The US dollar eased slightly on Friday after data showed inflation subsided, reinforcing expectations that the Federal Reserve will cut interest rates this year. The personal consumption expenditures (PCE) price index was unchanged last month, with a 2.6% increase over the year through May. This aligns with the disinflationary trend indicated by earlier CPI and PPI reports. Following the data, the likelihood of a September rate cut increased to around 67%. The first campaign debate between Donald Trump and President Joe Biden impacted the dollar, with Trump's aggressive stance on tariffs and potential fiscal expansion seen as dollar-positive.
GOLD
Steadied on Friday after the US inflation report aligned with expectations, gold price remained at $2,324 per ounce. David Meger from High Ridge Futures noted that incremental reductions in inflation have supported the gold market by lowering yields and increasing bond prices. Chris Gaffney of EverBank suggested gold will stay in its current range until the Fed confirms rate cuts.
XAUUSD (H4). Only broke the resistance level of 2340 once, Gold had a tight sideways movement during June. Triple-bottom at 2295.00 and quadruple-top at 2340.00 prove that investors are in wait-and-see mode.
YEN
The dollar initially fell against the yen, a currency pair susceptible to US economic data due to its strong correlation with Treasury yields. The pair ended the day slightly higher at 160.88 after reaching a 38-year high of 161.27. Investors still focus on the significant interest rate differential between the US and Japan. The dollar has shown monthly and quarterly gains against the yen of 1.9% and 5.9%. Traders are watching out for potential intervention from BOJ.
USDJPY (H4). Yen appeared weak against the other major currencies during June, but the gains slowed down compared to previous months. Waiting for the correction to its bullish projection line which is also 38.2% Fibonacci level at 158.70.
EURO
The euro was down 1.3% against the dollar in June. It is on track for its biggest monthly fall since January as political uncertainty weighed in the run-up to France’s general election.
For the second quarter, Europe’s single currency fell 0.7%. Investors fear a new French government could increase fiscal spending, threatening the sustainability of the country’s public debt and the financial stability of the bloc. After all, France is the second largest economy of the bloc currency.
EURUSD (H4). This pair is consolidating after a downtrend and is expected to trade between 1.0670 and 1.0760.
OIL
Oil prices rose on Friday, poised for a third consecutive weekly increase, driven by supply concerns from geopolitical tensions and weather disruptions. The price rally is due to the rising tensions between Israel and Lebanon’s Hezbollah, with fears that broader Middle Eastern conflicts could involve major oil exporters like Iran. Weather-related disruptions, such as heavy rains in Ecuador reducing production and potential cyclones threatening the US Gulf Coast, further pressurise the supply. Brent and WTI futures have gained 1.5% weekly.
WTIUSD (H4). Oil managed to regain its momentum in June. The major resistance at USD 80 per barrel was finally broken and became the support level. Buy near 80.00 and aim for the higher resistance level at 84.10.
Fullerton Markets Research Team
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