official Market Update by Solidecn.com

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Crude Oil

Crude oil price shows some slight bullish bias now, affected by grand support (62.3 - 62.7) current positivity, and it might test the key resistance (82.29 - 85.31) .55 before turning back to decline again.

 

 

H4: Noting that the EMA50 meets this resistance to add more strength to it.

 

 

Until now, the bearish trend scenario still valid and active as long as (69.56) area remains intact, waiting to visit (72.7 - 73.7) area as a next main target, noting that breaching 73.7 will lead the price to recover and achieve gains that start at 76.7 direct.

 

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Wheat

Turkish media reports that Russian and Ukrainian negotiators with help from Turkey and the United Nations are closing in on an extension to Black Sea grain deal. This has triggered a drop on the WHEAT market with grain price erasing all of today's gains. Nevertheless, the news has not been confirmed yet and Russian media reported over the weekend that any extensions are likely to be just for 60 days (similarly to previous extensions).

 

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GBPUSD

GBPUSD is testing the monthly support at (1.2442). 

 

 

If the daily candle closes above the (1.2423 - 1.2441) area the price will likely grow to retest recent highs around the (1.2520 - 1.2547) areas, and the bullish trend continues. The next major support is located in the area of 37 pips between (1.2386 to 1.2343). These zones provide opportunities for long positions. 

 

 

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AUDUSD

AUDUSD keeps its stability below 0.6668 level. Breaking  0.6630.level will provide strong negative motive that will push the price to achieve negative targets (0.6585 - 0.6560) area. 

 

 

Therefore, the bearish trend will remain valid and active conditioned by the price stability below 0.6665 and 0.6705 levels.

 

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DE30 Closes in on all-time highs

European indices rally, DE30 closes in on all-time highs

European indices are rallying at the beginning of today's cash trading session on the Old Continent. This comes after a stellar Wall Street session yesterday that saw major US indices gain over 1%, with small-cap Russell 2000 jumping over 2%. Optimism on Wall Street yesterday was triggered by upbeat comments on US debt ceiling negotiations - US president Biden said that talks are progressing and he will have more news on the matter on Sunday, when he returns from G7 summit, while US House Speaker McCarthy said that default is off the table and reaching a deal this week is doable.

Major blue chips indices from Europe are trading over 0.5% higher on the day. German DAX deserves a special mention as the index outperforms regional peers with 1.5% gain. Taking a look at DAX futures (DE30) we can see that price broke above a recent trading range and reached a fresh 1-year high today. Moreover, the index is currently trading just 0.4% below all-time highs from November 2021.
 

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EURUSD

 

Philadelphia FED Manufacturing Index for May:

Actual: -10.4 Expected: -19.8, Previously: -31.3

 

Weekly Jobless Claims Data

Actual: 242k, Expected: 255k, Previously: 264k

 

US Dollar appreciates right after the publication of jobless claims data and the release of the FED Philly Index. EURUSD downward trend indicates growing strengths of the US currency.

 

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USDJPY

• Wall Street indices rallied for another day. S&P 500 gained 0.94%, Dow Jones gained 0.34% and Nasdaq surged 1.51%. Russell 2000 added 0.58%
• US President Biden said that negotiator teams are making a steady progress on debt ceiling
• Meanwhile, US Vice President Harriss and White House economic adviser Brainard warned that US debt default could trigger a recession
• Indices from Asia-Pacific traded mixed today - Nikkei and Kospi gained 0.8%, S&P/ASX 200 moved 0.6% higher, Nifty 50 dropped 0.2% and indices from China traded mostly lower
• European index futures point to a higher opening of the European cash session today
• DAX futures (DE30) briefly traded above 16,300 pts and painted fresh record highs earlier today
• G7 leaders will discuss new sanctions on Russian diamond trade as well as on countries that help Russia circumvent sanctions
• Reuters reports that Chinese state banks have intervened on the market to support falling yuan
• Japanese CPI inflation accelerated from 3.2 to 3.5% YoY in April (exp. 3.5% YoY). Core CPI inflation (ex-food) accelerated from 3.1 to 3.4% YoY (exp. 3.4%). So-called core-core CPI inflation (ex-food and energy) accelerated from 3.8 to 4.1% YoY (exp. 3.4% YoY)
• New Zealand's trade balance for April reached NZ$427 million (exp. -NZ$235 million)
• Cryptocurrencies are trading mixed - Bitcoin drops 0.3%, Dogecoin trades 0.1% lower, Ripple adds 0.4% and Litecoin rallies 1.5%
• Energy commodities trade mixed - oil gains 0.7-0.8% while US natural gas prices drop 0.6%
• Precious metals trade higher - gold gains 0.2%, platinum adds 0.3% while silver and palladium gain 0.6% each
• AUD and JPY are the best performing major currencies while EUR and GBP lag the most

 

Japanese yen is one of the best performing G10 currencies today following a beat in CPI data for April. USDJPY is pulling back and looking towards a test of a recently-broken resistance zone at 138.00.

[Solid ECN ✔️]

DE 30

German DAX rallied over the past two days, adding almost 2% over Wednesday and Thursday combined. The upward move was being continued on the futures market during the Asian session today as optimism over possible agreement on US debt ceiling drove equities higher.  As a result, DAX futures (DE30) briefly traded above 16,300 pts mark at fresh all-time highs. 

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Taking a look at DE30 chart at H1 interval, we can see that the upward move on the German index accelerated after breaking above the 15,810-16,085 pts range. While the index pulled back a bit after reaching a fresh ATH, there is still some room for gains from a technical point of view. A textbook range of the upside breakout from the aforementioned 15,810-16,085 pts trading range suggests a possibility of the upward move to as high as 16,355 pts - or around 0.6% higher from current market price.

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USDCNH

People's Bank of China (PBOC) left interest rates unchanged today, in-line with market expectations. 1-year prime lending rate was left at 3.65% while 5-year rate, which is used for majority of mortgage loans in China, was left at 4.30%.

China experienced a clear setback after the initial euphoria associated with the reopening of the economy after the pandemic, although at the same time, Goldman Sachs believes that with the current momentum, the government's target of 5% growth should be achievable. In such a case, GS does not see the possibility of any additional stimulus in the country. However, it believes that there is potential for a cut in reserve requirement ratio, as a cut to main interest rates is unlikely given the significant spread between the rates in the USA or a recent depreciation of yuan. On the other hand, the weakness of the yuan could be seen as a way to increasing competitiveness of the economy, which declined significantly in the latter part of 2022. There is also a strong correlation with copper, which means that further problems in China could lead to an attempt to test of $8,000 per tonne area.

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US100

A new week has begun and there is still no agreement on the US debt ceiling. Moreover, comments made by Democrats and Republicans suggest that two sides grew more apart in their positions over the weekend. Nevertheless, talks are still ongoing and US president Biden is set to meet with House Speaker McCarthy today to look for solutions. US Treasury once again warned that deadline to reach the agreement is June 1, 2023 and failure to do so by then could risk US defaulting on its obligations. Goldman Sachs assesses that US default would happen on June 8-9, 2023 without an agreement.

Deadline to reach the deal is looming large but, interestingly, markets barely reacted to the latest setbacks and launched new week's trading little changed. This shows that there is a strong belief in the markets that the deal will eventually be reached and sides to the negotiations are just trying to win as many concessions from the other as possible. Nevertheless, failure to reach a deal this week could see markets start to get nervous.

Taking a look at Nasdaq-100 futures chart (US100) at D1 interval, we can see that the index reached a 13-month high last week. While a small pullback occurred last week, price remains close to recent high. While markets seem to ignore negative news on debt ceiling negotiations, it does not mean that positive news will be similarly ignored. Headlines suggesting that definite agreement was reached would likely trigger a positive reaction on indices with US100 possibly moving above 14,000 pts. Apart from debt ceiling talks, US tech index may also move on FOMC minutes (Wednesday, 7:00 pm BST) this week or Nvidia earnings (Wednesday, after market close).

[Solid ECN ✔️]

META.US

The European Union, on behalf of the Irish Data Protection Commission, has imposed a record €1.2bn ($1.3bn) fine on Meta Platforms (META.US), managed by Mark Zuckerberg, for data privacy breaches. The European body also set a categorical ban on sending user data. Within the next five months, the company is to suspend all future transfers of personal data to the US and US security services and six months to stop unlawful processing, including storage, of EU users' personal data. 

 

 

The decision itself, however, does not directly cover the Instagram and WhatsApp platforms. The move by the control authorities in this case was itself foreseeable, however, in view of the fact that Meta, the US and the European Union have already had disputes in the past on the data line. The current decision and, in particular, the implemented preparatory period for the cessation of data transfer to the US, gives space for the US and the Union to modify their policies regarding the sharing of user data. Discussions on this matter are already underway and are expected to be implemented operationally in the coming months.

 

Meta Platforms is expected to appeal the fine.

 

Following the fine, Meta's shares are losing more than 1.2% before the open.

 

[Solid ECN ✔️]

EURUSD

The EURUSD pair has been under pressure over the past few weeks; however, last Friday, bulls showed signs of strength once again.

 

 

EURUSD - 4 hours time frame chart

However, on the 4-hour chart, we can see that buyers regained control of the price near an important support zone marked by 1.0757. Currently, the price is approaching a significant obstacle - the downtrend line. If buyers manage to break above this zone, the upward movement may resume.

 

 

On the 4 hours time chart of the US Dollar Index, we can also see signs that the bearish scenario for the USD may indeed manifest. From a technical standpoint, we observe that sellers managed to break below the lower boundary of the rising wedge pattern, which could bring new selling pressures to the price.

 

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US500

Breaking fake news was released today regarding an alleged explosion at the Pentagon. The news quickly turned out to be false, and the tweet was deleted shortly after it was published. This information would likely have gone unnoticed unless the significant market reaction. Immediately following the news, the US500 index dropped 30 points to 4,180, and the Dollar Index declined from its peak of 103.290 points to 103.169 points.

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EURUSD

Flash PMI indices for May from France and Germany were released at 8:15 am BST and 8:30 am BST, respectively. Data was expected to show a small improvement in the manufacturing sector as well as deterioration in the services sector.

 

Indeed, it was the case with French data with manufacturing index climbing in-line with expectations and services index dropping more than expected. However, things looked different in case of German data as manufacturing index there disappointed and dropped instead of improving while services gauge unexpectedly jumped. In both countries manufacturing sector remained below 50 points threshold, indicating a recession, while services sector remain above 50 points threshold, indicating an expansion.

 

 

EUR and European indices dropped in a knee-jerk move after the French release, with EURUSD dropping deeper below 1.08 mark. While equity indices managed to recover from those losses later on, they faced another wave of selling following German data. Meanwhile, EUR attempted to recover after German data and moved back towards the 1.08 mark.

 

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Bitcoin

• US debt deal was reached during a weekend
• Beijing “Web3 Innovation and Development White Paper” introduction

Bitcoin experienced a price increase over the week, reaching above $28,000, attributed to various factors. One significant development was the announcement of a debt ceiling deal by the White House, which boosted market sentiment and led to a 4.9% increase in Bitcoin and a 4.9% increase in Ether. Additionally, a Chinese governmental agency released a white paper outlining suggestions for China's Web3 policy, signaling progress in a country that has been reevaluating its approach to cryptocurrencies.

 

 

The release of the white paper in Beijing coincided with new digital asset regulations in Hong Kong, sparking further interest in China's stance toward the crypto industry. The document, titled "Web3 Innovation and Development White Paper," recognizes Web3 technology as an essential aspect of future Internet industry development. Beijing's municipal government aims to establish the city as a prominent global innovation hub for the digital economy, allocating a minimum of 100 million yuan annually until 2025 for this purpose. As a reminder, retail investors in Hong Kong are allowed to trade cryptocurrencies starting from the 1st of June.

 

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Oil 

Oil prices have made an almost complete U-turn, recovering the majority of losses made earlier today. While there was no specific news driving the rebound, Reuters survey based on secondary sources suggested that OPEC countries were over complying with pledged output cuts. While countries like Saudi Arabia, Kuwait and United Arab Emirates were mostly in-line with pledged cuts, there were a number of countries that have cut more than pledged. Iraq and Nigeria are of note here as they are significant oil producers and their compliance with pledged cuts stood at 151% and 448% respectively. Combined output of 13 OPEC countries was 460k bpd lower in May than in April. Moreover, output data for April was revised lower by 150k bpd.

 

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Taking a look at OIL.WTI chart at H1 interval, we can see that price plunged to $67.00 area earlier today, where early-May lows are located. However, buyers took over control afterwards and a strong upward move was launched. While OIL.WTI is still trading around 1% lower on the day, it has been dropping as much as 4% earlier. Continuation of the upward move will, however, depend on whether buyers manage to push the price above the $69.45-69.65 area, where the upper limit of a local market geometry can be found.

 

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US30

US indices launched this week's trading on the back foot and moved lower on Tuesday and Wednesday. However, tides turned yesterday as it became more and more likely that Fed will keep rates unchanged at June meeting (13-14 June, 2023). Comments from Fed Harker and Jefferson signaling that FOMC is in position to skip a rate hike at the June meeting led to a slump in rate hike bets on money markets. Currently, markets price in just a 25% chance of 25 basis point rate hike at June meeting while those odds were as high as 70% following release of JOLTS data on Wednesday. NFP report for May, which is scheduled to be released at 1:30 pm BST today, will be watched closely but it seems that Fed members have already made up their minds when it comes to the June decision and therefore jobs data may not have too much of an impact.

Taking a look at Dow Jones futures (US30) at D1 interval, we can see that the index made another test of the 32,900 pts support zone and has once again failed to break below. The aforementioned support zone is marked with previous price reactions, 200-session moving average (purple line), upward trendline and the 50% retracement of the downward move launched at the beginning of 2022. Positive demand-side reaction to this hurdle suggests that the index may be set for a bigger recovery move. The first resistance zone to watch should current gains extend can be found in the 33,700 pts area, marked with 61.8% retracement.
 

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EURUSD

Final services PMI readings for May from European countries were released this morning. Revised data from France and Germany, as well as whole euro area, showed lower PMI readings than flash releases. Releases from Spain and Italy also missed expectations and came in lower compared to a month ago. Nevertheless, services sector in all major European economies is still in expansion with PMI readings above 50 pts threshold.

EUR moved slightly lower on those releases with EURUSD looking back towards daily lows in the 1.0682 area. Equity indices did not saw any major reaction to PMIs today.
 

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Crude Oil

Weekend meeting of OPEC+ group was watched closely but was not expected to result in any changes to the level of agreed output cuts. This turned out to be partially true. While OPEC+ decided not to deepen output cuts, it has agreed to extend the current output cut agreement through 2024. However, Saudi Arabia announced that it will make a voluntary output cut of 1 million barrels per day. The cut was announced for July only but Saudi officials already warned that it may be extended if the situation requires it.

Baseline production levels were adjusted for 2024 and it could be seen as somewhat bearish. This is because production quotas were redistributed from countries that struggled to meet production targets to countries that have spare production capacity. As a result, it may lead to better compliance with production targets across the group and, in turn, to higher combined production.

Taking a look at WTI chart (OIL.WTI) at D1 interval, we can see that the price launched a new week with a big bullish price gap. While Brent (OIL) jumped around 1.7% at the beginning of a new week, WTI opened with an around-4% price gap. OIL.WTI jumped above the $73-74 per barrel resistance zone and tested 50-session moving average (green line). However, bulls failed to break above it and gains started to be erased as the Asian session progressed. Price has almost completely filled the bullish price gap but has bounced off the daily lows since.