EURUSD
- EUR/USD experienced a slight decline, reaching 1.0940, after hitting a one-month high in the previous session following the European Central Bank's rate hike and hawkish forward guidance.
- ECB President Christine Lagarde reinforced the rate hike sentiment in the subsequent press conference, stating a high likelihood of another rate increase in July. Lagarde emphasized that the central bank still has work to do to combat high inflation.
- The final reading of the eurozone consumer price index for May is scheduled to be released later in the session. Analysts expect the index to show an annual decrease to 6.1% from the previous month's 7.0%. However, taming core CPI, which excludes volatile energy and food prices, is expected to be more challenging, with a projected decrease to 5.3% from 5.6%.
- The U.S. dollar saw a slight gain in early European trade on Friday, recovering from losses driven by weak economic data. Meanwhile, the Japanese yen weakened as the Bank of Japan maintained its interest rates at very low levels.
- Market participants will closely monitor the release of the eurozone consumer price index and its impact on EUR/USD, along with the performance of the U.S. dollar and the Bank of Japan's policy stance.
| SMA (20) | Slightly Rising |
| |||
| RSI (14) | Rising |
|
| ||
| MACD (12, 26, 9) | Rising |
|
|
Closing statement: EUR/USD retreated from its one-month high as the European Central Bank's rate hike and forward guidance still influenced the market. ECB President Christine Lagarde's remarks about another rate increase in July and the upcoming release of the eurozone consumer price index add to the market's focus. The U.S. dollar regained some strength after weak economic data, while the Japanese yen weakened as the Bank of Japan maintained low interest rates. Traders will closely watch these developments for further insights into the currency market.
GBPUSD
- GBP/USD remained relatively unchanged at 1.2788, after briefly reaching a more than one-year high fueled by increasing expectations of the Bank of England raising interest rates for the 13th consecutive meeting next week.
- The upcoming quarterly survey on the views of U.K. consumers regarding inflation and interest rates will provide further insights into the country's economic landscape, particularly as Britain faces one of the highest inflation rates among major advanced economies.
- The Dollar Index, which measures the performance of the U.S. dollar against a basket of six other currencies, advanced 0.13% to 102.274, recovering from a new one-month low it reached overnight with a decline of approximately 0.8%.
- Earlier in the week, the U.S. dollar received a boost after the U.S. Federal Reserve projected at least two more rate hikes this year, despite temporarily pausing its series of rate increases. This decision was driven by persistently elevated inflation levels that exceeded the central bank's target range.
- Market participants will closely monitor the upcoming consumer survey, the performance of the Dollar Index, and any further developments related to the Bank of England's potential interest rate hike.
| SMA (20) | Slightly Rising |
|
||
| RSI (14) | Rising |
|
|
|
| MACD (12, 26, 9) | Slightly Rising |
|
Closing statement: GBP/USD traded in a relatively stable manner near its recent one-year high as market attention remains focused on the Bank of England's upcoming decision on interest rates. The U.K.'s consumer survey and the performance of the Dollar Index will provide additional factors to consider. The U.S. dollar regained some strength after the Federal Reserve's forecast of further rate hikes in response to persistent inflation levels. Traders will continue to monitor these factors for potential impact on GBP/USD.
GOLD
- Gold prices remained relatively unchanged on Friday as investors assessed diverging expectations for additional rate hikes from the Federal Reserve, while copper was poised for a strong finish to the week due to increased stimulus measures by China, the largest copper importer.
- Following the Federal Reserve's decision, gold initially experienced a sell-off but managed to recover most of its losses on Thursday as traders reevaluated their outlook on future rate hikes. However, gold still struggled to break out of the trading range between $1,930 and $2,000, where it has been consolidating for the past month.
- Weaker economic indicators in the United States, such as sluggish retail sales and slowing industrial production, have raised concerns about the extent to which the Federal Reserve can continue raising interest rates.
- The extended pause in the Federal Reserve's rate hike cycle is viewed favorably for gold, as higher interest rates increase the opportunity cost of holding non-yielding assets.
- Market participants will closely monitor the developments surrounding the Federal Reserve's rate hike expectations and the impact on gold prices.
Closing statement: Gold prices showed limited movement as market participants weighed conflicting expectations for additional rate hikes by the Federal Reserve. While gold experienced a brief sell-off following the Fed decision, it recovered most of its losses. The recent consolidation within a trading range highlights the uncertainty in the market. Weak U.S. economic indicators have raised questions about the Federal Reserve's ability to continue raising interest rates. The extended pause in the rate hike cycle is considered positive for gold, given the inverse relationship between rising interest rates and non-yielding assets. Traders will continue to monitor developments related to the Federal Reserve's rate hike trajectory and their impact on gold prices.
CRUDE OIL
- Crude oil prices are set to snap a two-week losing streak on Friday, driven by optimism about higher energy demand from China, the largest crude importer, and a weaker U.S. dollar.
- The CEO of Kuwait Petroleum Corp stated that Chinese demand for oil is expected to continue climbing at a steady pace during the second half of the year.
- Market analysts anticipate that voluntary crude oil output cuts implemented by the Organization of the Petroleum Exporting Countries (OPEC) and its allies in May, along with additional cuts by Saudi Arabia in July, will provide support to oil prices.
- However, market sentiment remains tempered by a weak economic outlook, as China's industrial output and retail sales growth in May fell short of forecasts.
- The impact of a weaker economic backdrop on oil prices underscores the need for continued monitoring of Chinese economic indicators and their influence on oil demand.
| SMA (20) | Slightly Falling |  |
|
| RSI (14) | Slightly Rising |
|
|
| MACD (12, 26, 9) | Neutral |
Closing statement: Crude oil prices are poised to end their two-week decline, buoyed by positive expectations for energy demand from China and a weaker U.S. dollar. The projected growth in Chinese oil consumption, coupled with production cuts by OPEC and its allies, including Saudi Arabia, are factors supporting the market. Nonetheless, concerns about the weak economic outlook and disappointing Chinese economic data contribute to an air of caution in the market. Monitoring key economic indicators will be essential in assessing the future trajectory of oil prices.
DAX
- European shares opened higher on Friday, with gains led by defensive healthcare stocks, wrapping up a week dominated by major central bank policy decisions.
- The DAX index in Germany edged higher this morning, reflecting the positive sentiment in the market. The CAC 40 in France also rose by 0.57%, while the FTSE 100 in the U.K. recorded a gain of 0.44%.
- The Bundesbank, in its biannual update of projections, stated that the German economy, the largest in Europe, is expected to contract this year, and inflation is anticipated to remain above 2% until at least 2025.
- These revised forecasts were released just a day after the European Central Bank (ECB) raised interest rates for the eighth consecutive time and signalled further tightening. The ECB's decision was driven by persistent inflationary pressures that have exceeded expectations, despite a recessionary period during the winter months.
- The convergence of central bank actions, economic projections, and inflation dynamics continues to shape investor sentiment and market trends in Europe.
| SMA (20) | Slightly Rising |
| |
| RSI (14) | Rising |
|
|
| MACD (12, 26, 9) | Slightly Rising |
|
Closing statement: European shares opened on a positive note, propelled by defensive healthcare stocks, capping off a week heavily influenced by major central bank decisions. The German economy's contraction projection and persistent inflationary pressures highlighted by the Bundesbank's updated forecasts provide a backdrop for the ECB's recent interest rate hike and its commitment to ongoing tightening measures. These developments underscore the significance of monitoring central bank policies and economic indicators in navigating the European market.