enDaily Analysis 07/06/2024
Latest Economic and Fundamental Insights
The dollar index stabilized around 104 on Friday, but it is still heading for a loss of about half a percent this week, as signs of a slowdown in the US labor market reinforced bets on a cut in interest rates by the Federal Reserve (the US central bank) this year.
-Gold is heading for its first weekly gains in three with a decline in US dollar returns
-Weaker business data could translate into upside for gold analysts
-US non-farm payrolls data is scheduled to be released at 15:30 Mecca time
The dollar hovered near an eight-week low and the yield on 10-year US Treasury bonds fell to a low of 4.275% on Thursday, its lowest level since April 1, making the metal more attractive to investors.
“Gold prices have remained resilient recently, as lower bond yields and a difficult US dollar have provided a supportive environment for the yellow metal,” said Yip Jun Rong, market strategist at IG.
Markets are now eyeing US non-farm payrolls data at 1230 GMT, with job growth likely to come in below economists’ average forecast of 185,000.
It would take a significant downside surprise in business conditions to convince the Fed to cut rates earlier, given that inflation progress has stalled broadly around the 3% level. Any weaker labor market data could translate into higher gold prices.” Jun Rong said.
A series of weaker macro data this week has added to signs that inflation is cooling and the Fed will begin cutting interest rates as early as September. (Fedwatch)
-Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
Metals Focus Consulting said that gold prices are expected to reach a new record level this year despite the decline in actual demand.
A combination of factors, from expectations of lower US interest rates, and central bank purchases due to geopolitical tensions, supported bullion demand to reach a record level of $2,449.89 on May 20.
-Oil rises as markets continue to evaluate OPEC+ plans, with Brent crude trading at $79.00 and West Texas Intermediate crude at $75.00.
These bets came in the wake of weak jobs data in the United States and the first interest rate cut from the European Central Bank in five years.
However, oil prices are on track to decline for the third week in a row as the latest OPEC+ decision raises concerns about a potential oversupply.
-Bitcoin price started a downward correction from the $71,650 resistance area. BTC is now consolidating and may correct towards the $69,500 support level.
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: 2375.21
The first scenario: Buy gold at a break and hold above 2382.21, with a target price of 2388.50 and 2395.63.
Alternative scenario: sell gold at a break and hold below 2370.69, with a target price of 2364.24 and then 2358.01.
Comment: Trading above supports and averages suggests an upward trend
CRUDE OIL
Trend: bearish
Time interval: half an hour (30 minutes)
Current price: $75.34 per barrel
The first scenario: selling oil at a break and holding steady by closing the candle below the $74.99 level, targeting a price of $74.47, then 73.88. Alternative scenario: buying oil at a break of the $75.67 level, targeting a price of $76.14, then 76.70.
Comment: Trading below resistances and averages suggests a decline
EURUSD
General trend: bullish
Time interval: half an hour (30 minutes)
Current price: 1.08886 The first scenario: Buying Euro/Dollar at a break of 1.09016, targeting a price of 1.09201 then 1.09425
Alternative scenario: sell the euro/dollar at a break and hold firm by closing the candle below 1.08789, targeting the price of 1.08629 then 1.08416.
Comment: Trading above supports and averages suggests an upward trend
GBPUSD
Trend: bullish
Time interval: half an hour (30 minutes)
Current price: 1.27869 The first scenario: Buying the pound with dollars at a break and stability above the level of 1.28092, targeting a price of 1.28378, then 1.28599.
Alternative scenario: sell the pound/dollar at a break and hold firm by closing below 1.27756, targeting a price of 1.27558 then 1.27334.
Comment: Trading above supports and averages suggests an upward trend
NAS100
Trend: bullish
Time interval: half an hour (30 minutes)
Current price: 19087
The first scenario: Buy the Nasdaq at a break and hold steady by closing above 19131, targeting the price of 19201 then 19281.
Alternative scenario: sell Nasdaq at a break and hold firm by closing below 19030, price 18973, then 18922.
Comment: Trading above supports and averages suggests an upward trend
Economic Calendar
(Times are in GMT+3)
-From China China’s foreign exchange reserves (US dollars) (May) 11:00
-From Europe GDP (annual) 12:00
-From the United States of America, average hourly wages index (monthly) (May) 15:30
-From the United States of America Non-Farm Employment Report Index (May) 15:30
-From the United States of America, unemployment rate index (May) 15:30
Fundamental Analysis
The dollar index stabilized around 104 on Friday, but it is still heading for a loss of about half a percent this week, as signs of a slowdown in the US labor market reinforced bets on a cut in interest rates by the Federal Reserve (the US central bank) this year.
Data released Thursday showed initial jobless claims rose more than expected last week and first-quarter labor costs were revised lower.
Investors are now looking to Friday’s upcoming monthly jobs report for further insights into the state of the labor market.
Markets are now betting that the Fed will provide 50 basis points of total easing this year, with the first cut likely to come in September.
Meanwhile, the European Central Bank joined the Bank of Canada in kicking off its interest rate cutting cycle this week, as markets had largely expected.
However, the European Central Bank raised euro zone inflation forecasts for this year and lowered expectations for sharp interest rate cuts this year, supporting the euro at the expense of the dollar.
Gold prices stabilized on Friday, and were on track for their first weekly gain in three weeks as traders ramped up bets that the US Federal Reserve would start cutting interest rates soon, sending the dollar and Treasury yields lower.
Crude oil rose after OPEC+ ministers said the group still retained the option to pause or reverse oil production changes if necessary, UOB’s global economics and markets research team wrote in a note. OPEC+ recently announced plans to phase out some voluntary production cuts, causing market concerns about potential oversupply
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