manufacturing and construction sectors. Nevertheless, the strength of sterling is underpinned by robust wage growth reported on Tuesday, increasing the likelihood of further tightening by the Bank of England in the upcoming week.
- The DXY, which measures the performance of the dollar against six other major currencies, traded mostly flat and remained close to its three-week lows.
- The dollar experienced a sharp decline on Tuesday and continues to struggle in the current session, as soft U.S. inflation data reinforced expectations that the Federal Reserve will maintain unchanged interest rates at the conclusion of its two-day policy-setting meeting.
- Market participants are closely monitoring the outcome of the Federal Reserve's meeting, as it is expected to provide clarity on the future course of monetary policy and influence the direction of GBP/USD.
| SMA (20) | Neutral | |||
| RSI (14) | Slightly Rising |
|
||
| MACD (12, 26, 9) | Slightly Rising |
|
Closing statement: GBP/USD advanced further after a notable increase in the previous session, supported by UK GDP data and expectations of continued tightening by the Bank of England. Meanwhile, the dollar remained subdued due to soft inflation data, heightening anticipation for the Federal Reserve's decision at the conclusion of its policy-setting meeting. Traders await further guidance on monetary policy direction, which could have implications for the future movements of GBP/USD.
GOLD
- Gold prices showed a slight upward movement on Wednesday, following three consecutive days of losses, as investors awaited further signals from the conclusion of the Federal Reserve meeting later in the day. Copper prices also benefited from China's interest rate cut.
- The decision by China to cut interest rates, the first time in 10 months, contributed to an increase in risk appetite across global markets. This move by the Chinese government aims to support a slowing economic recovery.
- The U.S. consumer price index (CPI) recorded a mere 0.1% rise last month, translating to a year-on-year increase of 4.0%. This marks the smallest increase since March 2021.
- As the market largely anticipates a pause in the tightening cycle, the focus now shifts to the language used by Federal Reserve officials to guide future policy moves. The central bank's communication will be crucial in determining whether they will emphasize that the tightening cycle is not yet complete.
- Investors remain attentive to the outcome of the Federal Reserve meeting and are seeking clarity on the central bank's stance, which will likely have an impact on the direction of gold prices.
Closing statement: Gold prices experienced a modest recovery following a series of losses, with market participants closely monitoring the Federal Reserve meeting for further guidance. The interest rate cut in China and the subdued U.S. consumer price index added to the evolving market dynamics. The focus now turns to the Fed officials' language, as they aim to shape expectations regarding the future trajectory of monetary policy and its implications for the XAU/USD pair.
CRUDE OIL
- Crude oil prices showed a slight increase on Wednesday as market participants awaited several key events, including the outcome of the U.S. Federal Reserve's June meeting, important economic data from China, and the release of U.S. government data on crude stockpiles.
- The price of crude oil surged over 3% on Tuesday, driven by optimism surrounding increased fuel demand following China's central bank's decision to lower a short-term lending rate.
- Contrary to analysts' expectations of a 500,000-barrel decline, U.S. crude oil stocks reportedly rose by approximately 1 million barrels in the week ending June 9, according to sources citing figures from the American Petroleum Institute.
- Within the OPEC+ framework, Russia has been granted a slightly higher oil production baseline. This adjustment allows Russia to produce more oil under the latest quotas compared to the previously agreed limits.
- Market participants remain watchful of these developments, as they have the potential to influence crude oil prices and shape the outlook for the oil market.
| SMA (20) | Slightly Falling | |
|
| RSI (14) | Slightly Rising |
|
|
| MACD (12, 26, 9) | Neutral |
Closing statement: Crude oil prices experienced a modest uptick as investors eagerly awaited the outcome of the Federal Reserve meeting, along with significant economic data from China and the release of U.S. crude stockpile figures. The recent boost in fuel demand expectations following China's interest rate cut, coupled with unexpected growth in U.S. crude stocks, added to the prevailing market dynamics. Additionally, the adjustment in Russia's oil production baseline under the OPEC+ agreement garnered attention. These factors contribute to the ongoing volatility in crude oil prices, prompting market participants to closely monitor the developments ahead.
DAX
- European stock markets showed modest gains on Wednesday as investors absorbed the U.K. growth data and awaited the conclusion of the U.S. Federal Reserve's latest policy-setting meeting.
- The DAX index in Germany traded 0.26% higher, while the CAC 40 in France rose 0.48%. However, the FTSE 100 in the U.K. traded flat during the session.
- Germany stocks closed higher on Tuesday, driven by gains in the Transportation & Logistics, Retail, and Food & Beverages sectors.
- Among the top performers on the DAX, Covestro AG rose 2.83%, Zalando SE added 2.59%, and Adidas AG saw a gain of 2.35% in late trade.
- On the other hand, Vonovia SE was among the session's worst performers, declining 1.70%, followed by Siemens Energy AG, which fell 0.80%, and Symrise AG Inh. O.N., which was down 0.61%.
| SMA (20) | Slightly Rising |
|
| RSI (14) | Slightly Rising |
|
| MACD (12, 26, 9) | Slightly Rising |
|
Closing statement: European stock markets, including the DAX in Germany, exhibited upward movement as investors processed U.K. growth data and awaited the conclusion of the U.S. Federal Reserve's policy-setting meeting. Positive performances in various sectors contributed to the gains, with notable stocks like Covestro AG, Zalando SE, and Adidas AG leading the way. However, some stocks, such as Vonovia SE, Siemens Energy AG, and Symrise AG Inh. O.N., faced declines during the session. The overall market sentiment remained influenced by the central bank meeting and ongoing economic developments.