enDaily Analysis 04/06/2024
Latest Economic and Fundamental Insights
The dollar index settled around 104 on Tuesday, hovering at its lowest levels in nearly two months, as signs of economic weakness in the United States supported the case for an interest rate cut by the Federal Reserve.
-Gold is stable with focus on US jobs data
-Wednesday’s ADP employment report and Friday’s non-farm payrolls data will be closely watched for further clues about the health of the US labor market and whether that will prevent the Fed from cutting interest rates in September.
“If the jobs data comes in above 200,000, which is very rosy, gold prices may fall further and even break the support level of $2,320,” said Kelvin Wong, chief market analyst for the Asia-Pacific region at OANDA.
“We see technical factors remaining positive at least in the near term as they remain supported at the $2,320 support level, with yesterday’s bounce supported by weaker than expected manufacturing numbers which also caused yields to decline.”
Data showed US manufacturing activity slowed for the second straight month in May, and construction spending unexpectedly fell for the second straight month in April.
-The Federal Reserve Bank of New York said on Monday that core inflation pressures eased slightly in April.
While bullion is considered a hedge against inflation, rising interest rates increase the opportunity cost of holding non-yielding assets.
A survey conducted by a research center showed that global central banks plan to continue increasing their exposure to gold, a trend that has already helped the precious metal reach record levels this year.
The Chinese yuan fell against the dollar on Tuesday, defying broader gains in Asian currencies, as foreign dividend payments and prevailing economic concerns offset any rise resulting from widespread US currency weakness.
Traders are currently anticipating a roughly 60% chance of a Fed rate cut in September, according to the CME FedWatch tool.
Low interest rates reduce the opportunity cost of holding non-yielding bullion.
Oil falls further due to fears of higher supplies later in 2024, with Brent crude trading at $77.00 and West Texas Intermediate crude at $73.00.
-The Organization of the Petroleum Exporting Countries and its allies led by Russia, known as OPEC+, agreed on Sunday to extend most oil production cuts until 2025 but left room to gradually cancel the voluntary cuts from eight members from October onwards.
“Oil prices have faced a double blow recently, as the supply story was affected by OPEC+ guidance to begin unwinding some production cuts from October 2024, while demand conditions were not well supported with weaker-than-expected US manufacturing activities,” he said.
U.S. manufacturing activity slowed for a second straight month in May, with construction spending unexpectedly falling for a second month in April due to a decline in non-residential activity – both of which could translate into weaker oil and fuel demand.
-Bitcoin price found support at $67,000 and started a new increase. Bitcoin has risen above $69,500 and may continue to rise in the near term.
Smart technical reports
How they work
A likely scenario is proposed for today, and the probability of this scenario being achieved, according to technical analysis, may be between 60% and 75%.
If the first scenario fails, the probability of the second scenario being achieved will be between 60% and 75% certain.
The first scenario fails when the price reaches the level of the alternative scenario condition, and the alternative scenario is immediately activated and the prediction from the first scenario is cancelled.
These reports are not considered a substitute for the trader’s decision, but rather they are a tool to assist the follower in making his own decisions, as a reference based on the origins of classical technical analysis.
GOLD
General trend: bullish
Time interval: half an hour (30 minutes)
Current price: 2351.31
The first scenario: Buy gold at a break and hold above 2353.45, with a target price of 2359.88 and 2367.01.
Alternative scenario: sell gold at a break and hold below 2342.07, with a target price of 2335.62 and then 2329.39.
Comment: Trading above supports and averages suggests an upward trend
CRUDE OIL
Trend: bearish
Time interval: half an hour (30 minutes)
Current price: $73.40 per barrel
The first scenario: selling oil at a break and holding steady by closing the candle below the $73.12 level, targeting a price of $72.60, then 72.01. Alternative scenario: buying oil at a break of the $73.80 level, targeting a price of $74.27, then 74.83.
Comment: Trading below resistances and averages suggests a decline
EURUSD
General trend: bullish
Time interval: half an hour (30 minutes)
Current price: 1.09015
The first scenario: Buying Eurodollars at a break of 1.09171, targeting a price of 1.09356, then 1.09580.
Alternative scenario: sell the euro/dollar at a break and hold firm by closing the candle below 1.08944, targeting the price of 1.08784 then 1.08571.
Comment: Trading above supports and averages suggests an upward trend
GBPUSD
Trend: bullish
Time interval: half an hour (30 minutes)
Current price: 1.27984
The first scenario: Buying the pound dollar at a break and stability above the level of 1.28189, targeting the price of 1.28475, then 1.28696.
Alternative scenario: sell the pound dollar at a break and hold firm by closing below 1.27853, with a target price of 1.27655 then 1.27431.
Comment: Trading above supports and averages suggests an upward trend
NAS100
Trend: down
Time interval: half an hour (30 minutes)
Current price: 18638
The first scenario: sell Nasdaq at a break and hold steady with a close below 18585, targeting the price of 18528 then 18477.
Alternative scenario: Buy Nasdaq at a break and hold firm by closing at the highest level of 18687, price of 18756, then 18837.
Comment: Trading below resistances and averages suggests a decline
Economic Calendar
(Times are in GMT+3)
From USA Job Opportunities (JOLTs) (April) 17:00
Fundamental Analysis
The dollar index settled around 104 on Tuesday, hovering at its lowest levels in nearly two months, as signs of economic weakness in the United States supported the case for an interest rate cut by the Federal Reserve.
Data on Monday showed that manufacturing activity in the United States contracted further in May despite market expectations of a slight improvement.
Markets now expect a roughly 55% chance of a Fed rate cut in September after the data, compared to about 55% on Friday.
Investors are now looking to more economic reports this week including the JOLTS Services and Jobs Purchasing Managers’ Index (ISM) and the upcoming monthly jobs report for further guidance.
Markets are also awaiting the European Central Bank’s policy decision on Thursday, when it is expected to start cutting interest rates.
The dollar settled at multi-month lows against most major currencies, but only traded at two-week lows against the Australian dollar and the yen.
Gold prices fell today, Tuesday, after rising 1 percent in the previous session, as investors awaited US jobs data scheduled to be released later this week in search of evidence on the path of the Federal Reserve’s interest rate (the US central bank).
Oil prices fell in Asian trading on Tuesday, extending losses from the previous session when prices fell to their lowest levels in four months, with investors concerned about higher supply later in the year amid cautious expectations for demand from the United States, the main consumer.
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