EURUSD
- The EUR/USD pair is trading flat this morning around 1.0830, facing pressure from the strengthening U.S. dollar ahead of the European Central Bank's rate decision scheduled for later in the session. It is widely anticipated that the ECB will announce another 25 basis-point hike.
- If implemented, this would mark the eighth consecutive increase of that magnitude, and the ECB is also expected to indicate further rate hikes in the coming months based on recent comments by President Christine Lagarde, who stated that there is no clear evidence that underlying inflation has peaked.
- Throughout this year, the EUR/USD has traded within a range of approximately $1.0485 and $1.1100. The average has been around $1.08, and yesterday it traded above this level for the first time in 2 ½ weeks.
- Conversely, the U.S. dollar has rallied during early European trade on Thursday, benefiting from the Federal Reserve's hawkish outlook for additional tightening measures later this year. Meanwhile, the euro has weakened in anticipation of the upcoming European Central Bank policy meeting.
- The ECB's decision to potentially raise interest rates for the eighth consecutive time reflects its commitment to addressing inflation concerns and signalling a tightening monetary policy.
| SMA (20) | Neutral | ||||
| RSI (14) | Slightly Rising |
| |||
| MACD (12, 26, 9) | Rising |
|
|
Closing statement: The EUR/USD pair experienced flat trading this morning as the U.S. dollar gained strength and the euro faced pressure ahead of the European Central Bank's rate decision. The ECB's expected rate hike, along with indications of further increases, has influenced the currency pair. The EUR/USD has shown a trading range throughout the year, with the average hovering around $1.08. The recent rally in the U.S. dollar is attributed to the Federal Reserve's hawkish projection for future tightening.
GBPUSD
- GBP/USD fell 0.1% to 1.2652, retreating from last month's highs as the pair faced selling pressure.
- Bank of England policy makers find themselves in a challenging situation, with limited options other than raising interest rates. However, the task of achieving a soft landing amid economic uncertainties poses a considerable challenge.
- The DXY, which tracks the dollar against a basket of six major currencies, traded 0.15% higher at 103.157, recovering from the previous session's four-week low. The dollar's rebound was driven by the Federal Reserve's decision to pause its year-long policy tightening cycle, a move that was widely anticipated by the market.
- Following the conclusion of the latest policy-setting meeting, the Federal Reserve announced its decision to maintain interest rates, reflecting a pause in its tightening cycle. This stance was in line with market expectations and contributed to the dollar's upward momentum.
- Market participants will closely monitor the future actions of central banks, including the Bank of England and the Federal Reserve, as they navigate the delicate balance between supporting economic growth and managing inflationary pressures.
| SMA (20) | Slightly Rising |
|
||
| RSI (14) | Slightly Rising |
|
||
| MACD (12, 26, 9) | Slightly Rising |
|
Closing statement: The GBP/USD pair experienced a slight decline, influenced by the Bank of England's rate hike prospects and the U.S. dollar's recovery following the Fed's decision. Traders will continue to analyse central bank policies and economic data for further insights into the currency pair's future trajectory.
GOLD
- Gold prices declined on Thursday in response to mixed signals from the Federal Reserve. Despite the central bank's decision to keep interest rates unchanged, it issued a warning that at least two more rate hikes are likely to occur this year.
- After a prolonged period of trading within a narrow range, gold finally broke down to the $1930 area, with sellers attempting to exert downward pressure on the precious metal.
- Surprisingly, gold failed to find substantial support even as the U.S. dollar sank to three-week lows following the Fed's decision.
- In its latest economic projections, the Federal Reserve indicated that it expects rates to increase by an additional half percentage point, equivalent to two more 25 basis point hikes, before the year concludes.
- Investors will closely monitor the impact of the Fed's tightening measures and any further developments that may influence gold's performance in the market.
Closing statement: Gold prices experienced a decline as the Federal Reserve's mixed signals regarding future rate hikes created uncertainty among investors. The market will continue to assess the implications of the Fed's projections on gold's trajectory and monitor any additional factors that may shape its movement in the near future.
CRUDE OIL
- Crude oil prices rebounded on Thursday, recovering from the previous day's significant decline. The uptick was driven by data revealing a notable increase in refinery runs in China, the world's leading crude oil importer. However, gains were constrained by a weak economic backdrop, which limited the overall upside potential.
- On Wednesday, crude oil experienced a 1.5% drop following the U.S. Federal Reserve's projection of the need for additional rate hikes this year. This announcement sparked concerns among investors, who worried that a higher interest rate environment could potentially slow down the economy and reduce oil demand.
- According to data released on Thursday, China's oil refinery throughput in May recorded a remarkable 15.4% year-on-year growth, reaching its second-highest total on record. This data point underscores China's robust demand for crude oil.
- Despite the positive refinery data, crude oil price gains were capped by a weak economic outlook. China's industrial output and retail sales growth in May fell short of expectations, contributing to the dampened sentiment in the market.
- Furthermore, the increased production of Iranian oil under sanctions poses a challenge to the traditional incentives for nuclear negotiations, which adds another layer of complexity to the dynamics of the oil market.
| SMA (20) | Slightly Falling |  |
|
| RSI (14) | Slightly Falling | |
|
| MACD (12, 26, 9) | Neutral |
Closing statement: Crude oil prices rebounded from the previous day's decline, buoyed by robust refinery runs in China. However, concerns over a weak economic backdrop, reflected in disappointing industrial output and retail sales figures, limited the extent of price gains. Ongoing scrutiny of economic indicators and market dynamics will shape the future direction of crude oil prices.
DAX
- Germany stocks experienced gains on Wednesday's close, with the Food & Beverages, Financial Services, and Telecoms sectors leading the way and driving shares higher.
- European shares started the trading session on Thursday with a downward trend, as the European Central Bank (ECB) was anticipated to raise borrowing costs later in the day. This decision follows the U.S. Federal Reserve's signal of more interest rate hikes.
- The ECB is expected to raise the deposit rate by 25 basis points to 3.5%, marking the highest level in 22 years. The central bank aims to combat persistent inflationary pressures, even as the eurozone economy continues to face challenges.
- The DAX index in Germany saw a slight decline this morning, while the CAC 40 in France recorded a 0.4% decrease. On the other hand, the FTSE 100 in the U.K. showed a modest increase.
- Investors will closely watch the ECB's decision and its impact on the market as the trading day progresses.
| SMA (20) | Slightly Rising |
|
| RSI (14) | Slightly Rising |
|
| MACD (12, 26, 9) | Slightly Rising |
|
Closing statement: Despite Germany stocks closing with gains in specific sectors, the European shares started the day on a downward trend as investors awaited the ECB's decision on raising borrowing costs. The DAX index in Germany experienced a slight decline, the CAC 40 in France fell, and the FTSE 100 in the U.K. showed a modest rise. The market will closely monitor the ECB's decision and its potential implications for the ongoing trading session.