AUD/USD struggles to gain traction, flat-lined near monthly low ahead of US PCE inflation data

 

AUD/USD staged modest bounce, though struggled to find acceptance above the 0.6900 mark.

Recession fears weighed on investors’ sentiment and undermined the perceived riskier aussie.

The Fed’s hawkish outlook lifted the USD closer to a 20-year peak and favours bearish traders.

Investors now look forward to the US Core PCE Inflation for May for a fresh directional impetus.

The AUD/USD pair struggled to capitalize on its modest intraday bounce from the vicinity of the monthly low and remained below the 0.6900 mark heading into the North American session.

Concerns that a more aggressive move by major central banks would pose challenges to global economic growth continued weighing on investor' sentiment. This was evident from a generally weaker tone around the equity markets, which provided a fresh lift to the safe-haven US dollar and acted as a headwind for the risk-sensitive aussie.

In fact, the USD shot closer to a two-decade high and was also underpinned by Fed Chair Jerome Powell's overnight hawkish remarks, reaffirming a faster policy tightening path. Speaking at the ECB's annual forum, Powell said that the Fed remains focused on getting inflation under control and the market pricing is pretty close to the dot plot. 

Hence, the market focus will remain glued to the release of the Fed's preferred inflation gauge, the Core PCE Price Index. The data would influence the USD price dynamics and provide a fresh impetus to the AUD/USD pair. In the meantime, the USD bulls seemed rather unaffected by the ongoing decline in the US Treasury bond yields. 

The fundamental backdrop supports prospects for an extension of the recent depreciating move for the AUD/USD pair, though bearish traders might wait for sustained weakness below the 0.6850 area. Spot prices might then aim to challenge the YTD low, around the 0.6830-0.6825 region touched in May, before eventually dropping to the 0.6800 mark.

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EUR/USD holds on around 1.0500 ahead of German CPI, Sintra

EUR/USD briefly dipped below 1.0500 on USD strength.

German Flash June CPI next on tap in the domestic docket.

Lagarde, Bailey, Powell will meet in Sintra later in the session.

The single currency remains under pressure and prompts EUR/USD to navigate the 1.0500 neighbourhood on Wednesday.

EUR/USD looks to data, ECB Forum

EUR/USD so far loses ground for the second session in a row on Wednesday on the back of the resumption of the risk aversion and the better sentiment surrounding the greenback.

In the meantime, the German money markets show the 10y Bund yields trimming part of the recent 2-day advance and retest the 1.60% region amidst the equally flat performance in the US peers.

In the domestic calendar, advanced inflation figures in Spain showed the CPI is seen rising 10.0% in the year to June. Further June data saw the final EMU Consumer Confidence at -23.6 and the Economic Sentiment at 104. Later in the session, markets’ attention will be on the release of the German preliminary inflation data ahead of the discussion panel between Powell, Bailey and Lagarde at the ECB Forum in Sintra.

What to look for around EUR

EUR/USD faces the re-emergence of the risk-off mood and the subsequent drop to the sub-1.0500 area midweek.

In the meantime, the single currency continues to closely follow news from the ECB Forum in Portugal as well as any developments surrounding the bank’s plans to design a de-fragmentation tool in light of the upcoming start of the hiking cycle.

However, EUR/USD is still far away from exiting the woods and it is expected to remain at the mercy of dollar dynamics, geopolitical concerns and the Fed-ECB divergence, while higher German yields, persistent elevated inflation in the euro area and a decent pace of the economic recovery in the region are also supportive of an improvement in the mood around the euro.

Key events in the euro area this week: ECB Forum on Central Banking, EMU Final Consumer Confidence, EMU Economic Sentiment, Germany Flash Inflation Rate, ECB Lagarde (Wednesday) – Germany Retail Sales, Unemployment Change, Unemployment Rate. EMU Unemployment Rate, ECB Lagarde (Thursday) – EMU, Germany Final Manufacturing PMI, EMU Flash Inflation Rate (Friday).

Eminent issues on the back boiler: Fragmentation risks. Kickstart of the ECB hiking cycle in July? Asymmetric economic recovery post-pandemic in the euro bloc. Impact of the war in Ukraine on the region’s growth prospects.

EUR/USD levels to watch

So far, spot is retreating 0.05% at 1.0511 and faces immediate contention at 1.0358 (monthly low June 15) followed by 1.0348 (2022 low May 13) and finally 1.0300 (psychological level). On the upside, a break above 1.0615 (weekly high June 27) would target 1.0773 (monthly high June 9) en route to 1.0786 (monthly high May 30).

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Gold Price Forecast: XAUUSD bears eye $1,820 and $1,816 as next targets

Gold Price rebound lacks follow-through bias, as Treasury yields firm up.

USD stays sluggish amid a better mood, ahead of NATO, ECB Forum.

Oil price surge keeps the demand for XAUUSD underpinned.

Optimism prevails, pointing to a turnaround Tuesday for the financial markets, as the previous week’s upbeat global momentum returns and caps the broad US dollar recovery. Investors, however, remain wary ahead of the key NATO Summit and a policy panel of the heads of the Fed, BOE and ECB due later this week. The sluggish price action in the dollar is helping Gold Price recoup a part of Monday’s sharp decline. The upside in the yellow metal lacks traction, however, as the US Treasury yields resume their gradual recovery mode amid lingering recession fears and an aggressive Fed rate-hike track. Buyers also remain cautious, as a slew of key US economic data are due for release later this week, which may prompt markets to re-price the hawkish Fed expectations, in turn impacting gold valuations.

Gold Price: Key levels to watch

The Technical Confluence Detector shows that Gold Price is approaching the strong support around $1,820, where the previous day’s low and the lower band of the four hour Bollinger Band merge.

Selling interest may pick up steam below the latter, exposing the convergence of the previous week’s low, monthly Fibonacci 23.6% retracement and daily S1 pivot point merge at $1,816.

The line in the sand for gold optimists is seen at the weekly S1 pivot point at $1,813.

On the flip side, bulls need to find a strong foothold above the $1,829 barrier, which is the confluence of the 5-day SMA, and the daily and weekly Fibonacci 38.2% retracement level.

The next stop for bulls is aligned at the 10-day SMA at $1,832, above which the daily Fibonacci 61.8% level at $1,835 will come to sellers’ rescue.

Further up, the intersection of the weekly Fibonacci 61.8% level and the R1 daily pivot point at $1,837 will offer stiff resistance.

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AUD/USD remains on the defensive, holds comfortably above 0.6900 amid modest USD weakness

 

• AUD/USD kicked off the new week on a weaker note, though lacked follow-through selling.
• The recent slide in commodities, Chinese economic woes acted as a headwind for the aussie.
• The risk-on impulse undermined the safe-haven USD and helped limit losses for the major.

The AUD/USD pair struggled to capitalize on Friday's goodish rebound from sub-0.6900 levels and met with a fresh supply on the first day of a new week. The pair maintained its offered tone through the first half of the European session and was last seen trading around the 0.6920 area, just a few pips above the daily low.

The recent slump in commodity prices is a key factor undermining the resources-linked Australian dollar. Another factor adding downward pressure on the China-proxy aussie is the fact that the Chinese economy is facing headwinds amid the resurgence of COVID-19 cases. That said, a combination of factors has also held back traders from placing aggressive bearish bets on the AUD/USD pair, helping to limit deeper losses. Investors have turned optimistic amid hopes that inflation is nearing its peak and now seem to have scaled back their expectations for more aggressive rate hikes by the Fed. This was reinforced by a sharp corrective pullback in the US Treasury bond yields, which kept the US dollar bulls on the defensive. Apart from that, a generally positive risk tone around the equity markets further undermined the safe-haven greenback and offered some support to the risk-sensitive aussie.

From a technical perspective, the emergence of fresh selling at higher levels suggests that the recent downward trajectory witnessed since the beginning of this month is still far from being over. Hence, a subsequent fall back towards the monthly low, around the 0.6850 region, now looks like a distinct possibility. The AUD/USD pair could extend the fall further and eventually drop to challenge the YTD low, around the 0.6830-0.6825 region touched in May.

Market participants now look forward to the US economic docket, featuring the release of the Durable Goods Orders and Pending Home Sales data later during the early North American session. This, along with the US bond yields, will influence the USD price dynamics and provide some impetus to the AUD/USD pair. Traders will further take cues from the broader risk sentiment to grab short-term opportunities around the major.

EUR/USD Price Analysis: Sustained gains seen above 1.0670/80

 

• EUR/USD keeps the erratic activity well in place this week.
• The 1.0670/80 band continues to cap the upside so far.

EUR/USD resumes the upside bias past the 1.0500 mark following Thursday’s decent pullback.

So far, and as long as the 4-month line in the 1.0670/80 band limits the upside, extra pullbacks in the pair should remain on the cards in the near term. The surpass of this area, however, could spark a bull run to the June top at 1.0773 and the May peak at 1.0786.

In the longer run, the pair’s bearish view is expected to prevail as long as it trades below the 200-day SMA at 1.1136.

Gold Price Forecast: $1,816 keeps luring XAUUSD sellers 

Gold Price rebounds from six-day lows but buyers remain wary.

Upbeat mood keeps USD bears in control despite a pause in the yields sell-off.

Central banks' rate hike bets cool off amid looming recession risks.

The R-word is back on the radars, prompting markets to scale back aggressive rate hike expectations from major central banks worldwide. Cooling hawkish expectations is helping calm investors’ nerves, weighing negatively on the safe-haven US dollar at the expense of gold price. However, stabilizing US Treasury yields, following the recent retreat, are keeping the further upside elusive in the bright metal. The market’s perception of risk sentiment, in the facing of lingering inflation and recession worries will continue to drive the US dollar price action, in turn, influencing XAUUSD. Attention now turns towards next Monday’s US Durable Goods data and the ECB Forum in Sintra, where the central banks’ heads are likely to participate in a panel discussion on the monetary policy.

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USD/JPY flirts with daily low, still comfortable above 135.00 mark ahead of US data/Powell

USD/JPY extended the overnight pullback from a 24-year high and edged lower for the second straight day.

Speculations that authorities could intervene, along with recession fears underpinned the safe-haven JPY.

Modest USD strength, the Fed-BoJ policy divergence support prospects for the emergence of some dip-buying.

The USD/JPY pair witnessed some selling for the second straight day on Thursday and moved further away from a 24-year high, around the 136.70 region touched the previous day. The pair maintained its offered tone through the mid-European session and was last seen trading just below mid-135.00s, down over 0.60% for the day.

Traders turned cautious and opted to lighten their bullish bets around the USD/JPY pair amid speculations that any further depreciation of the Japanese yen might force some form of practical intervention. Apart from this, the worsening global economic outlook drove haven flows towards the JPY and exerted downward pressure on the major.

Investors remain sceptic that major central banks could hike interest rates to curb soaring inflation without affecting economic growth. Adding to this, the disappointing release of the flash Eurozone PMI prints for June further fueled worries about a possible recession and boosted demand for traditional safe-haven assets.

Bearish traders further took cues from declining US Treasury bond yields, though the emergence of fresh US dollar buying helped limit deeper losses for the USD/JPY pair, at least for now. The USD drew support from firming expectations that the Fed would stick to its aggressive policy tightening path to combat stubbornly high inflation.

In fact, the markets have been pricing in another 75 bps rate hike move at the upcoming FOMC policy meeting in July. The bets were reaffirmed by Fed Chair Jerome Powell's remarks on Wednesday, saying that the ongoing rate increases will be appropriate. In contrast, the Bank of Japan remains committed to keeping interest rates very low.

It is worth recalling that the BoJ last week decided to maintain the massive stimulus programme and vowed to defend the 0.25% cap for the 10-year JGB yield to support a still-fragile economy. This, along with a turnaround in the global risk sentiment, assisted the USD/JPY pair to find support ahead of the 135.00 psychological mark.

The fundamental backdrop supports prospects for the emergence of some dip-buying around the USD/JPY pair. Hence, the negative move witnessed over the past two trading sessions might still be categorized as a corrective pullback and is more likely to be bought into, warranting some caution for aggressive bearish traders.

Next on tap is the US economic docket, featuring the release of the usual Weekly Jobless Claims data and the flash PMI prints for June. Traders will also take cues from Fed Chair Jerome Powell's second day of testimony. Apart from this, the US bond yields, the USD price dynamics and the broader risk sentiment might provide some impetus to the USD/JPY pair.

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Gold Price Forecast: XAUUSD jumps to fresh daily high, bulls flirt with 200-DMA ahead of Powell

Gold attracted some dip-buying on Wednesday and rallied nearly $20 from a multi-day low.

The risk-off impulse, sliding US bond yields, modest USD pullback extended some support.

Hawkish Fed expectations kept a lid on any meaningful upside ahead of Powell’s testimony.

Gold reversed an intraday dip to the $1,823 region, or a four-day low touched earlier this Wednesday and shot to a fresh daily peak during the mid-European session. The XAUUSD was last seen trading around the $1,840 region, with bulls now awaiting a convincing break through the very important 200-day SMA.

The overnight optimistic move in the equity markets fizzled out rather quickly amid worries that a more aggressive policy tightening by major central banks would pose challenges to the global economy. Adding to this, the supply chain disruptions caused by the Russia-Ukraine war and the recent COVID-19 outbreak in China have been fueling fears about a potential recession. This continued weighing on investors' sentiment and triggered a fresh wave of the global risk-aversion trade, which, in turn, offered some support to the safe-haven gold.

The anti-risk flow was reinforced by a steep decline in the US Treasury bond yields and held back the US dollar bulls from placing aggressive bids. Apart from this, some repositioning trade ahead of Fed Chair Jerome Powell's testimony before the Senate Banking Committee forced the USD to surrender its intraday gains, which further benefitted the dollar-denominated gold. That said, expectations that the Fed would hike interest rates at a faster pace to curb inflation kept a lid on any meaningful upside for the non-yielding yellow metal.

Hence, investors will closely scrutinize Powell's comments for fresh clues about the policy tightening path. This will play a key role in influencing the near-term USD price dynamics and help determine the next leg of a directional move for gold. This makes it prudent to wait for a sustained move beyond a technically significant 200-DMA before traders start positioning for any further appreciating move for the XAUUSD.

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 Malaysia: Investment Approvals normalized in Q122 – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assess the latest approved investment figures in Malaysia.

Key Takeaways

“Total approved investments normalised to MYR42.8bn in 1Q22 (or -56.6% y/y from record MYR98.7bn in 1Q21) following a high base of comparison whereby a megaproject was approved in the same period last year. Bulk of 1Q22 approvals was channelled to the manufacturing sector (MYR30.0bn or 70.0% of total approved investment), with the electrical & electronics (E&E) subindustry remaining the top beneficiary. The real estate and agriculture sub-sectors were the biggest recipients of approved investments in the services and primary sectors respectively.”

“Foreign direct investment (FDI) remained a key source of overall committed investments, totalling MYR27.8bn or 65.0% of total approved investment. Top FDI sources in 1Q22 were Germany (MYR8.9bn or 32.0% of total approved FDI), Brunei (MYR5.1bn or 18.3%), the USA (MYR3.9bn or 14.0%), Hong Kong (MYR3.3bn or 11.9%), and Japan (MYR3.2bn or 11.5%), which collectively accounted for 87.7% of total FDI approved in the manufacturing, services and primary sectors.”

“Going forward, the government’s approach to managing endemic COVID, targeted trade and investment missions, and medium-term prospects are expected to support Malaysia’s investment momentum amid multiple external headwinds on the horizon. MIDA has identified a pipeline of potential investments worth MYR150.4bn and proposed investments of MYR14.4bn. As such, we maintain our total approved investment projection at MYR200bn for 2022 (2021: MYR309.4bn, prepandemic five-year average: MYR204.5bn).”

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GBP/USD steadily climbs to 1.2270-80 region, fresh daily high amid weaker USD

 

• GBP/nt decline in the US bond yields and a positive risk tone weighed on the safe-haven buck.
• Hawkish Fed expectations should limit any further USD losses and cap the upside for the major.

The GBP/USD pair built on its modest intraday gains and climbed to a fresh daily high, around the 1.2275-1.2280 region during the mid-European session.

Against the backdrop of the post-FOMC slide in the US Treasury bond yields, a generally positive risk tone exerted some downward pressure on the safe-haven US dollar on Monday. This, in turn, was seen as a key factor that assisted the GBP/USD pair to regain positive traction and recover a part of Friday's losses. That said, any meaningful recovery move still seems elusive, warranting caution for aggressive bullish traders.

Investors remain concerned that a more aggressive move by major central banks to curb inflation would pose challenges to global economic growth. This should keep a lid on any optimistic move in the markets, which, along with hawkish Fed expectations should act as a tailwind for the buck. In fact, the markets seem convinced that the US central bank would hike interest rates at a faster pace to tame soaring inflation.

EUR/USD: A lengthier consolidation phase looks increasingly likely – Credit Suisse

EUR/USD is seen at risk of a lengthier consolidation phase. Notwithstanding,  economists at Credit Suisse stay negative for an eventual sustained break below the 2017 and YTD lows at 1.0350/41.

EUR/USD to suffer an eventual break below 1.0350/41 for a fall to parity

“We see increasing risk for a lengthier consolidation phase. A close above the 13-day exponential average at 1.0555 can add weight to this view for a recovery back to what we continue to see as more important resistance, starting at 1.0627 and stretching up to the 55-day average at 1.0652, which we continue to look to cap on a closing basis.”

“Only above 1.0774/88 would mark a ‘double bottom’ base and a more significant move higher.”

“Support is seen at 1.0470 initially, then 1.0445, below which should clear the way for a retest of 1.0358/41. An eventual break below here should act as the catalyst for a resumption of the core downtrend with support seen next at 1.0217/09 and eventually parity/0.99.”

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Gold Price Forecast: XAUUSD remains depressed below $1,850, bulls trying to defend 200-DMA

Gold met with a fresh supply on Friday and snapped a two-day winning streak.

Resurgent USD demand, the risk-on impulse turned out to be a key bearish factors.

The ongoing decline in the US bond yields offered some support and helped limit further losses.

Gold struggled to capitalize on its strong gains recorded over the past two trading sessions and witnessed some selling on the last day of the week. The XAUUSD remained depressed through the first half of the European session and was last seen trading just below the $1,850 level. Bulls, however, have managed to defend support at a technically significant 200-day SMA, warranting some caution before positioning for any further losses.

The US dollar caught aggressive bids and reversed a part of this week's retracement slide from a two-decade high amid hawkish Fed expectations. Investors seem convinced that the US central bank will stick to its aggressive policy tightening path to combat stubbornly high inflation. The bets were reaffirmed by the Fed's so-called dot plot, which showed that the median projection for the federal funds rate stood at 3.4% for 2022 and 3.8% in 2023. This, in turn, assisted the USD to snap a two-day losing streak to a one-week low and dented demand for the dollar-denominated gold.

Apart from this, the risk-on impulse - as depicted by a generally positive tone around the equity markets - further undermined the safe-haven precious metal. That said, the ongoing decline in the US Treasury bond yields offered some support to the non-yielding gold. Investors took comfort from the fact that the Fed forecasted the rate to decline to 3.4% in 2024 and 2.5% over the long run. This, in turn, dragged the US bond yields away from over a two-decade high touched earlier this week, which, along with mounting recession fears, could help limit deeper losses for gold, at least for now.

Market participants now look forward to the US economic docket, featuring Industrial Production and Capacity Utilization Rate for a fresh impetus later during the early North American session. Traders will further take cues from the US bond yields, the USD price dynamics and the broader market risk sentiment to grab short-term opportunities around gold on the last day of the week.

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EUR/USD remains vulnerable near 1.0400 amid ECB news, choppy USD

EUR/USD is struggling to extend the recovery above 1.0400.

The US dollar remains choppy despite risk-aversion at full speed.

ECB officials said to want new policy instrument ready by the July meeting

EUR/USD is attacking 1.0400, unable to sustain the recovery near the 1.0425 region, as EUR bulls remain unimpressed by the latest European Central Bank (ECB) news.

Reuters reported that European Central Bank (ECB) officials are said to want a new instrument, which will be used to counter the fragmentation issue, ready by the July Governing Council meeting.

Further, the upside attempts in the pair remain elusive, as the risk-on market profile keeps the sentiment around the US dollar buoyed. The rebound in the longer-dated US Treasury yields on the 75 bps Fed rate hike is also underpinning the dollar demand.

Meanwhile, investors assess the cautious policy guidance adopted by the Bank of England (BOE) this Thursday after it hiked rates by 25 bps, as expected. The GBP/USD slump-induced support received by EUR/GBP is cushioning the losses in the shared currency against the dollar, as of writing.

Attention now turns towards a slew of second-tier US economic releases and the Wall Street open for fresh trading impetus on EUR/USD.

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GBP/USD recovers above 1.2100 after BOE-inspired drop

 GBP/USD has regained its traction and recovered above 1.2100 after having dropped sharply with the initial reaction to the Bank of England's (BOE) decision to hike its policy rate by 25 basis points. Focus now shifts to US Housing Starts and Jobless Claims data.

The pair was last seen trading near 1.2120, where the 20-period SMA on the four-hour chart and the Fibonacci 23.6% retracement of the latest downtrend align. In case this support fails, additional losses toward 1.2050 (static level) and 1.2000 (psychological level) could be witnessed. Meanwhile, the Relates Strength Index (RSI) indicator on the same chart stays below 50 despite Wednesday's rebound, suggesting that buyers remain hesitant to commit additional gains in the near term.

On the upside, stiff resistance is located at 1.2200 (Fibonacci 38.2% retracement). A four-hour close above that level could be seen as a bullish development and open the door for an extended rebound toward 12300 (Fibonacci 50% retracement) and 1.2350 (50-period SMA).

Gold Price Forecast: XAUUSD steadily climbs to $1,825 area, fresh daily high ahead of FOMC

Gold gained traction on Wednesday and snapped a two-day losing streak to a near one-month low.

Retreating US bond yields prompted some USD profit-taking and extended some support to the metal.

Hawkish Fed expectations might cap gains for the XAUUSD ahead of the key central bank event risk.

Gold attracted some buying on Wednesday and for now, has snapped a two-day losing streak to a near one-month low, around the $1,805 region touched the previous day. The XAUUSD built on its steady intraday ascent through the first half of the European session and climbed to a fresh daily high, around the $1,826 region in the last hour.

Retreating US Treasury bond yields prompted traders to take some profits off their US dollar bullish bets, especially after the recent strong bullish run to a two-decade high. This, in turn, was seen as a key factor that prompt some short-covering around the dollar-denominated commodity. That said, the attempted recovery move runs the risk of fizzling out rather quickly and remains capped amid expectations for a more aggressive policy tightening by the Fed.

Investors now seem convinced that the US central bank would tighten its monetary policy at a faster pace to combat stubbornly high inflation, which surged to a four-decade high in May. In fact, Fed fund futures indicate rising odds of a 75 bps rate hike at the conclusion of a two-day FOMC meeting on Wednesday and another 75 bps hike in July. This should act as a tailwind for the US bond yields and the USD, which, in turn, might cap gains for the non-yielding gold.

Hence, the focus remains glued to the outcome of a two-day FOMC monetary policy meeting, due later during the US session. A 75 bps Fed rate hike move would be the biggest since 1994 and send shockwaves across asset classes, boosting the USD and lending some support to gold prices. In the meantime, traders might take cues from the US monthly Retail Sales figures, though any immediate market reaction is more likely to be short-lived.

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NZD/USD recovers from Tuesday’s two-year lows under 0.6200 pre-US Retail Sales/Fed announcement

 

• NZD/USD has rebounded to close to 0.6250 after hitting its lowest since June 2020 on Tuesday. 
• Traders are focused on imminent US Retail Sales data and the upcoming Fed policy announcement. 

A bout of pre-US Retail Sales data and Fed policy announcement meeting weakness in the US dollar, that seems partially driven by a modest improvement in risk appetite as European equities rebound from Tuesday’s multi-month lows and global yields pare back from highs, is boosting NZD/USD in pre-US open Wednesday trade. The pair was last trading higher by about 0.7% in the 0.6250 region, a little over 50 pips higher versus Tuesday’s lows just under 0.6200, which was the lowest the pair has been since June 2020. 

Amid a lack of major macro updates, traders have their attention fixated on Wednesday’s economic calendar. US Retail Sales figures for May are due at 1230GMT and will be viewed in the context of rising US recession fears. Given that inflation in the US is so bad (as per last week’s inflation figures), bad data is unlikely to be interpreted as good for risk appetite as the Fed doesn’t have the room to be more dovish to support growth. 

AUD/USD pares intraday gains, still comfortable above 0.6900 amid modest USD weakness

 

• AUD/USD staged a modest recovery from a near one-month low, though lacked follow-through.
• The risk-on impulse, retreating US bond yields undermine the USD and extended some support.
• Recession fears kept a lid on the optimistic move in the markets and the risk-sensitive aussie.
• Fed rate hike bets favour the USD bulls and support prospects for further losses for the major.
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The AUD/USD pair struggled to capitalize on its modest recovery gains and has now retreated nearly 40 pips from the daily peak. The pair was last seen hovering near the 0.6930-0.6935 region, up less than 0.15% for the day.

The early optimistic move in the markets ran out of steam amid concerns that a more aggressive policy tightening by major central banks to curb inflation would pose challenges to the global economy. This, in turn, was seen as a key factor that acted as a headwind for the risk-sensitive aussie, though modest US dollar weakness could help limit further losses for the AUD/USD pair, at least for now.

Oil prices rise as tight supply counters China COVID, recession worries

LONDON (Reuters) -Oil prices rose on Tuesday as tight global supply outweighed worries that fuel demand would be hit by a possible recession and fresh COVID-19 curbs in China.

Brent crude futures rose 88 cents, or 0.7%, to $123.15 a barrel at 0824 GMT, while U.S. West Texas Intermediate (WTI) crude rose 88 cents, or 0.7% to $121.81 a barrel.

Tight supply has been aggravated by a drop in exports from Libya amid a political crisis that has hit output and ports.

Other OPEC+ producers are struggling to meet their production quotas and Russia faces bans on its oil over the war in Ukraine.

"The continuing squeeze on refined products globally, as well as a lack of investment to bring online more supplies from OPEC members, or other sources, means lost Russian production is nowhere near being covered by global markets," said Jeffrey Halley, senior market analyst at OANDA, in a note.

UBS raised its Brent price forecast to $130 a barrel for end-September and to $125 for the subsequent three quarters, up from $115 previously.

"Low oil inventories, dwindling spare capacity, and the risk of supply growth lagging demand growth over the coming months have prompted us to raise our oil price forecast," the bank said.

The market will be awaiting weekly U.S. inventory data from the American Petroleum Institute on Tuesday and the U.S. Energy Information Administration on Wednesday for a view of how tight crude and fuel supply remain.

Six analysts polled by Reuters expect U.S. crude inventories to have fallen by 1.2 million barrels in the week to June 3 with gasoline stockpiles up by about 800,000 barrels and distillate inventories, which include diesel and heating oil, unchanged.

On the demand side, China's latest COVID outbreak traced to a bar in Beijing has raised fears of a new phase of lockdowns just as restrictions in the country were being eased and fuel demand was expected to firm.

The Chinese capital's most populous district, Chaoyang, kicked off a three-day mass testing campaign among its roughly 3.5 million residents on Monday.

About 10,000 close contacts of the bar's patrons have been identified, and their residential buildings put under lockdown.]

Looking ahead, oil prices may face pressure if the U.S. Federal Reserve surprises markets with a higher-than-expected interest rate hike to tame inflation when it meets on June 14-15.

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GBP/USD dives back closer to YTD low, around 1.2160 area amid broad-based USD strength

GBP/USD witnessed selling for the fourth straight day and dropped back closer to the YTD low.

Disappointing UK macro data fueled recession fears and weighed heavily on the British pound.

Aggressive Fed rate hike bets and the risk-off mood benefitted the USD and added to the selling.

The GBP/USD pair added to its heavy intraday losses and weakened further below the 1.2200 round-figure mark heading into the North American session. The pair was last seen trading around the 1.2160-1.2165 region, just a few pips above the YTD low touched on May 12.

The monthly UK GDP report released earlier this month showed that the economy contracted by 0.3% in April, marking the first 

back-to-back decline since the start of the coronavirus pandemic. Adding to this, the UK Industrial and Manufacturing Production slumped for the second straight month. The lacklustre macro data fuelled fears that Britain could be headed for a recession and clouded the outlook for the Bank of England. This, along with Brexit woes and UK political jitters, took its toll on the British pound.

In the latest Brexit-related developments, the UK government will publish plans to scrap parts of the post-Brexit deal concerning the Northern Ireland Protocol. This would set the stage for a further deterioration in post-Brexit UK-EU relations and possibly spark a trade war in the middle of the cost-of-living crisis. Apart from this, the uncertainty over Boris Johnson’s future as the UK Prime Minister further undermined sterling and dragged the GBP/USD pair lower for the fourth straight day amid broad-based US dollar strength.

The red-hot US consumer inflation data released on Friday fueled speculations that the Fed would tighten its policy at a faster pace and opened the door for a jumbo 75 bps rate hike. This, in turn, pushed the yield on the 2-year Treasury note - seen as a proxy for the Fed's policy rate - to 3% for the first time since 2008. Adding to this, the yield on the benchmark 10-year US government bond shot to the highest level since 2018 and underpinned the buck.

Meanwhile, the prospects for a more aggressive move by major central banks, along with the worsening global economic outlook, continued weighing heavily on investors' sentiment. This was evident from an extended selloff in the equity markets, which provided an additional boost to the greenback's relative safe-haven status. The combination of factors exerted downward pressure on the GBP/USD pair and took along short-term trading stops near the 1.2200 mark.

Some follow-through selling below the YTD low, around the 1.2155 region would be seen as a fresh trigger for bearish traders and set the stage for additional losses. That said, traders might refrain from placing aggressive bets ahead of the key central bank event risks later this week. The Fed is due to announce its policy decision on Wednesday and the BoE meeting is scheduled on Thursday. The outcome should provide a fresh directional impetus to the GBP/USD pair.

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EUR/USD drops to multi-week lows near 1.0450 amid risk-aversion

  EUR/USD has continued to push lower early Monday after having lost more than 200 pips last week. The pair trades below 1.0500 in the European morning and the technical outlook suggests that there could be a technical correction before the next leg lower.

On Friday, the data from the US showed that annual inflation, as measured by the Consumer Price Index (CPI), jumped to its highest level in four decades at 8.6% in May. Following the European Central Bank's (ECB) cautious on the rate outlook, the hot inflation data from the US reminded investors of the policy divergence between the Fed and the ECB.

Although some Fed policymakers said that it could be appropriate to pause rate hikes in September, market participants don't think this is a likely scenario after CPI readings. According to the CME Group FedWatch Tool, markets fully price in a total of 150 basis points (bps) of Fed rate hikes in the next three meetings.

Meanwhile, the intense flight to safety provides an additional boost to the greenback and further weighs on EUR/USD. With the US stock index futures losing between 1.5% and 2.3%, the US Dollar Index continue to stretch higher toward 105.00.

There won't be any data releases featured in the US economic docket on Monday and the risk perception should continue to drive the market action.

 AUD/USD drops to fresh two-week low, back below 0.7100 on hotter-than-expected US CPI

AUD/USD turned lower for the third straight day in reaction to stronger US inflation figures.

The latest US CPI report reaffirmed hawkish Fed expectations and boosted the greenback.

The risk-off impulse further underpinned the buck and weighed on the risk-sensitive aussie.

The AUD/USD pair witnessed aggressive selling during the early North American session and turned lower for the third successive day in reaction to stronger US consumer inflation figures. The pair was last seen trading around the 0.7080-0.7075 region, or over a two-week low, down 0.25% for the day.

According to the data released this Friday, the headline US CPI rose to 1.0% MoM in May as against 0.7% expected and the yearly rate unexpectedly jumped to a fresh 40-year high level of 8.6%. Adding to this, core inflation, which excludes food and energy prices, came in at 0.6% MoM and 6.0% YoY rate versus consensus estimates for a reading of 0.5% and 5.9%, respectively.

The data reaffirmed market bets that the Fed would need to tighten its monetary policy at a faster pace to curb soaring inflation. This was reinforced by a fresh leg up in the US Treasury bond yields, which, along with a steep fall in the equity markets, pushed the safe-haven US dollar to a fresh three-week high and exerted heavy downward pressure on the AUD/USD pair.

Given the overnight break below the 0.7150 horizontal support, the emergence of fresh selling on Friday favours bearish traders and supports prospects for further losses. Hence, some follow-through weakness, towards testing the 0.7000 psychological mark, now looks like a distinct possibility. The downward trajectory could further get extended towards the 0.6945 support zone.

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Gold Price Forecast: XAUUSD surge towards $2,000 on a break above $1,900 – ANZ

 Gold has been in the range of $1,800-1,850 since mid-May. Strategists at ANZ Bank expect the yellow metal to confirm an upside move on a break past $1,900.

XAUUSD is consolidating, the range looks indecisive

“The current price range of $1,800-1,900 will not provide any clear direction until prices break either side of the range.”

“A convincing break of above $1,900, which is also a trend break-out, will be required before a short-term bullish outlook can be called. Once this level breaks, prices could touch the previous highs of $1,950 and $2,000.”

“Key supports are at $1,800 and $1,760.”

 EUR/USD: Unlikely to push higher as the ECB still focusing on ‘gradualism’ – TDS

As broadly expected, the ECB left rates unchanged today.  What’s more, the European Central Bank (ECB) has signaled its intent to raise rates by 25 bps in July but left the door open to a 50 bps move in September. Still, economists at TD Securities do not believe that the EUR/USD is ready to push higher.

EUR/USD is at risk of returning to sub-1.07 If Lagarde cannot sound more hawkish

“ECB institutionalized dovishness wins out by essentially saying that it ‘intends to’ hike by 25 bps in July.” 

The ECB did throw a bone to the hawks by opening the door to a 50 bps hike in September if high inflation is sustained. But, with the ECB still focusing on ‘gradualism’ and a small upgrade to 2024 inflation (to 2.1%), we do not get the sense that EUR/USD is ready to push higher, particularly with the risk of a stronger US core CPI read tomorrow (on a MoM basis).”

“If Lagarde cannot sound more hawkish in the press conference, EUR/USD is at risk of returning to sub-1.07.”

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World Gold Review on June 9, 2022

 ✍️ World Gold Review on June 9, 2022:

 - The precious metal market yesterday did not have too much volatility as it mainly fluctuated in the range from 1844-1859.  Closing the session at around 1853. With Gold still moving sideways and not seeing many changes, my view in today's session will be waiting to buy at low price and take profit at the margin.  on the horizontal zone.

 - The price support zone pushing the price of precious metals should be around 1844-1848 and the upper resistance zone around 1865.

Silver Price Analysis: XAG/USD consolidates near $22.00, within weekly ranges as traders eye US CPI

Silver is trading near $22.00 per troy ounce, well within this week’s ranges.

XAG/USD has traded subdued so far this week, much as with other asset classes, ahead of US CPI on Friday.

Spot silver (XAG/USD) prices continue to trade within recent intra-day ranges amid a subdued tone to broader macro trading conditions. XAG/USD is currently trading near the $22.00 per troy ounce level, well within the $21.80-$22.50ish ranges that have prevailed over the past five sessions. The precious metal continues to fund support ahead of its 21-Day Moving Average around the $21.80 level.

Silver’s directionless feel reflects the price action being seen in other major asset classes (like US equities, US bond yields and the US dollar), which are all also locked within recent intra-day ranges amid a lack of notable fundamental catalysts, as traders keep their powder dry ahead of this Friday’s US Consumer Price Inflation (CPI) data.

While the upcoming CPI report is just one of many reports that the looks at to gauge US inflationary pressures, it is certainly one of the more important ones, with traders set to pay particularly keen attention to measures of core price pressures. Any signs of a further slowing in the MoM and YoY rates of core inflation would contribute to the growing sense that US inflation has now peaked.

Furthermore, this would come as a welcome development for the Fed, which may be able to slow the pace of monetary tightening from September following widely flagged consecutive 50 bps rate hikes in June (next week) and July. This would probably weigh on both the US dollar and US yields, which would come as a boost to precious metals like silver. In this bullish scenario, a test of and potential break above recent highs in the $22.50 area would be on the cards, with bulls eyeing a move towards $23.00 in the short term.

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Gold Price Forecast: XAUUSD to remain under pressure following robust US jobs data – Commerzbank

Gold remains pressured. In the view of strategists at Commerzbank, the strong Nonfarm Payrolls report released on Friday has exacerbated the yellow metal’s downside potential.

Further US Fed rate hikes are likely

“Gold is being kept in check by the firm US dollar and rising bond yields. Yields on ten-year US Treasuries are currently above the 3% mark again. This has caused real interest rates to rise again too, making gold unattractive as a non-interest-bearing alternative investment.” 

“Gold has found itself under pressure since last Friday, probably thanks in part to the robust US labour market. This is because 390K new jobs were created in the US in May, more than expected.” 

“Since demand for labour remains unchanged at a high level, there is still a risk of a wage-price spiral, so we believe that further US Fed rate hikes are likely.” 

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EUR/USD consolidates in low 1.0700s as traders eye this week’s ECB meeting/US CPI

EUR/USD is trading in calm fashion in the low 1.0700s as traders eye this week’s ECB meeting and US CPI.

A hawkish ECB/easing of US price pressures combo could see the pair push above 1.0800.

EUR/USD is trading just north of flat in the 1.0725 area, in quiet trade ahead of what will ultimately be a busy week for the pair. The European Central Bank (ECB) announces policy in June and is expected to solidify expectations for interest rates going positive by the end of Q3, with traders set to scrutinise President Christine Lagarde’s tone on the prospect of further tightening as markets guage the outlook for 2023. Meanwhile, US Consumer Price Inflation data for May is set for release on Friday and could impact expectations for Fed policy.

But the first three days of the week are set to be much quieter in terms of central bank events and economic data, meaning EUR/USD is likely to take its cue more from things like risk sentiment/geopolitical developments etc. That would suggest that the pair may well remain stuck within recent low-1.0600s to upper-1.0700s ranges, with the 50-Day Moving Average likely to act as a magnet, as has more or less been the case over the past few days.

Some strategists think that the case for a push above 1.0800 and to its highest levels since mid-April is on the cards for EUR/USD later this week/next week, should the ECB come across as hawkish and US inflation show signs of easing. On the latter, growing momentum behind the peak US inflation narrative and, thus, peak Fed hawkishness, has been a major driver of the recent rebound from last month’s lows under 1.0400.

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GBP/USD consolidates gains near 1.2550, eyes on UK no-confidence vote

  

The market’s cautious sentiment could be witnessed via the S&P 500 Futures and the US 10-year Treasury yields as both of them struggle around 4,175 and 2.91% even if the Wall Street benchmarks rose the most in a week on Thursday.

Elsewhere, the Australia and New Zealand Banking Group (ANZ) highlights the difference between the currency BOE rate and the one per Taylor rule to suggest more work for the “Old Lady”. Further, a Tory critic, who is a UK Member of Parliament (MP), suggested rejoining the bloc and chatters over a no-confidence vote for UK Prime Minister (PM) Boris Johnson also weighed on the GBP/USD prices.

Looking forward, expectations of likely softer US data may keep GBP/USD buyers hopeful. That said, the headline US NFP is expected to ease to 325K versus 428K prior whereas the ISM Services PMI may retreat from 57.1 to 56.4. Other than the data, US President Joe Biden’s speech will also be important. However, a Platinum Jubilee Bank Holiday can restrict the pair’s moves on Friday.