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AUD/USD holds lower ground near 0.7065 as it prints a three-day downtrend heading into Thursday?s European session. In doing so, the Aussie pair break
  • AUD/USD takes offers to renew intraday low, down for the third consecutive day.
  • Break of two-week-old support line, steady RSI keep sellers hopeful.
  • 10-DMA, 20-DMA and resistance-turned-support from early April together offer strong challenge to bears.
  • Bulls need to cross weekly top before eyeing the monthly peak.

AUD/USD holds lower ground near 0.7065 as it prints a three-day downtrend heading into Thursday’s European session. In doing so, the Aussie pair breaks a fortnight-long support line.

In addition to the support break, the steady RSI and the recent pullback from a three-week high signal the AUD/USD pair’s further downside.

However, a confluence of the 10-DMA, 20-DMA and previous resistance line from early April, near 0.7035, appears a tough nut to crack for the bears.

Following that, the 0.6950 level may act as the last defense of the AUD/USD buyers before directing the quote towards the monthly low of 0.6828.

Alternatively, recovery moves need to refresh the weekly high, currently around 0.7130, to convince buyers.

Even so, the 0.7200 threshold and the monthly peak surrounding 0.7270 could challenge the AUD/USD bulls.

Overall, AUD/USD is likely to decline further but the downside room appears limited.

AUD/USD: Daily chart

Trend: Further downside expected

 

The NZD/USD pair has faced barricades around 0.6500 and has slipped to near 0.6460 in the early European session. Mounting uncertainty ahead of the US
  • NZD/USD has attracted significant offers at 0.6500 on a firmer rebound in the DXY.
  • Investors are getting risk-averse ahead of the US PCE.
  • RBNZ’s warning signal for a potential recession has impacted the antipodean.

The NZD/USD pair has faced barricades around 0.6500 and has slipped to near 0.6460 in the early European session. Mounting uncertainty ahead of the US Personal Consumption Expenditure (PCE), which is due in the New York session, has diminished the risk appetite of the market participants.

The US PCE is expected to remain stable at 7% but stability in the catalyst at elevated levels is itself a cause of worry for the Federal Reserve (Fed).  Higher PCE levels dictate higher spending on durable and non-durable goods from the households, which could let inflationary pressures anchored at higher levels. No wonder, this will compel Fed chair Jerome Powell to dictate a mega rate hike along with an extremely hawkish stance for the upcoming monetary policies.

On the dollar front, the US dollar index (DXY) has established above 102.00 and is expected to remain sustained higher amid a rebound in the negative market sentiment.

Meanwhile, the kiwi dollar is also facing the headwinds of renewed recession fears. The 50 basis points (bps) rate hike announcement by the Reserve Bank of New Zealand (RBNZ) on Wednesday has pressed the recession button while tackling the ramping up inflation. RBNZ Governor Adrian Orr, in his statement, has warned that recession cannot be ruled out however he is not predicting one. It is worth noting that this is a consecutive jumbo rate hike by the RBNZ.

 

Japanese Prime Minister Fumio Kishida said Thursday that he expects the Bank of Japan (BOJ) to make efforts to achieve the 2% inflation target stably

Japanese Prime Minister Fumio Kishida said Thursday that he expects the Bank of Japan (BOJ) to make efforts to achieve the 2% inflation target stably and sustainably.

Kishida, however, said that specific monetary policy is up to the BOJ to decide.

On Wednesday, Japan's government called on the Bank of Japan (BOJ) to strive for achieving its 2% inflation target in a "sustainable and stable fashion,” Reuters reports, having seen a draft of its long-term policy outline.

Market reaction

USD/JPY is up 0.07% on the day, currently trading at 127.40, capitalizing on the renewed US dollar demand.

In the opinion of FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, GBP/USD could extend the upside once it clears the 1.2600 barrier. Key Q

In the opinion of FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, GBP/USD could extend the upside once it clears the 1.2600 barrier.

Key Quotes

24-hour view: “Yesterday, we expected GBP to ‘trade within a range of 1.2480/1.2580’. GBP subsequently traded within a wider range than expected (1.2482/1.2590). The underlying tone has improved and GBP could edge above the major resistance at 1.2600. The next resistance at 1.2640 is unlikely to come under threat. On the downside, a break of 1.2530 (minor support is at 1.2560) would indicate that the current mild upward pressure has eased.”

Next 1-3 weeks: “We highlighted yesterday (25 May, spot at 1.2540) that GBP is likely to consolidate and trade between 1.2430 and 1.2600. We added, ‘looking ahead, further GBP strength is not ruled out but it has to close above 1.2600 before a sustained advance is likely’. GBP subsequently rose to 1.2590 before closing at 1.2584 (+0.38%). Shorter-term upward momentum has improved somewhat but as indicated; GBP has to close above 1.2600 before a sustained advance is likely. The next resistance above 1.2600 is at 1.2640.”

Prices of copper futures on COMEX take offers around $4.23 as sellers keep reins for the third consecutive day amid the market?s fears of global reces
  • Copper remains on the back foot around weekly low, prints three-day downtrend.
  • China’s covid conditions, geopolitical headlines raise concerns over global economic downturn.
  • Improvement in supplies adds strength to the bearish bias.
  • US GDP, China’s covid updates and risk catalysts are crucial for clear directions.

Prices of copper futures on COMEX take offers around $4.23 as sellers keep reins for the third consecutive day amid the market’s fears of global recession and a slump in the industrial demand for the red metal.

Reuters describe three-month LME copper prices as 0.1% down at $9,365 a tonne by 03:51 GMT whereas the most-traded July copper contract on the Shanghai bourse ended the morning trade 0.2% lower at 71,280 yuan ($10,614.25) a tone.

“Years of under-investment in the mining of metals essential to the energy transition, supply shocks, and high energy prices will continue to drive commodity prices higher, Eurasian Resources Group Chief Executive Benedikt Sobotka said,” per Reuters.  The news also highlights increasing odds of an end to the protest that has halted operations at MMG Ltd's Las Bambas copper mine in Peru also weighing on prices.

Elsewhere, fears emanating from the Ukraine-Russia crisis and China’s covid conditions, as well as the fresh fears of the Sino-American tussles, weigh on the market sentiment and copper prices.

While portraying the mood, the S&P 500 Futures print mild losses around 3,965 whereas the US 10-year Treasury yields again bounce off monthly low, after Wednesday’s failed attempt, up 0.5 basis points (bps) to 2.75% at the latest.

Looking forward, copper traders will keep their eyes on the second readings of the US Q1 2022 GDP, the annualized figure is expected to remain unchanged at -1.4%, to determine short-term prices. However, major attention will be given to the risk catalysts surrounding inflation, growth and covid.

Technical analysis

Unless crossing a short-term hurdle surrounding $4.45, COMEX Copper prices are on the way to $4.00.

CME Group?s flash data for gold futures markets saw traders trim their open interest positions for yet another session on Wednesday, this time by arou

CME Group’s flash data for gold futures markets saw traders trim their open interest positions for yet another session on Wednesday, this time by around 2.2K contracts. Volume, instead, went up for the third session in a row, now by around 30.8K contracts.

Gold looks supported by the 200-day SMA

Wednesday’s downtick in gold prices was accompanied by shrinking open interest, which is indicative that a deeper retracement could be out of favour in the very near term. Against this, the key 200-day SMA at $1,839 should hold the initial test for the time being.

EUR/USD should clear 1.0720 to allow for a potential test of the 1.0750 in the next weeks, suggested FX Strategists at UOB Group Lee Sue Ann and Quek

EUR/USD should clear 1.0720 to allow for a potential test of the 1.0750 in the next weeks, suggested FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “We highlighted yesterday that ‘faltering upward momentum coupled with overbought conditions suggests that EUR is unlikely to strengthen further’ and we expected EUR to ‘consolidate and trade between 1.0670 and 1.0750’. However, EUR dropped to 1.0641 before rebounding. The price actions still appear to be part of a consolidation and EUR is likely to trade within a range of 1.0645/1.0720 for today.”

Next 1-3 weeks: “We highlighted yesterday (25 May, spot at 1.0730) that a break of the major resistance at 1.0750 would not be surprising. We did not expect the sharp pullback that came within one pip of our ‘strong support’ level at 1.0640 (low of 1.0641). Upward momentum is beginning to wane and EUR has to move and stay above 1.0720 within these 1 to 2 days or the chance for a break of 1.0750 would diminish quickly. Conversely, a break of 1.0640 (no change in ‘strong support’ level) would indicate that the upward pressure that started earlier this week has eased.”

WTI crude oil prices keep the previous two week?s inaction forward as it flirts with $110.00 heading into Thursday?s European session. Even so, the bl
  • WTI grinds higher past 50-SMA, stays sidelined in the last three weeks.
  • Higher-low on prices and RSI keep buyers hopeful until the quote stays beyond two-week-long support line.
  • Bulls need a clear break of weekly horizontal hurdle to register dominance.

WTI crude oil prices keep the previous two week’s inaction forward as it flirts with $110.00 heading into Thursday’s European session.

Even so, the black gold buyers remain hopeful as an upward sloping support line from May 10 joins bullish RSI divergence, as the quote prints higher-low together with the indirection.

This suggests the energy benchmark’s ability to cross the weekly hurdle surrounding $111.30.

Following that, the monthly high near $113.20 and late March’s high near $116.60 can entertain oil buyers before directing them to the yearly peak surrounding $129.50.

Meanwhile, the 50-SMA level near $109.50 restricts the commodity’s immediate downside ahead of the aforementioned support line, at $109.15 by the press time.

Should the WTI bears manage to conquer the aforementioned support line, also break the $109.00 threshold, the odds of the quote’s south-run towards the previous week’s low near $103.00 can’t be ruled out.

WTI: Four-hour chart

Trend: Further upside expected

 

Gold price (XAU/USD) has witnessed a steep fall in the early European session after failing to cross the round-level resistance of $1,850.00. The prec
  • Gold prices have established below $1,850.00 amid uncertainty over the US PCE.
  • The DXY has recorded a fresh day’s high at 102.16 a risk-on impulse fade.
  • A higher US PCE number could compel the Fed to sound extremely hawkish.

Gold price (XAU/USD) has witnessed a steep fall in the early European session after failing to cross the round-level resistance of $1,850.00. The precious metal looks set for a downside move as the US dollar index (DXY) has refreshed its day’s high at 102.16, at the press time. Investors are pouring money into the DXY as the US Personal Consumption Expenditure (PCE) is expected to remain stable at 7%.

Sustainability of the PCE at elevated levels is going to bolster the odds of a 50 basis point (bps) interest rate hike by the Federal Reserve (Fed) in its June monetary policy. Higher PCE by the households advocates higher aggregate demand and eventually mounting inflationary pressures, which could worsen the situation for Fed policymakers.

Apart from that, investors are also awaiting the release of the US Gross Domestic Product (GDP) numbers. The annual US GDP is seen at -1.4% while the GDP Price Index is expected to land at 8%. A higher-than-expected figure could bring more bids to the DXY counter and eventually a sell-off in the gold prices.

Gold technical analysis

A Bearish Divergence formation on an hourly scale has weakened the gold prices. The precious metal formed a higher high while the momentum oscillator, Relative Strength Index (RSI) (14), formed a lower high, which signaled a loss of momentum. The RSI (14) has slipped below 40.00, which adds to the downside filters. The 20-period Exponential Moving Average (EMA) at $1,852.58 is acting as a major resistance for the gold prices.

Gold hourly chart

 

Singapore Industrial Production (YoY) above forecasts (5.1%) in April: Actual (6.2%)
Singapore Industrial Production (MoM) registered at 2.2%, below expectations (8.1%) in April
FX option expiries for May 26 NY cut at 10:00 Eastern Time, via DTCC, can be found below. - EUR/USD: EUR amounts 1.0600 851m 1.0680 379m 1.0700 526m -

FX option expiries for May 26 NY cut at 10:00 Eastern Time, via DTCC, can be found below.

- EUR/USD: EUR amounts        

  • 1.0600 851m
  • 1.0680 379m
  • 1.0700 526m

- GBP/USD: GBP amounts        

  • 1.2400 200m
  • 1.2475 242m

- USD/JPY: USD amounts                     

  • 127.50 940m
  • 128.00 516m

- AUD/USD: AUD amounts  

  • 0.7125 473m

- USD/CAD: USD amounts       

  • 1.2600 325m
  • 1.2795 680m
  • 1.2815 411m
  • 1.3000 372m

- EUR/GBP: EUR amounts

  • 0.8500 433m
USD/TRY extends the run-up towards a record high ahead of the CBRT Interest Rate decision, sidelined around the yearly peak heading into Thursday?s Eu
  • USD/TRY prints five-day uptrend, seesaws around the highest levels since December 2022.
  • Fears of FX reserve depletion at CBRT recently favored bulls.
  • CBRT is expected to keep benchmark rates unchanged at 14%, the fifth consecutive inaction.
  • Second reading of the US Q1 2022 GDP will also decorate the calendar.

USD/TRY extends the run-up towards a record high ahead of the CBRT Interest Rate decision, sidelined around the yearly peak heading into Thursday’s European session. That said, the quote takes rounds to 16.35-40 by the press time, after refreshing the 2022 top with 16.46 the previous day.

The Turkish lira has been on the back foot since the early days of 2022 as markets lose confidence in the Turkish government’s efforts to stabilize the beleaguered currency while keeping the interest rates unchanged. The moves were also doubted on the recently depleting FX reserves of the Central Bank of the Republic of Turkey (CBRT).

“Data last Friday showed the central bank's net international reserves dropped some $3.5 billion to $11.53 billion in the week to May 13. Bankers calculate that they fell to $10 billion or less in the following week,” said Reuters.

Reuters also mentions, “Economists say rate hikes could help relieve both the lira and reserves. But President Tayyip Erdogan's opposition to policy tightening has left few expecting a turnaround any time soon, including when the bank meets on Thursday.”

Elsewhere, fears emanating from the Ukraine-Russia crisis and China’s covid conditions, as well as the fresh fears of the Sino-American tussles, weigh on the market sentiment and favor the US dollar’s safe-haven demand. However, the latest Federal Open Market Committee (FOMC) Minutes raised doubts about the 50 bps rate hike after September and probed the greenback bulls.

Looking forward, the CBRT is expected to keep the benchmark rate unchanged near 14%, which in turn could offer another push towards the north to the USD/TRY pair. However, any surprise rate hikes won’t be taken lightly and will be interesting to watch.

Technical analysis

A daily closing beyond an upward sloping resistance line from early January 2022, around 16.35 by the press time, keeps USD/TRY bulls hopeful of challenging the record high marked in 2021, close to 18.35.

Markets in the Asian domain are auctioning positively, following the positive cues from Wall Street on Wednesday. The US indices recovered sharply in
  • Asian indices are following the footprints of the positive closing of Wall Street.
  • The DXY is trading subdued ahead of the US GDP, which is seen stabled at -1.4%.
  • Oil prices are expected to scale higher amid rising uncertainty over Europe’s embargo on Russian oil.

Markets in the Asian domain are auctioning positively, following the positive cues from Wall Street on Wednesday. The US indices recovered sharply in the previous trading session as uncertainty over the release of the Federal Open Market Committee (FOMC) faded. FOMC minutes were extremely hawkish as all Federal Reserve (Fed) policymakers were advocating for a 50 basis point (bps) interest rate hike along with hawkish guidance. However, investors ignored the hawkish tone and pumped liquidity into the US equities.

At the press time, Japan’s Nikkie225 added 0.16%, SZSE Component gained 0.90%, and India’s Nifty50 added 0.26%. However, Hang Sang eased 0.16%.

Meanwhile, the US dollar index (DXY) is displaying back and forth moves in the Asian session. The DXY is trading in a narrow range of 101.94-102.24 and is expected to deliver a downside break amid positive market sentiment. In today’s session, investors are awaiting the release of the US Gross Domestic Product (GDP). A preliminary estimate for the annual GDP is -1.4%, similar to the previous figure.

On the oil front, the oil prices are consolidating in a minor range but are expected to move upside down sharply as supply worries could worsen further on an embargo on Russian oil by the European Union (EU). The EU is still considering the prohibition of the Russian oil imports as Hungary is opposing the decision amid its higher dependency on oil imports from Moscow. However, the odds are still favoring a ban on oil from Russia.

 

GBP/USD bulls take a breather around a three-week top as buyers struggle for clear direction s amid mixed catalysts and a sluggish session during earl
  • GBP/USD pares gains around three-week high, holds lower ground of late.
  • Brexit woes, BOESpeak and subdued sentiment weigh on prices.
  • Fed Minutes underpinned recovery moves ahead of preliminary US Q1 GDP.

GBP/USD bulls take a breather around a three-week top as buyers struggle for clear direction s amid mixed catalysts and a sluggish session during early Thursday in Europe. That said, the cable pair refreshed multi-day high with 1.2612 level before easing to 1.2575, taking rounds to 1.2585 by the press time.

Talking about the recent positives, headlines from the recent Federal Open Market Committee (FOMC) Minutes join the firmer odds of the Bank of England’s (BOE) faster rate hikes to keep the GBP/USD prices strong. As per the latest Fed minutes, the policymakers endorsed the idea of 50 basis points (bps) rate hikes for only the next couple of meetings, also raising doubts on the rate-lift trajectory past September, to favor sentiment. The Minutes rather highlighted inflation concerns and mentioned, “It would be appropriate to consider sales of mortgage-backed securities.”

It’s worth noting that such statements renewed concerns of limited monetary policy tightening and helped Wall Street to post the biggest daily gains in a week.

On the other hand, Bank of England (BOE) Chief Economist Huw Pill said, in an interview with the Western Mail newspaper, that he believes that more interest rate hikes are needed, adding that he is aware that could trigger an economic recession.

Alternatively, fears emanating from the Ukraine-Russia crisis and China’s covid conditions, as well as the fresh fears of the Sino-American tussles, weigh on the market sentiment and favor the US dollar’s safe-haven demand. Furthermore, Brexit jitters over the Northern Ireland Protocol (NIP) are an extra burden on the GBP/USD prices.

Against this backdrop, the S&P 500 Futures print mild losses around 3,970 whereas the US 10-year Treasury yields again bounce off monthly low, after Wednesday’s failed attempt, up 2.5 basis points (bps) to 2.77% at the latest.

That said, GBP/USD prices may remain mildly bid amid an off in major European bourses and a light calendar. Though, the second readings of the US Q1 2022 GDP, the annualized figure is expected to remain unchanged at -1.4%, will join the US Personal Consumption Expenditure (PCE) details for April and weekly jobless claims to direct short-term cable moves.

Technical analysis

GBP/USD remains directed towards the monthly high near 1.2640 unless breaking a two-week-old support line near 1.2530.

 

USD/INR consolidates weekly losses around 77.55, staying inside a fortnight-long trading range surrounding 77.30-80 as traders struggle with diverse c
  • USD/INR picks up bids to snap three-day downtrend, bounces off weekly low.
  • FOMC Minutes, RBI’s assurance to limit “runaway” INR slump challenge pair buyers.
  • Firmer oil prices, subdued sentiment and exodus of funds from Indian equities bar gate for bears.
  • US GDP, Fed’s preferred inflation gauge will be important this week, risk catalysts should be watched too.

USD/INR consolidates weekly losses around 77.55, staying inside a fortnight-long trading range surrounding 77.30-80 as traders struggle with diverse catalysts during Thursday’s Asian session.

Among them, the latest Federal Open Market Committee (FOMC) Minutes and the recently active Reserve Bank of India (RBI) seem to restrict the pair’s upside momentum. However, pessimism surrounding the Indian stock market, strong oil prices and sluggish risk appetite keep the USD/INR bulls hopeful.

That said, the recent Fed minutes mentioned that the policymakers endorsed the idea of 50 basis points (bps) rate hikes for only the next couple of meetings and raised doubts on the rate-lift trajectory past September, which in turn favored sentiment. On the other hand, the RBI recently assured investors of not allowing "runaway" INR depreciation limits USD upside, per Reuters.

On the other hand, Indian equities are on the way to posting the first yearly loss in seven as broad fears of growth and inflation push foreign investors to flee, marking the record outflow of foreign funds during the first five months of 2022.

Further, WTI crude oil prices also print mild gains around $111.00 by the press time and brace for the sixth monthly run-up. Considering India’s record deficit and heavy reliance on oil imports, firmer energy prices drown the Indian rupee (INR).

Elsewhere, comments from US Trade Representative General Counsel Greta Peisch suggesting, “Review of US-Sino tariffs is likely to take ‘months’,” becomes a fresh threat to the US-China trade relations. Previously, Beijing criticizes the US Draft Security Council resolution on North Korea and added strength to the Sino-American tensions. Also negative from China are the covid-led lockdowns that weigh on the world’s second-largest economy, also Australia’s biggest trading partner.

It’s worth noting that fears of global recession due to the Ukraine-Russia crisis, recently backed by World Bank President David Malpass also favor USD/INR prices. "Russia's war in Ukraine and its impact on food and energy prices, as well as the availability of fertilizer, could trigger a global recession," said World Bank's Malpass on Wednesday during an event hosted by the U.S. Chamber of Commerce.

Moving on, off in major European bourses join a light calendar to restrict USD/INR moves but the second reading of the US Q1 2022 GDP, the annualized figure is expected to remain unchanged at -1.4%, will be important to watch. Also crucial will be Personal Consumption Expenditure (PCE) details for April and weekly jobless claims.

Technical analysis

Even if a choppy trading range between 77.30 and 77.80 restricts short-term USD/INR moves, RSI conditions hint at the receding bullish momentum. However, sellers need to wait for a clear break below 77.30 for fresh entries. On the contrary, the 10-DMA level of 77.56 guards immediate recovery moves ahead of 77.80.

 

The EUR/USD pair is hovering around 1.0700 and is expected to establish above the same comfortable amid subdued performance from the US dollar index (
  • EUR/USD is struggling to sustain above 1.0700 as a rate hike expectation by the ECB has strengthened.
  • The DXY consolidates despite the hawkish FOMC minutes.
  • The US GDP and PCE are seen stabled at -1.4% and 7.0% respectively.

The EUR/USD pair is hovering around 1.0700 at the press time but is expected to establish above the same, comfortably, amid subdued performance from the US dollar index (DXY). The shared currency bulls are swiftly scaling higher after sensing a cushion from its crucial support at around 1.0640. 

Bolstered rate hike expectations by the European Central Bank (ECB) have underpinned the euro against the greenback. Inflation is affecting the real income of the households in the eurozone and the ECB has yet not paddled up its interest rates unlike the other Western leaders, which are featuring 50 basis points (bps) rate hikes. The eurozone inflation has reached 7.5% and the ECB needs to tighten its sleeves and announce quantitative restrictions.

Meanwhile, Dutch Central Bank head and ECB Governing Council member Klass Knot stated on Wednesday that inflation expectations will remain well-anchored at its upper limit and a rate hike by 50 bps is not off the table.

On the dollar front, the DXY is underperforming broadly despite the release of the extremely hawkish Federal Open Market Committee (FOMC) minutes. As per the minutes, all Fed policymakers were in favor of a jumbo rate hike announcement. Also, they believe that the benchmark rates should be sent close to the neutral rates quickly. Inflation will remain anchored at elevated levels and the labor market is extremely tight.

Going forward, investors will respond to the US Gross Domestic Product (GDP) and Personal Consumption Expenditure (PCE) numbers. The US GDP is seen unchanged at -1.4% on annual basis. Also, the US PCE is expected to remain stable at 7%.

 

Analysts at Morgan Stanley offer their bearish outlook on the British pound, expecting the Bank of England (BOE) to shift towards a dovish pivot in th

Analysts at Morgan Stanley offer their bearish outlook on the British pound, expecting the Bank of England (BOE) to shift towards a dovish pivot in the coming months.

Key quotes

"We continue to think risks are skewed to the downside for GBP/USD as the UK faces a sharp, consumer-led growth slowdown, with consumer confidence at a five-decade low. Markets are still pricing in too much policy tightening from the BoE in our view, and our economists continue to expect a dovish pivot by the BoE (in August).”

"Brexit uncertainty is another factor that is likely to put further downward pressure on GBP, seeing as our idiosyncratic risk premium model is still suggesting little to no risk premium priced in at the moment.  Equities  and the broader risk sentiment have been important drivers of  GBP  performance in recent months.” 

The USD/CNH pair has witnessed a minor correction after a former upside move to near 6.7300. The minor corrective move is expected to convert into an
  • A double test of the 38.2% Fibo retracement strengthens a bullish reversal.
  • The RSI (14) is expected to overstep 60.00, which will delight the greenback bulls.
  • An establishment above 20- and 50-period EMAs add to the upside filters.

The USD/CNH pair has witnessed a minor correction after a former upside move to near 6.7300. The minor corrective move is expected to convert into an initiative buying action, which will drive the asset higher.

On the four-hour scale, the USD/CNH pair has bounced back sharply after re-testing the 38.2% Fibonacci retracement (which is placed from April 8 low 6.3583 to May’s high 6.8385) at 6.6554. The downward sloping trendline placed from May’s high at 6.8365, adjoining May 16 high at 6.8206 and May 19 high at 6.7883, respectively, will act as major resistance for the counter.

A range shift move from 20.00-40.00 to 40.00-60.00 by the Relative Strength Index (RSI) (14) signals that the asset is not bearish anymore. Also, the range shift action by the RSI (14) indicates that the oscillator will breach 60.00, which will delight the greenback bulls.

The asset has overstepped the 20- and 50-period Exponential Moving Averages (EMAs) at 6.6964 and 6.7112, respectively, confirming an establishment of short-term upside momentum.

A decisive breach of the downward sloping trendline at 6.7340 will send the major towards May 18 high at 6.7882. Breach of the latter will drive the asset to May’s high at 6.8365.

On the flip side, the Chinese yuan bulls could dominate if the asset drops below 38.2% Fibo retracement at 6.6554. An occurrence of the same will drag the asset towards May 4 low at 6.6116, followed by April 27 low at 6.5757.

USD/CNH four-hour chart

 

AUD/USD struggles to rebound from intraday low, down for the third consecutive day, as risk-negative headlines from China and Ukraine join downbeat Au
  • AUD/USD stays around intraday low, down for the third consecutive day after challenging three-week high.
  • Recent headlines from China, Ukraine join downbeat Australia Private Capital Expenditure for Q1 to weigh on prices.
  • FOMC minutes, light calendar and off in Europe put a floor under the prices.

AUD/USD struggles to rebound from intraday low, down for the third consecutive day, as risk-negative headlines from China and Ukraine join downbeat Aussie data. That said, the quote remains pressured at around 0.7080 during Thursday’s Asian session.

Australia’s Private Capital Expenditure (Private Capex) data for the first quarter (Q1) of 2022 slumped to -0.3% versus 1.5% expected and 1.1% prior.

Elsewhere, comments from US Trade Representative General Counsel Greta Peisch suggesting, “Review of US-Sino tariffs is likely to take ‘months’,” becomes a fresh threat to the US-China trade relations. Previously, Beijing criticizes the US Draft Security Council resolution on North Korea and added strength to the Sino-American tensions. Also negative from China are the covid-led lockdowns that weigh on the world’s second-largest economy, also Australia’s biggest trading partner.

It’s worth noting that fears of global recession due to the Ukraine-Russia crisis, recently backed by World Bank President David Malpass also drag AUD/USD prices. "Russia's war in Ukraine and its impact on food and energy prices, as well as the availability of fertilizer, could trigger a global recession," said World Bank's Malpass on Wednesday during an event hosted by the U.S. Chamber of Commerce.

On Wednesday, the Federal Open Market Committee (FOMC) Minutes mentioned that the policymakers endorsed the idea of 50 basis points (bps) rate hikes for only the next couple of meetings and raised doubts on the rate-lift trajectory past September, which in turn favored sentiment.

Against this backdrop, the S&P 500 Futures print mild losses around 3,970 whereas the US 10-year Treasury yields again bounce off monthly low, after Wednesday’s failed attempt, up 2.5 basis points (bps) to 2.77% at the latest.

Looking forward, an off in major European bourses join a light calendar to restrict AUD/USD moves ahead of the second readings of the US Q1 2022 GDP, the annualized figure is expected to remain unchanged at -1.4%. Also important will be Personal Consumption Expenditure (PCE) details for April and weekly jobless claims.

Technical Analysis

AUD/USD sellers attack a two-week-old ascending trend line, around 0.7070, before targeting the 21-DMA level near 0.7040. Meanwhile, the recent swing high surrounding 0.7125-30 challenges the bulls.

It’s worth noting that the firmer MACD and steady RSI join the Aussie pair’s rebound from short-term key supports to keep buyers hopeful.

 

South Korea's new central bank governor Rhee Chang-yong said that the rate hike decision at its monetary policy meeting on Thursday was unanimous. Rhe

South Korea's new central bank governor Rhee Chang-yong said that the rate hike decision at its monetary policy meeting on Thursday was unanimous.

Rhee added that the policy focus will remain on stabilizing prices for a few months.

Additional quotes

Slower global demand to hurt s. Korea exports.

Sees upside risk to growth from increased corporate investment, improving private consumption.

Consumer inflation to exceed 5% soon.

Inflation likely to peak after mid-year.

The Bank of Korea (BOK) raised the base rate by 25 bps from 1.5% to 1.75% earlier this Thursday, as widely expected.

Market reaction

USD/KRW is currently trading at 1,264.61 down 0.15% on the day. The pair stalled its rebound just shy of the 1,267 mark on these above comments.

AUD/JPY takes offers to renew intraday low around 90.10, reversing the bounce off a one-week low during Thursday?s Asian session. The cross-currency p
  • AUD/JPY extends pullback from daily top, reverses the previous day’s bounce off weekly low.
  • Australia’s Q1 Private Capital Expenditure disappoints, cautious optimism in the market puts a floor under the prices.
  • Fed Minutes renew market’s optimism but headlines from China, Ukraine test the bulls.

AUD/JPY takes offers to renew intraday low around 90.10, reversing the bounce off a one-week low during Thursday’s Asian session.

The cross-currency pair’s latest declines could be linked to Australia’s Private Capital Expenditure (Private Capex) data for the first quarter (Q1) of 2022. As per the latest figures, the Private Capex slumped to -0.3% versus 1.5% expected and 1.1% prior.

Also challenging the AUD/JPY prices could be the latest risk-negative headlines from China and Ukraine.

That said, “Ukrainian President Volodymyr Zelensky on Wednesday savaged suggestions that Kyiv gives up territory and make concessions to end the war with Russia, saying the idea smacked of attempts to appease Nazi Germany in 1938,” per Reuters. On the same line, China criticizes the US Draft Security Council resolution on North Korea and adds to the recently alive Sino-American tensions.

Also likely to escalate the US-China tussles could be the latest comments from US Trade Representative General Counsel Greta Peisch suggesting, “Review of US-Sino tariffs is likely to take ‘months’.”

On the positive side, the latest Federal Open Market Committee (FOMC) Minutes mentioned that the policymakers endorsed the idea of 50 basis points (bps) rate hikes for only the next couple of meetings, also raised doubts on the rate-lift trajectory past September and favored sentiment. The Minutes rather highlighted inflation concerns and mentioned, “It would be appropriate to consider sales of mortgage-backed securities.”

It’s worth noting that such statements renewed concerns of limited monetary policy tightening and helped Wall Street to post the biggest daily gains in a week.

While portraying the mood, the S&P 500 Futures print mild gains around 3,980 whereas the US 10-year Treasury yields again bounce off monthly low, after Wednesday’s failed attempt, up 2.5 basis points (bps) to 2.77% at the latest.

Moving on, holidays in Europe and a light calendar in Asia could keep AUD/JPY moves depended on the risk catalysts ahead of Friday’s Australia Retail Sales for April, expected 0.9% versus 1.6% prior.

Technical analysis

AUD/JPY remains pressured towards a two-week-old ascending support line near 89.70 unless crossing the 21-DMA hurdle, at 90.85 by the press time.

 

The People's Bank of China is out with a statement now, via Reuters, urging banks to increase lending to SMEs. developing story ....

The People's Bank of China is out with a statement now, via Reuters, urging banks to increase lending to SMEs.

In a notice issued on Thursday, the PBOC further said it will boost financial institutions' confidence to lend to small firms.

Separately, Global Times reported that “China's State Council, the cabinet, on Wednesday held what has been seen as an unprecedented national video teleconference on stabilizing the economy with reportedly upwards of 100,000 participants, including officials of various levels, stressing the need to better implement measures to safeguard market entities, employment, people's livelihood and keep the economy operating in a reasonable range.”

Market reaction

USD/CNY was last seen trading at 6.7101, adding 0.27% on the day.

The price of gold is under a little bit of pressure in Asia as the US dollar attempts to stabilise. At $1,851.94, the gold price is down 0.07% and is
  • Gold is correcting back towards the W-formation's neckline which would be expected to hold the initial tests.
  • Bulls could be encouraged to move in to target the prior resistance near $1,870. 

The price of gold is under a little bit of pressure in Asia as the US dollar attempts to stabilise. At $1,851.94, the gold price is down 0.07% and is sticking to a range of between 41,851.63/$1,854.43 so far. The US dollar, as measured by the DXY index,  edged lower following the Federal Reserve minutes that failed to send a message that large rate hikes were being considered. Therefore, the move lower in the greenback was making bullion less expensive for buyers holding other currencies and limiting losses. 

''Gold struggled to find a bid amid the weak economic backdrop,'' analysts at ANZ Bank said in a note on Thursday. ''Gold was under pressure from the opening of the session as the USD gained but pared some of those losses after Federal Reserve minutes showed little appetite for more aggressive rate hikes. Fed officials agreed the bank needed to tighten in half-point steps over the next couple of meetings.''

Gold technical analysis

In the New York session analysis, below, it is seen that the price had moved in on the support in a 38.2% Fibonacci retracement:

It was stated that ''the lower time frames can be monitored for signs of a deceleration of the bearish correction.''

Gold, H1 charts

This chart, from the New York session, shows the bulls were moving in to slow down the correction on the daily chart. 

Gold live market

As we can see here, the bulls had been moving in but the price is correcting back towards the W-formation's neckline, as forecasted in the previous analysis above. The neckline would be expected to hold the initial tests and on repeated failures to break below, then bulls will more than likely be encouraged to move in to target the prior resistance near $1,870. 

US Trade Representative General Counsel Greta Peisch expressed the urge to undertake a review of the Trump-era tariffs on Chinese goods at the earlies

US Trade Representative General Counsel Greta Peisch expressed the urge to undertake a review of the Trump-era tariffs on Chinese goods at the earliest, at an event hosted by Georgetown University’s law school on Wednesday.

Peisch, however, acknowledged that such a review could likely take “months,” per Bloomberg.

Key quotes

“We want to undertake a review as soon as we can.”

“In part, it will be driven by the volume of responses that we are receiving -- going through those, ensuring we have a really good process to consider them. Given that, it’s likely to be months, but again, we want to complete it as quickly as we can.”

“The US’s review of tariffs on more than $300 billion in Chinese imports that’s required as the duties reach their four-year anniversary will likely take months.”

Market reaction

AUD/USD is losing ground on a downside surprise in the Australian Q1 Private Capex data. The pair is trading at 0.7079, down 0.19% on the day.

EUR/USD pares intraday gains around 1.0700 while stepping back from an immediate resistance line. In doing so, the major currency pair reverses the pr
  • EUR/USD retreats from a three-day-old descending trend line.
  • Sustained trading beyond the key HMAs, firmer oscillators keep buyers hopeful.
  • 61.8% Fibonacci Expansion lures the bulls, sellers need validation from 200-HMA.

EUR/USD pares intraday gains around 1.0700 while stepping back from an immediate resistance line. In doing so, the major currency pair reverses the previous day’s pullback from the monthly high during Thursday’s Asian session.

Although a downward sloping trend line from Tuesday restricts the nearby EUR/USD upside around 1.0710, the quote’s ability to stay firmer past the 100-HMA and the 200-HMA keeps the buyers hopeful of overcoming the nearby hurdle.

Also favoring the upside bias is a one-week-old ascending trend line and the bullish MACD signals, not to forget firmer RSI (14).

That said, the 61.8% Fibonacci Expansion (FE) of May 20-25 moves, around 1.0770, gains the EUR/USD pair buyer’s attention until the quote stays beyond the weekly support line and the 100-HMA level, respectively around 1.0660 and 1.0650.

Even if the quote drops past 1.0650, the 200-HMA level of 1.0568 will test the bears before giving them control.

On the contrary, sustained trading beyond 1.0770 will help the EUR/USD buyers to aim for a late April swing high surrounding 1.0935.

EUR/USD: Hourly chart

Trend: Further upside expected

 

Beijing reported 45 new cases for Wednesday, compared with 47 on Tuesday.

 China's COVID-hit capital Beijing further tightened its dragnet on the virus with zero community transmission as the target, punishing workplaces that flout rules or circumvent curbs and imploring residents to police their own movements.

Since late April, the city of 22 million has wrestled with dozens of new cases a day. While these have been mostly in quarantine areas, a handful has been found in the community at large, illustrating the challenge the high transmissibility of the Omicron variant poses even to the world's most stringent pandemic containment policies.

Beijing reported 45 new cases for Wednesday, compared with 47 on Tuesday. 

China Central Television (CCTV) reported that container handling capacity is at 95%, returning to normalcy.

Meanwhile, Shanghai City Council announced that junior and senior high schools will re-open to students on June 6.

This comes as Shanghai reported 290 new local asymptomatic coronavirus cases vs. 343 previous and 48 symptomatic cases for May 25 vs. 44 prior – no. cases outside the quarantined zone.

 

 

Australia Private Capital Expenditure below forecasts (1.5%) in 1Q: Actual (-0.3%)
In recent trade today, the People?s Bank of China (PBOC) set the yuan (CNY) at 6.6766 vs. the estimate of 6.6742 and the previous 6.6550. About the fi

In recent trade today, the People’s Bank of China (PBOC) set the yuan (CNY) at 6.6766 vs. the estimate of 6.6742 and the previous 6.6550.

About the fix

China maintains strict control of the yuan’s rate on the mainland.

The onshore yuan (CNY) differs from the offshore one (CNH) in trading restrictions, this last one is not as tightly controlled.

Each morning, the People’s Bank of China (PBOC) sets a so-called daily midpoint fix, based on the yuan’s previous day's closing level and quotations taken from the inter-bank dealer.

After a sluggish start to the week, risk appetite improves during the mid-Asian session on Thursday as Fed minutes underpinned cautious optimism. Even
  • Market sentiment remains mildly positive amid mixed headlines from FOMC Minutes, China and Ukraine.
  • S&P 500 Futures track Wall Street’s gains, Treasury yields rebound from monthly low.
  • Light calendar, holidays in Europe may restrict market moves ahead of second-tier US data.

After a sluggish start to the week, risk appetite improves during the mid-Asian session on Thursday as Fed minutes underpinned cautious optimism. Even so, headlines from China and Ukraine test the market sentiment amid a mostly quiet Asian session.

While portraying the mood, the S&P 500 Futures print mild gains around 3,980 whereas the US 10-year Treasury yields again bounce off monthly low, after Wednesday’s failed attempt, up 2.5 basis points (bps) to 2.77% at the latest.

As per the latest Federal Open Market Committee (FOMC) Minutes, the policymakers endorsed the idea of 50 basis points (bps) rate hikes for only the next couple of meetings, raising doubts on the rate-lift trajectory past September. The Minutes rather highlighted inflation concerns and mentioned, “It would be appropriate to consider sales of mortgage-backed securities.”

It’s worth noting that such statements renewed concerns of limited monetary policy tightening and helped Wall Street to post the biggest daily gains in a week.

Also favoring the trading sentiment is the downbeat US data that backs the need for easy money. Other than the Fed Minutes, downbeat prints of the Durable Goods Orders for April also weighed on the US Dollar. As per the latest US Durable Goods Orders, the growth slowed down to 0.4% MoM versus market forecasts and revised down prior readings of 0.6%. Also, the Core Durable Goods Orders rose 0.3% MoM versus 0.6% expected and 1.1% prior (revised).

On the flip side, the latest headlines from China and Ukraine seem to challenge the market sentiment. That said, “Ukrainian President Volodymyr Zelensky on Wednesday savaged suggestions that Kyiv gives up territory and make concessions to end the war with Russia, saying the idea smacked of attempts to appease Nazi Germany in 1938,” per Reuters. On the same line, China criticizes the US Draft Security Council resolution on North Korea and adds to the recently alive Sino-American tensions.

Moving on, an off in Europe may restrict market moves and let the post-FOMC Minutes move to extend ahead of the US session. However, the second-tier US data, like preliminary GDP for Q1 2022 and Personal Consumption Expenditure (PCE) details for April, may entertain traders.

Read: Post FOMC: Market shift from catch-down camp to short covering mode

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