EURUSD
- EUR/USD Struggles Near 1.0800: EUR/USD is battling around the 1.0800 mark in European trading on Friday, pressured by recent strength in the US Dollar.
- Robust US Data: The Dollar's rebound is supported by strong preliminary US PMI data for May, indicating economic resilience.
- Jobless Claims Data: Weekly Initial Jobless Claims dropped to 215K for the week ending May 18, lower than the estimated 220K, signaling a strong labor market.
- Fed's Stance on Rate Cuts: Atlanta Fed President Raphael Bostic suggested that the US central bank might need to wait longer to cut interest rates due to persistent inflation pressures.
- ECB's Confidence in Inflation Control: ECB President Christine Lagarde expressed confidence in controlling Eurozone inflation and hinted at a possible interest rate cut next month.
| SMA (20) | Rising |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Rising |
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Closing statement: EUR/USD is facing pressure around the 1.0800 level in European trading on Friday, primarily due to the recent strength of the US Dollar, bolstered by robust US PMI data and lower-than-expected jobless claims. Comments from Fed President Bostic about the need to delay rate cuts due to inflation pressures add to the Dollar's strength, while ECB President Lagarde's confidence in controlling Eurozone inflation and the potential for a rate cut next month provide some support for the Euro.
GBPUSD
- Renewed Selling Pressure: GBP/USD has come under renewed selling pressure, falling below 1.2700 early Friday, influenced by a bigger-than-expected decline in UK Retail Sales data for April.
- Strong US PMI Data: On Thursday, the flash US S&P Global Composite PMI climbed to 54.4 in May from 51.3 in April, surpassing the market consensus of 51.1. The Manufacturing PMI also rose to 50.9 in May from the previous 50.0 reading.
- Inflation Concerns: A rise in input prices within the US manufacturing sector suggests potential inflationary pressures ahead, which might cause the US Federal Reserve (Fed) to delay interest rate cuts this year.
- UK CPI Impact on BoE: The UK CPI inflation report earlier in the week led investors to lower their bets on a Bank of England (BoE) rate cut next month, indicating expectations of a continued hawkish stance.
- Upcoming US Data: Later on Friday, US Durable Goods Orders and the Michigan Consumer Sentiment Index are scheduled for release, which could further influence market sentiment and GBP/USD dynamics.
| SMA (20) | Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: GBP/USD has fallen below 1.2700 amid renewed selling pressure due to a larger-than-expected decline in UK Retail Sales data for April. Strong US PMI data and rising manufacturing input prices have bolstered the US Dollar, with potential inflationary concerns suggesting the Fed may delay rate cuts. In the UK, the recent CPI inflation report has reduced expectations for a BoE rate cut next month. Market participants will be closely watching the upcoming US Durable Goods Orders and Michigan Consumer Sentiment Index later on Friday for further direction.
GOLD
- Gold Price Near Two-Week Lows: Gold is nursing losses and flirting with two-week lows near $2,327 in the European session on Friday.
- Technical Indicators: Gold price closed below the key 21-day Simple Moving Average (SMA) at $2,347, while the 14-day Relative Strength Index (RSI) moved below the midline, indicating a bearish trend.
- Impact of Robust US Data and Hawkish Fed: Robust US economic data combined with recent hawkish comments from Fed officials have reduced aggressive Fed rate cut bets for this year, putting additional downward pressure on the non-interest-bearing gold price.
- Supply Side Pressure: Gold price faced further pressure from the supply side after Reuters reported that Russian metals giant Nornickel plans a joint project to construct a platinum group metals (PGMs) refinery in Bahrain.
- Focus on Fedspeak: Traders will look for more cues from upcoming Fed comments. Fed’s Waller is set to speak on Friday, and hawkish remarks from Fed policymakers might add further downward pressure on gold.
Closing statement: Gold prices are under pressure, trading near two-week lows around $2,327, and have closed below the 21-day SMA, signaling potential further declines. Robust US economic data and hawkish Fed commentary are tempering aggressive Fed rate cut expectations, adding to the downward momentum. Supply-side developments, including Nornickel's plans for a PGMs refinery in Bahrain, have also weighed on gold prices. Investors are keenly awaiting further Fedspeak, with particular attention to remarks from Fed’s Waller on Friday, which could influence gold's trajectory further.
CRUDE OIL
- WTI Set to Close the Week Bearishly: West Texas Intermediate (WTI) oil prices are poised to end the week on a bearish note, extending losses for the fifth consecutive trading session on Friday.
- Pressure from Hawkish Fed Guidance: The oil market has been under pressure throughout the week as Federal Reserve (Fed) policymakers maintain a hawkish stance on interest rates.
- Conditions for Rate Cuts: Policymakers have emphasized that rate cuts will only be considered if there is greater confidence that inflation will sustainably return to the desired 2% rate.
- Upcoming OPEC Meeting: The next significant event for oil prices will be the OPEC meeting on June 1, where members will discuss supply policy.
- Previous OPEC Decision: In the last meeting on April 13, oil-producing nations decided to maintain the current voluntary oil output cut of 2.2 million barrels per day.
| SMA (20) | Falling |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: West Texas Intermediate (WTI) oil prices are set to close the week on a bearish note, extending their losing streak to five sessions. The market has been pressured by the Federal Reserve's hawkish stance on interest rates, with policymakers indicating that rate cuts will only occur if inflation shows sustainable signs of returning to the 2% target. The upcoming OPEC meeting on June 1 is anticipated as the next major event, with discussions on supply policy in focus. In their last meeting, OPEC members maintained the current voluntary oil output cut of 2.2 million barrels per day, which will likely influence future market movements.
DAX
- German Private Sector PMIs: On Thursday, preliminary private sector PMIs for Germany were in the spotlight. The HCOB Services PMI increased from 53.2 to 53.9, and the Manufacturing PMI rose from 42.5 to 43.1, resulting in the HCOB Composite PMI increasing from 50.6 to 52.2.
- US Economic Data: Economic data from the US also drew investor attention. Initial jobless claims fell from 223k to 215k for the week ending May 18. Additionally, the S&P Global Services PMI rose from 51.3 to 54.8.
- German GDP Growth: German gross domestic product (GDP) rose by 0.2% in the first quarter of 2024 compared to the fourth quarter of 2023.
- ECB Commentary: Investors should consider commentary from European Central Bank (ECB) officials. ECB President Christine Lagarde and Executive Board member Isabel Schnabel are scheduled to speak. Their views on post-June interest rate cuts could significantly influence market sentiment.
- Upcoming US Data: Later in the Friday session, US core durable goods orders and the University of Michigan Survey of Consumers will be key data points warranting investor attention.
| SMA (20) | Rising |
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| RSI (14) | Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: The DAX has seen mixed influences from both domestic and international data. The rise in German private sector PMIs and GDP growth of 0.2% in Q1 2024 provided some positive sentiment. However, attention is now shifting to the US economic data, including initial jobless claims and PMIs, and upcoming insights from ECB officials, particularly concerning post-June interest rate decisions. Investors are also awaiting US core durable goods orders and the University of Michigan Consumer Sentiment Index for further market direction.