EURUSD
- EUR/USD experienced a decline of 0.62% to 1.0667 following the release of lower-than-expected inflation data from the German state of North Rhine Westphalia, which recorded an annual inflation rate of 5.7% in May compared to the anticipated 6.8%.
- The decrease in Spanish consumer prices, combined with the German inflation figures, supports the stance of European Central Bank officials who believe that the region's inflationary pressures are subsiding and that interest rate hikes may soon come to an end.
- Other German states are scheduled to release their CPI data later Wednesday, leading to the publication of a national inflation figure. Additionally, French and Italian inflation numbers will be released ahead of the eurozone release on Thursday.
- In early European trading on Wednesday, the U.S. dollar strengthened as weak Chinese activity data dampened risk sentiment, while the U.S. debt ceiling deal made progress, alleviating concerns.
- The market will be closely monitoring the forthcoming inflation data from various European countries, as well as the impact of Chinese economic indicators and the progress of the U.S. debt ceiling deal on EUR/USD.
| SMA (20) | Falling |  |
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| RSI (14) | Slighty Falling | | |||
| MACD (12, 26, 9) | Falling | |
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Closing statement: EUR/USD experienced a significant decline after the release of lower-than-expected German inflation data, signalling a potential easing of inflationary pressures in the eurozone. The U.S. dollar gained strength amid weak Chinese activity data and positive developments regarding the U.S. debt ceiling. Market participants will closely watch upcoming inflation figures from various European countries and assess their impact on EUR/USD.
GBPUSD
- GBP/USD showed a slight upward movement, reaching 1.2358, while finding support just above the key level of 1.2290/80 in heavily oversold conditions, in line with expectations.
- The Bank of England is anticipated to raise interest rates further due to the United Kingdom's inflation not slowing down as initially anticipated.
- Despite the closure of both U.S. and U.K. markets on Monday, the U.S. dollar remained strong and is poised to record a monthly gain of nearly 2.5%, as traders position themselves for the potential scenario of higher U.S. interest rates persisting for a longer period.
- The DXY, which measures the dollar against six other major currencies, increased by 0.1% to 104.369, reaching a two-month high of 104.420 earlier in the session.
- Market participants will continue to monitor developments in the U.K. inflation situation, as well as the potential impact of U.S. interest rate expectations on GBP/USD.
| SMA (20) | Slightly Falling | |
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| RSI (14) | Slightly Falling | |
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| MACD (12, 26, 9) | Slightly Falling | |
Closing statement: GBP/USD experienced a modest rise, finding support after being oversold, while the Bank of England is expected to raise interest rates due to the persistent inflationary pressures in the United Kingdom. The U.S. dollar remained firm and is set to achieve a monthly gain, driven by traders positioning themselves for the possibility of prolonged higher interest rates in the U.S. Moving forward, market focus will remain on U.K. inflation data and the impact of U.S. interest rate expectations on GBP/USD.
GOLD
- Gold prices declined on Wednesday as investors awaited further developments regarding the U.S. debt ceiling, while copper prices also slipped due to indications of a slowdown in China's economic rebound.
- The bill to suspend the U.S. debt ceiling, amounting to $31.4 trillion, made progress as the Republican-controlled House Rules Committee voted 7-6 to advance it for a vote in the House of Representatives on Wednesday.
- The advancement of the debt ceiling bill reduces the likelihood of a disastrous U.S. default, but it may also provide the Federal Reserve with the confidence to continue raising interest rates, given the persistent elevated levels of inflation, which supports the dollar.
- With interest rates on the rise, the opportunity cost of investing in non-yielding assets, such as gold, increases. This trend had a negative impact on gold prices throughout 2022.
- Market participants will closely monitor the outcome of the debt ceiling vote and its potential impact on the Federal Reserve's monetary policy decisions, as well as the implications for gold prices.
Closing statement: Gold prices declined as investors awaited developments related to the U.S. debt ceiling, while concerns over a slowing economic rebound in China also affected copper prices. Progress in the debt ceiling bill reduces the risk of a U.S. default, but it may reinforce the Federal Reserve's inclination to raise interest rates given the persistent inflationary pressures, supporting the dollar and adding pressure on gold. The trajectory of interest rates and the outcome of the debt ceiling vote will be key factors to watch in assessing the future direction of gold prices.
CRUDE OIL
- Crude oil prices experienced slight declines in Asian trade on Wednesday, following significant drops in the previous session, as the market awaited a vote on the U.S. debt ceiling. Additionally, disappointing economic data from China raised concerns about sluggish demand for oil.
- Recent data released on Wednesday indicated that Chinese manufacturing activity contracted for the second consecutive month in May, and at a more pronounced pace compared to the previous month.
- The contraction in the manufacturing sector, which plays a vital role in the country's economic growth, led to an overall decline in business activity in China, impacting market sentiment and favouring the safe haven status of the dollar.
- OPEC's unexpected production cuts in April came into effect in May. However, Russia has maintained relatively stable production and exports, with the country being a significant supplier to both India and China.
- The combination of uncertainty surrounding the U.S. debt ceiling vote and concerns about weak demand due to China's manufacturing slowdown has put downward pressure on crude oil prices.
| SMA (20) | Slightly Falling | |
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| RSI (14) | Neutral | ||
| MACD (12, 26, 9) | Slightly Falling | |
Closing statement: Crude oil prices edged lower as the market awaited the U.S. debt ceiling vote and reacted to disappointing manufacturing data from China, which raised concerns about demand. OPEC's production cuts and steady output from Russia have been important factors to monitor in the oil market. The outcome of the debt ceiling vote and future developments in global manufacturing activity will likely influence crude oil prices in the near term.
DAX
- European stock markets experienced significant declines on Wednesday, driven by disappointing Chinese manufacturing data that negatively impacted market sentiment. Additionally, investors were focused on key regional inflation data.
- The DAX index in Germany traded 0.45% lower, the CAC 40 in France fell 0.56%, and the FTSE 100 in the U.K. dropped 0.42%.
- The economic calendar highlighted national Consumer Price Index (CPI) releases from major European countries, leading up to the flash eurozone inflation number on Thursday.
- The German state of North Rhine Westphalia, the country's most populous state, reported an annual inflation rate of 5.7% in May, significantly below the expected 6.8% and the revised prior figure of 6.7%.
- German unemployment figures for May showed a smaller-than-expected rise. The Federal Labour Office reported an increase of 9,000 people out of work in seasonally adjusted terms, reaching a total of 2.573 million. Analysts polled by Reuters had anticipated a rise of 15,000.
| SMA (20) | Slightly Rising |
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| RSI (14) | Slighty Falling | |
| MACD (12, 26, 9) | Slighty Falling | |
Closing statement: European stock markets, including the DAX40, faced notable declines on Wednesday, influenced by disappointing Chinese manufacturing data and the focus on regional inflation figures. The lower-than-expected inflation rate in North Rhine Westphalia and the smaller-than-anticipated rise in German unemployment provided some positive aspects amidst the overall negative sentiment. Investors will continue to monitor economic indicators and inflation data as they assess the impact on market dynamics.