Market Summary:
On June 14 (Friday), the US Dollar Index rose by 0.28% to 105.52. The Euro against the dollar fell by 0.32% to 1.0703, the British Pound against the dollar fell by 0.62% to 1.2685, the Australian Dollar against the dollar fell by 0.31% to 0.6615, the US Dollar against the Japanese Yen rose by 0.23% to 157.3855, the US Dollar against the Canadian Dollar fell by 0.05% to 1.3735, and the US Dollar against the Swiss Franc fell by 0.42% to 0.8901.
Spot gold (June 14) climbed over 1% last Friday, closing at $2332.51 per ounce, marking the first weekly gain in four weeks. Signs of slowing US inflation increased hopes for a rate cut later this year, and plunging European stock markets also provided support. It is important to note that last week's rebound in gold has not yet recovered from the decline on June 7, and gold prices are still under pressure from the 55-day moving average, suggesting a potential further pullback.
On June 14 (Friday), the July contract for US crude oil fell by 0.24% to $78.07 per barrel, while the August contract for Brent crude oil fell by 0.1% to $82.67 per barrel.
Previous Day's Data and News:
Due to political turmoil in France, leading to a significant drop in European stock markets and the Euro, along with a rise in demand for safe-haven assets, the US Dollar rose against the Euro, Pound, Yen, and Swedish Krona, while falling against the Canadian Dollar and Swiss Franc. The US Dollar Index rose overnight, showed strong consolidation in the morning, and subsequently narrowed its gains, ending higher. The Dollar Index, which measures the dollar against six major currencies, rose by 0.34% that day, closing at 105.549.
The French CAC 40 Index continued its steep decline on the 14th, dropping by 2.66%, while the German DAX Index fell by 1.44%.
French Economy and Finance Minister Bruno Le Maire warned that if far-right or left-wing parties win the parliamentary elections in the coming weeks, France, the second-largest economy in the EU, could face an economic crisis.
Senior macro strategist at Rabobank, Erik-Jan van Harn, stated that an unfavorable outcome in the upcoming French elections could exacerbate concerns about the sustainability of German debt.
US forex broker Monex stated on the morning of the 14th that with global political upheaval raising demand for safe-haven assets, the relatively less dire narrative for the US has resurfaced. Most notably in Europe, increasing political uncertainty in France is dragging down the Euro, along with other European currencies. The turmoil in European politics continues to put heavy pressure on the Euro, which is at its lowest level against the Dollar in over a month.
Monex added that investors are turning to the relative stability offered by the Swiss Franc as the Euro and Pound continue to fluctuate wildly.
The Bank of Japan announced at the conclusion of its policy meeting on the 14th that it would maintain its target interest rate range at 0 to 0.1%. The bank also stated that it would continue its long-term government bond purchases as determined in March but plan to reduce these purchases in July.
The Governor of the Bank of Japan, Kazuo Ueda, mentioned that the bank is closely monitoring the impact of a weaker Yen on inflation and indicated a possibility of a rate hike in July, contingent on economic data.
The US Dollar against the Japanese Yen rose after the Bank of Japan announced its monetary policy, but then significantly narrowed its gains.
US economic data is laying the groundwork for an early rate cut, but Federal Reserve officials remain hawkish—an increasingly evident divergence in the US macroeconomic landscape in recent weeks. This discrepancy persists even after the Fed's rate decision this week...
After a more than week-long silence period preceding the rate-setting meeting, Fed officials began giving public speeches starting last Friday. The first two to speak, Cleveland Fed President Loretta Mester and Chicago Fed President Austan Goolsbee, conveyed surprisingly similar messages despite their historically opposing stances: more favorable inflation data is needed before rate cuts can begin.
In early Asian trading on Monday (June 17), spot gold fluctuated narrowly, trading near $2329.43 per ounce. Spot gold climbed over 1% last Friday, closing at $2332.51 per ounce, marking the first weekly gain in four weeks. Signs of slowing US inflation increased hopes for a rate cut later this year, and plunging European stock markets also provided support.
In broader financial markets, European stock markets declined, with French political turmoil hitting French assets hard. On Wall Street, caution dominated sentiment as investors took a breather following strong gains in the S&P 500 and Nasdaq indices.
Bart Melek, Head of Commodity Strategy at TD Securities, stated, "Despite the Fed's adjustment of the dot plot chart during the FOMC meeting, weak stock markets, coupled with some rate declines (priced in by Fed fund futures), rekindled interest in gold."
Following last week's softer inflation data, traders increased their bets on a rate cut of around 52 basis points (two 25-basis-point cuts) by the end of December. On June 7, the expected rate cut was 37 basis points, as stronger-than-expected employment reports had dampened hopes for an early rate cut.
There are relatively few important economic data releases this week. Focus will be on comments from Fed officials, the Reserve Bank of Australia's rate decision on Tuesday, and the Bank of England's rate decision on Thursday. Also, look out for changes in US initial jobless claims on Thursday and the preliminary US June manufacturing PMI on Friday.
US Dollar Index Technical Analysis:
The Dollar Index met resistance at 105.80 last Friday and found support above 105.15, suggesting it may maintain its upward trend after short-term declines. If the index stabilizes above 105.20 today, its upward target will be between 105.85 and 106.15. Today's short-term resistance for the Dollar Index is between 105.80 and 105.85, with important short-term resistance between 106.10 and 106.15. Short-term support for today is between 105.20 and 105.25, with important short-term support between 104.85 and 104.90.
Euro/USD Technical Analysis:
The Euro/USD pair found support above 1.0665 last Friday and met resistance below 1.0745, indicating a potential decline after short-term gains. If the pair faces resistance below 1.0740 today, its downward target will be between 1.0660 and 1.0625. Today's short-term resistance for the Euro/USD is between 1.0735 and 1.0740, with important short-term resistance between 1.0775 and 1.0780. Short-term support for today is between 1.0660 and 1.0665, with important short-term support between 1.0625 and 1.0630.
Gold Technical Analysis:
Gold found support above 2301.00 last Friday and met resistance below 2337.00, indicating a potential decline after short-term gains. If gold faces resistance below 2348.00 today, its downward target will be between 2311.00 and 2288.00. Today's short-term resistance for gold is between 2347.00 and 2348.00, with important short-term resistance between 2359.00 and 2360.00. Short-term support for today is between 2311.00 and 2312.00, with important short-term support between 2288.00 and 2289.00.
CWG Predictions for the Future:
The US Dollar today should be mainly bought on dips in the short-term. Set a stop loss at a significant breakout point, and take profit after gaining more than 30 points. Cancel all unfilled orders before the US market opens. This strategy is suitable for margin trading and can be used as a reference for spot trading.
US Dollar Index: Buy at the lower limit of the 105.85---105.20 range, with a 30-point stop loss for a significant breakout. The target is at the upper limit of the range.
Euro/USD: Sell at the upper limit of the 1.0740---1.0660 range, with a 40-point stop loss for a significant breakout. The target is at the lower limit of the range.
GBP/USD: Sell at the upper limit of the 1.2745---1.2635 range, with a 40-point stop loss for a significant breakout. The target is at the lower limit of the range.
USD/CHF: Sell at the upper limit of the 0.8935---0.8880 range, with a 40-point stop loss for a significant breakout. The target is at the lower limit of the range.
USD/JPY: Buy at the lower limit of the 158.10---156.70 range, with a 40-point stop loss for a significant breakout. The target is at the upper limit of the range.
AUD/USD: Sell at the upper limit of the 0.6640---0.6590 range, with a 30-point stop loss for a significant breakout. The target is at the lower limit of the range.
USD/CAD: Buy at the lower limit of the 1.3775---1.3715 range, with a 30-point stop loss for a significant breakout. The target is at the upper limit of the range.
Gold: Sell at the upper limit of the 2347.00---2311.00 range, with a $10 stop loss for a significant breakout. The target is at the lower limit of the range.
