EURUSD
- EUR/USD declined by 0.3% to 1.0691, reaching a 2-month low at 1.0674, primarily influenced by the strengthening dollar. Spanish inflation figures fell short of expectations, rising 3.2% year-on-year in May, below the projected 4.4%.
- From a technical perspective, EUR/USD maintains a bearish bias in the short term, as indicated by indicators on the daily chart. However, the negative momentum has slightly eased in recent days.
- The U.S. dollar showed strength in early European trading on Tuesday, remaining near a two-month high. Traders were processing the potential for additional interest rate hikes by the Federal Reserve and the passage of the U.S. debt ceiling deal through a divided Congress.
- The upcoming monthly U.S. jobs report, scheduled for Friday, is expected to demonstrate the resilience of the country's labour market, with an anticipated creation of 180,000 jobs in May.
- The euro faced downward pressure against the dollar, touching a 2-month low, as the dollar remained strong. Spanish inflation data falling below expectations further contributed to the euro's decline. Traders continued to assess the potential for more interest rate hikes by the Federal Reserve and the passage of the U.S. debt ceiling deal. The focus will now shift to the upcoming U.S. jobs report, which is expected to shed light on the state of the labour market.
| SMA (20) | Falling |  |
| |
| RSI (14) | Falling | |
| |
| MACD (12, 26, 9) | Slightly Falling | |
Closing statement: Investors witnessed the euro sliding against the dollar, hitting a 2-month low, predominantly driven by the dollar's strength. Disappointing Spanish inflation data added to the euro's downward pressure. Market participants remained attentive to the possibility of increased interest rate hikes by the Federal Reserve and the progress of the U.S. debt ceiling agreement. Attention will now turn to the eagerly awaited U.S. jobs report, providing insights into the resilience of the labour market.
GBPUSD
- GBP/USD edged higher to 1.2358, rebounding from just above the key support level at 1.2290/80, which was in line with expectations.
- The Bank of England is expected to continue raising interest rates due to the ongoing inflationary pressures in the United Kingdom, as inflation shows no signs of decelerating as anticipated.
- The U.S. dollar remained firm on Monday, recording a monthly gain of nearly 2.5%, as traders position themselves for the potential of higher U.S. interest rates over a longer period.
- The DXY, which tracks the dollar against six other major currencies, rose 0.1% to 104.369, reaching a two-month high of 104.420 earlier in the session.
- The focus will now shift to the reopening of the U.S. and U.K. markets, following the holiday, to gauge further market activity and any potential impact on GBP/USD.
| SMA (20) | Slightly Falling | |
||
| RSI (14) | Slightly Rising |
|
||
| MACD (12, 26, 9) | Slightly Falling | |
Closing statement: GBP/USD showed a slight upward movement, recovering from solid support levels, while the U.S. dollar maintained its strength. The Bank of England's potential for further interest rate hikes remains due to the persistent inflationary pressures in the United Kingdom. Meanwhile, traders continued to position themselves for the possibility of sustained higher U.S. interest rates, resulting in the dollar's monthly gain. The focus will now turn to the reopening of markets and the subsequent trading activity.
GOLD
- GOLD (XAU/USD) Gold prices declined slightly on Tuesday, reaching a two-month low around $1932 per ounce, as optimism surrounding a debt ceiling deal and expectations of additional interest rate hikes by the Federal Reserve bolstered the demand for the dollar.
- U.S. President Joe Biden and top congressional Republican Kevin McCarthy reached an agreement over the weekend to suspend the debt ceiling until 2025 and implement spending caps, aiming to prevent a potential U.S. debt default.
- The agreement must now navigate through a closely divided Congress within a limited timeframe before the U.S. Treasury exhausts its funds to meet its obligations. However, it is anticipated to face opposition from both extreme factions of the political parties.
- Elevated inflation levels persist, leading the market to price in a 60% probability of a 25 basis-point interest rate hike by the Federal Reserve in June, contributing to the strength of the U.S. dollar.
- Gold prices continue to be influenced by these factors, as investors assess the implications of the debt ceiling deal, interest rate expectations, and inflation dynamics on the precious metal.
Closing statement: Gold prices experienced a slight decline, hitting a two-month low, driven by optimism surrounding a debt ceiling agreement and the anticipation of further interest rate hikes by the Federal Reserve. The dollar's strength, supported by elevated inflation levels, contributed to the downward pressure on gold. The market will closely monitor the progress of the debt ceiling deal and interest rate expectations, which are likely to influence gold's future trajectory.
CRUDE OIL
- Crude oil prices declined on Tuesday, erasing early gains, as concerns over potential interest rate hikes by the Federal Reserve and sluggish economic growth overshadowed optimism surrounding the U.S. debt ceiling negotiations.
- Traders remained cautious and awaited economic indicators from China, a major oil importer, with manufacturing and service sector data for May scheduled to be released on Wednesday.
- Worries about a slowdown in China's economic recovery prompted oil traders to reassess expectations of robust global crude demand this year, especially as Chinese oil imports declined in April.
- The upcoming OPEC meeting on June 4th will provide fresh insights into oil supply dynamics, following mixed signals from Saudi Arabia and Russia regarding potential production cuts.
- Market sentiment in the oil industry remains sensitive to economic cues, interest rate expectations, and developments in major oil-consuming countries.
| SMA (20) | Slightly Falling | |
|
| RSI (14) | Slightly Falling | |
|
| MACD (12, 26, 9) | Neutral |
Closing statement: Crude oil prices reversed their early gains and traded lower due to concerns about potential interest rate hikes and slower economic growth. Traders kept a watchful eye on China's economic indicators and its impact on global crude demand. Additionally, the upcoming OPEC meeting and signals from major oil-producing nations will play a significant role in shaping the market's direction.
DAX
- European stock markets showed mixed performance on Tuesday as investors closely monitored the progress of the U.S. debt ceiling agreement through Congress.
- The DAX index in Germany recorded a slight increase of 0.33%, while the CAC 40 in France experienced a decline of 0.36%, and the FTSE 100 in the U.K. fell by 0.28%.
- Year-to-date data from Bloomberg reveals that the DAX has generated a return of 17.2% including dividends, slightly trailing behind France's CAC 40 at 18%, but outperforming the FTSE 100, which has yielded a return of 6.2%.
- Shares of Adidas and Siemens have performed strongly this year, with both companies seeing a nearly 25% increase in their stock value. The market has responded positively to better-than-expected corporate earnings, allowing it to overlook concerns about Germany's economic outlook.
- Despite fears of a possible recession in Europe's largest economy, the market sentiment remains resilient due to robust corporate performances.
| SMA (20) | Neutral |
| RSI (14) | Neutral |
| MACD (12, 26, 9) | Neutral |
Closing statement: European stock markets, including the DAX40, exhibited mixed results as market participants awaited further developments regarding the U.S. debt ceiling agreement. The DAX40 has delivered a solid performance this year, slightly trailing behind the CAC 40 but outpacing the FTSE 100. Strong earnings from companies like Adidas and Siemens have contributed to market resilience despite concerns about Germany's economic outlook.