Gold prices hit new 14-month highs last week near $1358.00 per ounce, and the yield on 10-year US government bonds last week fell to almost 2-year lows near 2.060%.
Investors are alarmed by conflicts in the Middle East, foreign trade disputes and a slowdown in economic growth, forcing them to move away from risks into defensive assets.
The decline in US government bond yields is also associated with forecasts that the Federal Reserve will lower interest rates by the end of the year. Published last Wednesday, weak data on inflation in the US added arguments to investors, which putting on the Fed rate cut.
Nevertheless, the dollar strengthened sharply last Friday, which allowed the DXY dollar index to grow significantly and almost completely offset its decline in the previous week. At the same time, by the end of the trading day on Friday, gold quotes returned to the close of the previous week's marks near $1341.00 per ounce, i.e. showed almost zero growth at the end of last week.
The dollar was supported by a strong growth in retail sales in May. The Fed takes into account this indicator in its rate decision, as US economic growth largely depends on the consumer sector. Retail sales data showed that American consumers are not yet experiencing the negative effects of a slowdown in economic growth. In addition, before the Fed meeting next week, other important macro data are no longer expected.
Next week, traders will focus on the publication of important macro statistics for Germany, the Eurozone, New Zealand, Canada, including data on consumer inflation in the UK, Canada, as well as on the results of the meetings of the central banks of the USA, Japan, and the UK.
As always, the publication of a number of important macroeconomic data is expected during the new trading week and number important news will be published.
The oil market is dominated by negative dynamics. At the beginning of the European session, WTI crude oil is quoted at $52.00 per barrel, below the important resistance levels of 59.50 (50% Fibonacci level), 59.00 (EMA200 on the daily chart), 56.85 (EMA200 on the weekly chart), 55.40 (Fibonacci level 38.2% of the upward correction to a fall from the highs of the last few years near the 76.80 mark to the level of support near the 42.15 mark).
Long-term short positions with targets at the support level of 42.15 (Fibonacci level 0% and the lows of December 2018) became relevant again. A breakdown of the support level of 50.30 (Fibonacci level of 23.6%) will confirm this scenario.
Only the return of prices to the zone above the level of 59.90 will resume the bull trend.
Support Levels: 50.30, 49.00, 42.15
Resistance Levels: 53.25, 55.40, 56.85, 59.00, 59.50
Sell in the market. Stop Loss 53.50. Take-Profit 50.30, 49.00, 43.00
Buy Stop 53.50. Stop Loss 51.50. Take-Profit 55.40, 56.85, 59.00, 59.50
As the Ministry of Energy of the United States reported on Wednesday, oil reserves in the country rose by 2.2 million barrels during the week of June 1-7, to 485 million barrels, the maximum since July 2017.
Oil prices on Wednesday continued to decline after Tuesday in the Energy Information Administration (EIA) in the monthly report lowered the forecast for oil demand growth to 1.2 million barrels per day, or 15% compared with the previous month, in connection with concerns about a slowdown in global economic growth.
Investors were alarmed by a weakening demand and an increase in oversupply in the United States. On Wednesday, NYMEX crude oil futures closed down $ 2.13, or 4.2%, at $ 51.14 per barrel.
Over the last month, Brent quotes lost about 13%, while WTI fell by about 15%.
We are analyzing the activity of HFT algorithms in the Forex market today and have noticed that bullish trading opportunities may be interesting today.
Namely, the pair has now reached the light HFT buying pressure zone which is today noted at 1.1262 and below. The bearish attempt got strongly rejected and the hourly candle is way off the lows as of this moment.
This is a solid bullish signal that appears at the light HFT buying pressure zone but is also near the 1.1250 support zone. While for the moment, the bullish signal is not fully confirmed, the probabilities suggest it soon may be.
The Master MACD is also giving a bullish signal, but a bullish reversal will be confirmed when EURUSD breaks above today's daily high at 1.1288. It will at the same time, clear the resistance trendline of the descending channel (see chart below).
Nonetheless, looking to buy around current levels near the support trendline offers good risk-reward. And, in the bullish case, EURUSD is likely to head toward the light HFT selling pressure zone which is noted at 1.1297 and above. The medium HFT selling pressure zone is noted at 1.1332 and above.
We are analyzing the activity of HFT algorithms on the EURCHF Forex pair today and have noticed that bullish trading opportunities may be provided here.
The pair has now reached the light HFT buying pressure zone which is noted at 1.1218 and below. The price has reacted here, but a bullish signal or pattern has not been formed yet, so further bearish attempts to the downside are possible still.
However, the 1.1200 round number level is also near the current levels and is likely to provide additional buying interest as this level is notable support for EURCHF. Hence, the combination of the 1.1200 support and the light HFT buying pressure zone could attract enough buying pressure that could result in a bounce and formation of bullish signals here.
In such a case, if EURCHF would reverse the pair will probably move toward the first intraday resistance around 1.1230 and then toward the light HFT selling pressure zone which is noted at 1.1258 and above.
EUR / USD failed to consolidate in the zone above the resistance level of 1.1310 (ЕМА144 on the daily chart) and resumed its decline.
At the beginning of the European session on Thursday, EUR / USD is trading near support levels of 1.1285 (Fibonacci level 23.6% of the correction to the fall from 1.3900, which began in May 2014), 1.1278 (ЕМА200 on the 1-hour chart).
As the US Department of Labor reported on Wednesday, consumer prices in May increased compared to April, but less significantly than expected (in annual terms, + 1.8% against the forecast of + 1.9% and + 2.0% in April). The base consumer price index, which does not take into account food and energy, rose by 2% compared with May 2018, and compared with the expected growth of 2.1%.
Low inflation would not be a reason for lower rates, but it increases the likelihood that the Fed will signal a decrease in rates in the second half of this year when the next meeting takes place.
Despite lower than expected inflation, the US stock market is still near record highs, and unemployment has been at its lowest since 1969.
Despite the publication of weaker-than-expected inflation indicators, the dollar rose on Wednesday, and the dollar index DXY hit an intra-week high at 96.99.
Analysis of the activity of HFT algorithms in the Forex market shows that the AUDUSD currency pair has already reached the light HFT buying pressure zone which is today noted at 0.6949 and below.
Therefore, potential bullish opportunities may exist today on this pair. In addition, trend indicators such as the Master MACD and the FxTR CCI are already showing bullish signs too which confirms that AUDUSD may be ready to take a bullish push higher.
The price action stabilized around the 0.6950 level yesterday after a protracted period of decline. Today it is bouncing from slightly lower levels around 0.6945, but the overall support here is holding with bullish patterns rejecting lower levels below 0.6945.
In the bullish scenario, AUDUSD can offer trading opportunities toward the light HFT selling pressure zone which is noted at 0.6969 and above.
On Thursday, a regular meeting of the Swiss National Bank will be held, at which the bank is expected to maintain its monetary policy unchanged. At previous similar meetings the Swiss National Bank also kept the deposit rate at -0.75%, where it has been located since January 2015. The bank also maintained a three-month LIBOR rate in the range from -1.25% to -0.25%.
Last week, the total crypto market capitalization broke out of overbought area coming from a high of 281.2 Billion USD to 224.8 Billion USD, showing a decline in demand for cryptocurrencies and possible correction of the bullish price gains across the crypto market.
Let’s take a look at the technical price patterns driving a few of the top cryptocurrencies as well as recent fundamental drivers in the space.
BTCUSD (Bitcoin) Technical and Fundamentals
Based on a report by Independent on June 05, Oliver Isaacs, a bitcoin price analyst, believes that the price of the BTC will hit $25,000 around 2019.
He believes the price is on the increase based on geopolitical, regulatory, and technological drivers. The trade war between the U.S and China draws the attention of investors to the use of Bitcoin as a hedge on investment.
Tim Draper also noted the increase in mainstream adoption from companies such as Amazon, Microsoft, Starbucks, now accepting crypto payments.
Draper went further to project that the price of Bitcoin will hit $250,000 by the Year 2023.
SFOX analysts hold a more pessimistic position, sighting the current price growth as fear of missing out.
BTCUSD: Daily Chart
Correctional growth of AUD / USD stalled at the resistance level of 0.7000 (the upper line of the downward channel, EMA50 on the daily chart). AUD / USD remains in a long-term bearish trend. Below the key resistance levels of 0.7085 (EMA144 on the daily chart), 0.7140 (EMA200 on the daily chart) negative dynamics prevail.
AUD / USD returned to the zone below the short-term resistance levels of 0.6974 (ЕМА200 on 4-hour chart), 0.6962 (ЕМА200 on 1-hour chart) and inside the downward channel on the daily chart.
Below the resistance level of 0.7000, short positions remain preferable, while the targets of decline are located at 0.6900, 0.6830 (2016 lows), 0.6770.
Support Levels: 0.6900, 0.6830, 0.6800, 0.6770
Resistance Levels: 0.6962, 0.6974, 0.7000, 0.7085, 0.7140
Sell in the market. Stop Loss 0.7025. Take-Profit 0.6900, 0.6830, 0.6800, 0.6770
Buy Stop 0.7025. Stop Loss 0.6940. Take-Profit 0.7085, 0.7140
As reported by the General Administration of Customs of China last Monday, imports into the country decreased by 8.5% (in annual terms), which represents the worst result since mid-2016.
The reduction in imports was another signal of a more significant than expected weakening of domestic demand. Earlier there were data showing a sharp decrease in the volume of new orders in May. Both electronics imports from Korea and Japan, and raw materials imports, including from Australia, have declined.
The activity of HFT algorithms on the EURUSD currency pair this morning shows that interesting bearish trading opportunities could be created in the session ahead.
EURUSD now reached the light HFT selling pressure zone which today is noted at 1.133 and above. The bullish attempt was quickly rejected with the precision of 1 pip and the price is now falling with the new candle in the red. If it closes like this or lower, a bearish engulfing candlestick pattern will be formed on the hourly chart - confirming the selling interest in the light HFT selling pressure zone.
The Master MACD indicator is indicating the changes in trend and is now already bearish too. If the bearish reversal continues then EURUSD would likely head toward and reach the light HFT buying pressure zone that is today noted at 1.129 and below.
Analysis of the activity on HFT algorithms in the Forex market shows that strong bullish momentum continues to drive the EURGBP pair higher.
HFT algorithms are buying EURGBP and the pair has already reached the light HFT selling pressure zone today that is noted at 0.8913 and above. Buying momentum is strong and the pair could attack the medium HFT selling pressure zone as well which is noted at 0.8965 and above.
The strong bullish trend is confirmed by the Master MACD indicator and the FxTR CCI indicators, so it's not recommended to look for selling opportunities today even if EURGBP is inside of the light HFT selling pressure zone.
S&P500 futures open today with gap up.
Last Friday, Donald Trump tweeted that the planned trade duties on Mexican goods, which were supposed to take effect on Monday, were "postponed indefinitely". The US conflict with Mexico abated a little and faded into the background.
At the same time, a report published last Friday by the US Department of Labor, which turned out to be weaker than the forecast, strengthened expectations of investors putting on the Fed interest rate cut.
Last Friday, the US dollar fell sharply, as the employment report, which did not live up to expectations, increased the likelihood of the Fed lowering interest rates. According to data released on Friday by the Department of Labor, in May, the number of non-farm jobs increased by 75,000 (forecast was +175,000) against +224,000 in April. Unemployment, as expected, remained at 3.6%.
The DXY dollar index dropped 47 points on Friday to 96.49. In total, over the past week, the dollar index DXY has lost 1.25%, a decline from the level of 97.70.
The leaders of the Fed last week signaled that they were closely watching the risks of a slowdown in the economy.
US Dollar Fundamental Outlook – NFP Confirms Weakness In Economy; USD Hit Hard!
The US Dollar tumbled last week as economic data showed that investors’ worries over the economy and for Fed rate cuts are justified. ISM Manufacturing, Non-Farm Payrolls jobs growth, and wage growth all fell short of expectations - confirming the overall slowdown of the US economy. The only positive last week was the ISM Services report.
The Fed meeting is scheduled for June 19, and the probabilities favor the USD selling to extend going into this meeting. While a rate cut on June 19 still seems unlikely, chances are that the Fed will go full dovish at that meeting and maybe even prepare the markets for a rate cut in July. Markets are already pricing in a probability of 60 – 70 percent for a July cut and the Fed will now need to make it clear what they plan to do at the July meeting.
CPI Inflation and Retail Sales data will be released this week. If the numbers confirm the overall slowdown in the economy, then expect the USD decline to extend and accelerate as markets will price in an even greater probability of the Fed cutting rates in July.
The dollar fell last week, but major US stock indices rose, despite the continued high demand for defensive assets, such as gold, yen, and government bonds.
Thus, the yield on US 10-year government bonds fell last week by 2.8% or 0.059% in absolute terms to 2.072%. There is a somewhat contradictory picture. Stock indices are growing, despite investors' concerns about the state of the global and American economies. The growth of US stock indexes can, perhaps, be explained by the growing likelihood of a reduction in the Fed's interest rate.
A report released Friday by the US Department of Labor pointed out that the situation on the labor market in May was less positive than expected. Although the unemployment rate remained unchanged during the reporting period, reaching 3.6%, which is near the 50-year minimum, the number of non-farm jobs increased by 75,000 in May, with a forecast of +180,000.
Foreign trade remains the most important factor of uncertainty. In May, the United States raised to 25% duty on goods from China totaling $ 200 billion, and Beijing plans to raise tariffs on US imports worth $ 60 billion in response. Last week, US President Donald Trump threatened Mexico with imposing duties on imports of goods from this country, unless Mexican authorities take action against illegal immigration to the United States.
Last week, the Fed signaled that they were closely watching the risks of a slowdown in the economy. The deterioration of the economic outlook makes it possible to lower the interest rates of the Fed, which reduces the attractiveness of the dollar, but stimulates the purchase of high-yield, but at the same time high-risk assets on the stock market.
After the publication on Friday of a report from the US labor market, the dollar continued to fall, and the dollar index completed the past week with a decrease of 1.1% to 96.50.
Euro also rose against the dollar. At the ECB meeting last Thursday, its monetary policy remained unchanged, although the head of the central bank, Mario Draghi, who spoke at a press conference later, said directly that the bank was “ready to act and use all the tools at its disposal”, meaning a reduction in the rate and other measures.
Next week, the focus of traders will be the publication of data on consumer inflation in China, the USA, Germany, as well as data from the Australian labor market and the decision of the Swiss National Bank on the interest rate.
As always, the publication of a number of important macroeconomic data is expected during the new trading week and number important news will be published.
Analysis of the GBPJPY currency pair and the activity of HFT algorithms shows that bearish trading opportunities could be provided today.
GBPJPY has already reached the light HFT selling pressure zone today which is noted at 137.91 and above. The price soon started to react and we are now seeing even a bearish engulfing candlestick pattern forming on the 1-hour timeframe.
The pair is also trading in a rising channel since yesterday and would challenge its support around 137.80. Indicators are still showing the trend as bullish, although the Master MACD is already indicating changes as it has turned neutral.
A break below the 137.80 support trendline would confirm the potential bearish reversal. In this case, GBPJPY can fall down rapidly toward the light HFT buying pressure zone which is noted at 137.1 and below.
Despite the upward correction observed at the beginning of the month, EUR / USD remains in the global downtrend.
The last wave of decline began in April 2018 from a level of 1.2340. At the beginning of the European session on Friday, EUR / USD is trading near the 1.1268 mark, below the key resistance levels of 1.1285 (Fibonacci level 23.6% of the correction to a fall from the level of 1.3900, which began in May 2014), 1.1310 (ЕМА144), 1.1365 (ЕМА200 on the daily chart).
As the Federal Ministry of Economics and Technology of Germany reported on Friday, industrial production in this country in April shrank more than expected. According to official data, industrial production in Germany fell by 1.9% in April compared with March (the forecast was -0.4%), mainly due to the weakness of orders in the manufacturing industry and the mood of companies.
At the beginning of the European session on Thursday, EUR / USD is trading near the 1.1236 mark, 16 points higher than the opening price of the trading day and above the short-term support level of 1.1205 (ЕМА200 on the 1-hour and 4-hour charts). Above this level, correctional upward dynamics prevails within the general downward global trend.
The signal for the resumption of short positions will be the return of EUR / USD to the zone below the support level of 1.1205.
As the EU Statistics Agency reported on Thursday, the first assessment of the growth of the Eurozone economy in the first quarter coincided with the updated estimate today. Compared with the previous quarter, GDP grew by 0.4%, and compared with the 1st quarter of last year - by 1.2% (in annual terms an increase was +1.6%).
The main driver for accelerating the growth of the European economy, as it turned out, was the acceleration of consumer spending against the background of continuing employment growth.
At the same time, it is expected that growth in 2019 as a whole will be the weakest since the beginning of economic recovery in 2014.
We are analyzing the activity of HFT algorithms in the Forex market today and note that the EURJPY currency pair has already reached the light HFT buying pressure zone which is found today at 121.41 and below.
The price started to react strongly here and the last two consecutive candles now show a solid rejection of lower levels. The pair is also trading within a bearish downward channel and has reached the lower end, support trendline before the price bounced.
A bullish breakout above the channel will clear the way for more gains today, likely toward the light HFT selling pressure zone which is today noted at 122.13 and above.
The FxTR overbought/oversold indicator also confirms that the probabilities are high for a bullish reversal to occur here as the indicator's reading is below the 30 (oversold) level.
Analysis of HFT algorithms activity on the USDCAD currency pair today shows that bullish trading opportunities could be attractive in today's session here.
Namely, the USDCAD pair has already reached the light HFT buying pressure zone which is noted today at 1.3367 and below. The pair is also trading inside of a falling bearish channel since the start of this week and the price is now testing the resistance trendline of this channel - trying to breakout higher.
A bullish breakout here will confirm the bullish reversal in this area and will open the way for USDCAD to move higher toward the light HFT selling pressure zone which is noted at 1.3435 and above.
The Master MACD and now the FxTR CCI indicator also shifted bullish - confirming a change in trend momentum on the USDCAD pair.