Economic News Today

Market Overview

Expectations for rate cuts lost after minutes from the last meeting of the Federal Reserve's Federal Open Market Committee showed members are not convinced inflation is edging toward the central bank's 2% target.

“FOMC minutes lowered the prospect for rate cuts with some officials showing a willingness to tighten policy further if needed to get inflation under control,” Saxo Bank noted.

The dollar rose after the May manufacturing and services purchasing managers indices (PMI) both rose more than expected. The manufacturing PMI came in at 52.4 points, above expectations for a 50.0 reading, while the services PMI came in at 54.8, more than the forecast of 51.6.

Lower-than-expected weekly jobless claims along with a stronger-than-expected PMI reading had investors believing that the U.S. economy remains stubborn to cool down despite elevated interest rates.

Treasury yields rose, with the US two-year note last seen paying 4.94%, up 0.06%, while the yield on the 10-year note was up 0.055% to 4.483%.``

“Metals are the big victims today versus Wednesday's hawkish Fed minutes,” Robert Yawger of Mizuho Securities USA says in a note. “Higher rates are like kryptonite to precious metals, with the interest-bearing element often beating Gold and Silver for safe haven flows.”

Later, final German GDP figures, British and Canadian retail sales, U.S. durable goods orders, and speeches from ECB and Federal Reserve policymakers - notably Fed Governor Christopher Waller on longer-term rates will be released. 

GOLD -GOLD has continued to edge lower, breaking through 2332.174, and may continue to move lower. Traders closed trades to earn some quick profit after hearing of FOMC not being convinced that the economy is on its way to 2% inflation. It also pushed treasury bills higher, telling us that some of these traders moved trades to Treasury bills. It is still important to note that there is more bullish sentiment going on for GOLD even under these circumstances and we view this as a means to control sudden demand. Thus, we still call the GOLD bullish despite the sudden drop. However, as it currently stands, we must adapt to the market conditions and take note of the momentum and volume coming into the market, and look for opportunities to balance earnings. We wait for a better entry point for another buy in the market.

SILVER - The market was not as damaged as how GOLD was. We now see the price break under 30.938. However, we can still see bullish structures holding up. Although, we do see the price breaking back below 29.900 and toward 29.018. We still call this market bullish.

DXY - The price recovery on the dollar is sudden but within the expected range as the price is held back at 105.071. However, we continue to see how the day will progress. We still call this market bearish with a chance for the price momentum and sentiment to change. Currently, bearish structures are holding prices down.

GBPUSD -The GBP has held itself up fairly against the dollar but has lost a modest amount against economic data releases. It is currently slightly below 1.27006 with chances for the price to test the top of the range at 1.26487. We continue to wait and see how prices will play out. Currently, we still call it a bullish market.

AUDUSD - After the price has broken through 0.66541, tested 0.66145 and re-tested 0.66541, the market bias has changed, proven by the break below 0.66145. Thus, we call this market bearish. We expect the price to fall toward 0.65250 while finding possible support on 0.65869. We do suggest watching this structure as it may hold the price up. The M formation is confirmed, driven by its own economic outlook.

NZDUSD - The NZ is on the defensive as outlooks for its country run away from rate cuts. We can see the market holding up barely with a ranging market. Thus, we continue to wait for how this price will run. But as it currently stands, we still see the market as bullish.

EURUSD - The M formation on this chart has been confirmed and prices are currently testing the top of the trendline, showing chances for the drop to continue after it breaks through the trendline. Thus, we wait to see how the prices will continue from hereon out.

USDJPY - The market continues to tick higher as the YEN continues to lose against the dollar as the rate cuts are pushed back, causing Nikkei stocks to fall. The weakness seen in the market is the real momentum being shown and we call this market bullish, as seen evidently in its price action.

USDCHF - USDCHF has stalled price below 0.91580 and is above 0.91329. The market momentum has changed and the stall may call for the market to be bullish. We wait to see how the market will play out.

USDCAD -As called yesterday, bullish momentum did come into the market as the break of structure was clean. We can now see the price possibly reaching all the way to 1.37881. However, we still cannot call for overall momentum to have changed. As it stands, I will call for the price to still be inside the range that we may find on next week's analysis after today's run. Thus, we wait to see how the market will proceed.