US
May's robust job growth and wage increases suggest the Federal Reserve might maintain current interest rates through the summer and beyond. The Bureau of Labour Statistics reported a significant increase in nonfarm payrolls by 272,000, surpassing the 190,000 consensus and April’s 165,000 gain. Average hourly earnings rose 4.1% over the past year, exceeding expectations. Despite the unemployment rate rising to 4%, the labour market remains vibrant. However, inflation, though down from mid-2022 peaks, is still above the Fed's 2% target, running at about 3% annually. The Fed's dual mandate focuses on maintaining full employment and stable prices.
US30USD (Daily). Bouncing back from a solid demand area at 38,000, the Dow Jones is at the median support and resistance level of the last 6 month period. Potential buy around 38,000 and sell around 40,000.
USDJPY (Daily). Having insignificant movement last week, the pair is still stuck in a wide range over the last 3 months. Wait for a breakout at the resistance level of 158.30 for a buying opportunity or a rejection pattern for a selling opportunity.
GOLD
The gold market is experiencing some liquidation, as robust US economic data suggests the Federal Reserve might delay its first rate cut. Higher interest rates make holding non-yielding bullion less attractive. Additionally, bearish sentiment was reinforced by a jobs report and data showing that China, a top consumer, paused gold purchases in May after 18 consecutive months of buying.
XAUUSD (H4). Successfully broke through the strong support at 2325.00. Gold slumped on Friday as the prospect of rate cuts dropped. The price will likely retest the double-bottom level and there will be a potential buy around 2280.00.
OIL
Crude oil futures posted a third straight weekly loss over demand concerns and OPEC+'s plan to restore production. US and Brent crude prices fell earlier after OPEC+'s announcement to phase out 2.2 million barrels per day of production cuts starting in October. Although oil prices rebounded slightly in the last two days on hopes that lower interest rates might boost demand, both benchmarks ended the week down about 2%. Analysts believe the sell-off is an overreaction, as production increases won't start until October, and oil balances should tighten during the summer driving season.
WTIUSD (Daily). Crude oil broke the support at 76.50 on the first trading day of June and rebounded from the next support at 72.40. We expect crude oil to be trading within this price range in the near term.
EURO
The European Central Bank (ECB) confirmed a widely-anticipated interest rate reduction at its Frankfurt meeting, lowering the key rate to 3.75% from the record 4% held since September 2023, despite ongoing inflationary pressures in the 20-nation eurozone.
EURUSD (Daily). Traded lower on Friday, the Euro was pressured by the strength of its peer, the Dollar. The pair has crossed the projected bearish line for the last 3-months at 1.0780 and is expected to bounce back from this level.
Fullerton Markets Research Team
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