EURUSD
- EUR/USD Trading Sideways: EUR/USD is trading sideways around 1.0850 during European trading on Monday. Holiday-thinned market conditions and a lack of fresh fundamental catalysts have kept the pair in a tight range.
- ECB Policymaker's Comments: On Sunday, ECB policymaker Piero Cipollone stated that the time is right for an interest rate cut in June, as recent data has moved in the right direction.
- US Durable Goods Orders: On Friday, US Durable Goods Orders increased by 0.7% month-over-month in April, following a downward revision to 0.8% in March. This was stronger than the expected decline of 0.8%.
- University of Michigan Consumer Sentiment: The University of Michigan Consumer Sentiment Index improved to 69.1 in May from 67.4 in April, surpassing the estimated 67.5. Additionally, the UoM five-year inflation expectations eased to 3% from 3.1%.
- Upcoming US GDP Data: Investors are now awaiting the preliminary US Gross Domestic Product (GDP) Annualized data for the first quarter (Q1), which is scheduled to be released on Thursday.
| 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 continues to trade in a tight range amid subdued market activity and a lack of new catalysts. While ECB policymaker Piero Cipollone's comments hint at a possible rate cut in June, the stronger-than-expected US Durable Goods Orders and improved consumer sentiment underscore the resilience of the US economy. Investors are looking forward to the preliminary US GDP data for Q1, which will be a significant driver for the pair later in the week.
GBPUSD
- GBP/USD Advances: GBP/USD is advancing for the second consecutive session, trading around 1.2740, near two-month highs, during the Asian hours on Monday.
- Thin Liquidity and Minimal Volatility: The pair is experiencing thin liquidity and minimal volatility due to US and UK market holidays.
- UK Retail Sales Data: Traders in the United Kingdom have digested lower-than-anticipated Retail Sales data released on Friday, with April witnessing a notable 2.3% decline in the monthly volume of sales by retailers.
- GfK Consumer Confidence: GfK Consumer Confidence softened to a reading of -17 in May, which was slightly better than the anticipated -18 reading and the previous -19.
- UK Inflation Rate: The UK's annual inflation rate has moderated, edging closer to the Bank of England's (BoE) target of 2%. This moderation has tempered expectations of a rate cut in June among investors, potentially bolstering support for the Pound Sterling (GBP).
| 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 continues to advance, trading near two-month highs amid thin liquidity and minimal volatility due to market holidays in the US and UK. While lower-than-expected UK Retail Sales data and softened GfK Consumer Confidence were digested by traders, the moderating UK inflation rate nearing the BoE's target has tempered expectations of a June rate cut, providing potential support for the Pound Sterling.
GOLD
- Gold Price Recovery: Gold price is building on the recovery from two-week lows early Monday, supported by US holiday-induced thin market conditions.
- China's Investment Fund: Reuters reported that China launched a new state-backed investment fund with a registered capital of CNY 344 billion yuan to boost the semiconductor industry. This measure could help stimulate economic recovery, positively impacting gold prices.
- Middle East Escalation: A fresh escalation in the war in the Middle East is providing extra support for the ongoing rebound in gold prices.
- Fed Rate Cut Expectations: Despite the rebound, there is uncertainty about its sustainability as markets continue to trim their expectations of interest rate cuts by the US Federal Reserve (Fed) this year.
- Thin Liquidity: It’s worth noting that thin liquidity could exaggerate gold price movements, as both the UK and the US markets are closed on Monday in observance of the Spring Bank Holiday and Memorial Day.
Closing statement: Gold price is recovering from two-week lows amid US holiday-induced thin market conditions. The launch of China's state-backed investment fund and a fresh escalation in the Middle East are providing support. However, the sustainability of the rebound is uncertain as expectations of Fed rate cuts are trimmed. Thin liquidity could exaggerate movements, with UK and US markets closed for holidays.
CRUDE OIL
- WTI Crude Oil Price Recovery: West Texas Intermediate (WTI) crude oil price inches higher due to a recovery in overall market risk appetite.
- US Inflation Expectations: On Friday, the University of Michigan's 5-year Consumer Inflation Expectations for May eased slightly to 3.0%, down from the forecasted 3.1%. This decline in inflation expectations is bolstering investor sentiment regarding potential rate cuts by the Federal Reserve (Fed).
- Impact of Elevated Interest Rates: Higher for longer interest rates are negatively impacting the US economic outlook and reducing oil demand.
- Iran's Oil Output Plan: Reuters reported on Sunday, citing Iran’s Tasnim news agency, that an economic council led by Iran's interim president Mohammad Mokhber has approved a plan to increase the country's oil output from 3.6 million barrels per day (bpd) to 4 million bpd.
- Saudi Aramco Share Sale: Saudi Arabia is preparing for a multi-billion-dollar share sale in energy giant Aramco, aiming to raise around $10 billion as early as June.
| 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: WTI crude oil price sees a modest increase amid a recovery in market risk appetite. Easing US inflation expectations are supporting investor sentiment on potential Fed rate cuts, though prolonged elevated interest rates continue to dampen the US economic outlook and oil demand. Iran plans to boost oil output, and Saudi Arabia is set for a significant Aramco share sale, adding to market dynamics.
DAX
- German Q1 2024 GDP: On Friday, Q1 2024 GDP numbers for Germany drew investor interest, expanding by 0.2%. In Q4 2023, the German economy contracted by 0.5%. The numbers followed better-than-expected private PMI numbers that signaled an improving macroeconomic environment.
- ECB Rate Cut Delay: The European Central Bank (ECB) could delay post-June interest rate cuts in response to the more upbeat economic outlook.
- US Economic Indicators: US economic indicators provided late support. According to the finalized University of Michigan Survey of Consumers, the Michigan Consumer Sentiment Index fell from 77.2 to 69.1.
- German Ifo Business Climate Index: On Monday, the German Ifo Business Climate Index will warrant investor attention. A sharp pickup in business confidence would align with the PMI numbers for May.
- ECB Commentary: Investors should consider ECB commentary today. ECB Chief Economist Philip Lane is on the calendar to speak. Views on inflation, the economic outlook, and post-June interest rate hikes could move the dial.
| SMA (20) | Rising |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: German GDP growth and strong PMI numbers suggest a positive macroeconomic outlook, potentially delaying ECB rate cuts. Upcoming German Ifo Business Climate Index and ECB commentary will be key for investors to watch.