Today market outlook

[Zeologic]

Gold prices edge up as US inflation eases

Yesterday, gold prices drew a small-bodied bullish candle with shadows on the top and bottom of the candle. Prices formed a high of 3265, a low of 3216, and a close of 3249. Gold prices are near the lower band, which was a support level in early May.

A weaker-than-expected US inflation report and a trade tariff deal between China and the US could keep gold prices below the $3,300 level. The Bureau of Labor Statistics reported that the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent on a seasonally adjusted basis in April, after falling 0.1 percent in March in the US. Over the past 12 months, the all-goods index has increased by 2.3 percent before seasonal adjustments.

The Fed is expected to remain cautious despite falling inflation, with analysts warning that inflation could rise as tariffs gradually push up prices. According to the CME Group’s Fedwatch tool, the probability of the Fed keeping rates unchanged at its June 18 Fed meeting is 91.8%, and the probability of a 25 basis point cut is only 8.2%.

Recent US-China trade tariff talks that have reached some points of agreement have increased risk appetite and sent bullion prices lower. However, geopolitical risks and the latest developments in tariff policy could push gold in either direction.

Meanwhile, the World Gold Council reports that China added 2 tonnes to its gold reserves in April. The National Bank of Poland increased by 12 tonnes in April to 509 tonnes, while the Czech National Bank increased its reserves by 2.5 tonnes in April. The adoption of gold by central banks could maintain the value of gold in the long term.

This week, analysts will look to the US PPI data to be released on Thursday, which could be a trigger for the USD value, which is often negatively correlated to gold.

[Zeologic]

Australia's unemployment rate is expected to be stable, AUD/USD moves in the range

The AUDUSD pair during this week's trading moved within a range of the Bollinger band, the price was in the range of 0.63436 - 0.65146. Yesterday, AUDUSD drew a bearish candle with a shorter body than the previous one, and there was a shadow on the top of the candle. The price formed a high of 0.65009, a low of 0.64224, and a close of 0.64274.

The US dollar is still struggling to regain its position amid the Trump administration and its controversies. The dollar index (DXY), which tracks the performance of the US dollar against six major currencies, was at 101.040, having fallen to 100.271. The DXY is now above the 20 EMA, below the 50 EMA, with the RSI pointing to the 51 level.

US inflation data on Tuesday showed that core CPI fell 0.2% from the expected 0.3%, from the previously revised 0.1%. Month-on-month CPI was 0.2% from the expected 0.3% and the previous revision of -0.1%. And year-on-year CPI fell by 2.3% from the expected 2.4% and the previous revision of 2.4%. Weak inflation had brought the dollar index up to 101.977, along with the tariff agreement with China with a 90-day delay.

Meanwhile, the Australian Wage Price Index (WPI) rose to 0.9% in the quarter from the forecast 0.8% and the previous revision of 0.7%. The WPI measures changes in the price of labor, unaffected by compositional shifts in the labor force, hours worked, or employee characteristics.

Today, the Australian Bureau of Statistics (ABS) will release its monthly employment report for April, which is expected to see Australia add 20k new jobs, while the Unemployment Rate is projected to remain steady at 4.1%.

The Reserve Bank of Australia (RBA) meets on April 1, leaving the Official Cash Rate (OCR) unchanged at 4.10%. RBA officials noted that labor market conditions remain tight. The RBA will meet again on May 20, where it will announce the Cash Rate, which is expected to remain on its previous policy path.

Elsewhere in the US today, the Bureau of Labor Statistics will also release PPI data, which is expected to see Core PPI rise 0.3% from -0.1%, PPI MoM is expected to be 0.2% from -0.4%. Core Retail Sales are expected to fall 0.3% this month from 0.5%. Meanwhile, unemployment claims are expected to rise to 229k from 228k.

[Zeologic]

USD/CNH steady amid slowdown due to trade war

Amid the trade war with the United States, the USDCNH pair is moving steadily between the middle and lower band lines. On Friday, the USDCNH price drew a small-bodied bullish candle and short wicks on the top and bottom of the candle. The price formed a high of 7.2134, a low of 7.1948, and a close of 7.2073.

Despite experiencing an economic slowdown due to challenges such as the trade war with the United States and the debt crisis, China is still a key player in the global economy. China has been the world's second-largest economy by nominal GDP since 2010 and even surpassed the European Union economy in 2021.

The trade war with the US is an external challenge for China that affects Chinese exports to the United States. Several e-commerce giants such as Tencent, Douyin, and JD.com have been affected by President Trump's tariffs and have shifted their products to the domestic market.

China's Vice Minister of Commerce Sheng Qiuping in a statement last month, described China's vast domestic market as an important buffer for exporters in the face of external shocks, while urging local authorities to coordinate efforts to stabilize exports and boost consumption.

Another challenge facing China is the debt crisis, especially at the local government level, driven by fiscal deficits and rising debt burdens. On the other hand, the potential for deflation due to industrial overcapacity is another concern.

In response to these challenges, China is trying to address economic challenges by encouraging domestic consumption, increasing innovation, and investing in infrastructure.

Meanwhile, the United States is also facing economic challenges due to the impact of the trade war and fears of a recession. Recently, Moody's downgraded the United States' credit rating from AAA to AA1 on May 17, 2025. This downgrade came after other credit rating agencies, Fitch and S&P Global Ratings, also downgraded the US. The downgrade was caused by several factors, including increasing US government debt and rising interest costs. The downgrade could have an impact on borrowing costs and investor confidence in the US economy.

The dollar index (DXY), which tracks the performance of the US dollar against a basket of six major currencies,s moved below the 50 EMA slightly down -0.2% at 100.746 from 100.905 today at the time of writing.

Today China will release economic data, the National Bureau of Statistics of China will report retail sales which are forecast to rise 6.0% from the previous 5.9%, Industrial Production is forecast to fall 5.7% from the previous 7.7%, and the Unemployment Rate is forecast to be 5.2% the same as the previous revision.