Topaz Global Weekly Update June 2

Topaz Global Weekly Market Outlook

Summary

This week’s market outlook from Topaz Global highlights key movements and trends that traders should be aware of. The market sentiment remains cautiously optimistic as various economic indicators present a mixed picture. Here are the major points to consider:

1. Fed’s Monetary Policy Expectations: The market expects the Fed to cut interest rates less aggressively this year, which supports the dollar’s strength.
2. Eurozone Inflation: Rebounding inflation in the Eurozone raises caution about subsequent rate cuts after this week’s meeting.
3. UK Inflation Uncertainty: Inflation concerns weigh on the pound as the UK navigates economic challenges.
4. Japan’s Economic Data: Incoming data from Japan may influence the Bank of Japan’s future policies.
5. Gold Prices: Gold has settled lower for the second consecutive week, while silver erased recent gains.
6. Bitcoin Sentiment: Bitcoin prices show lackluster sentiment amid significant accumulations.
7. OPEC+ Production Cuts: OPEC+ has decided to extend their production cuts, impacting oil prices.
8. Stock Indices: Soft GDP data helped indices trim losses incurred by higher US bond yields.

Industry Analyst’s Views

Our analysis for this week indicates the following market sentiments:

• Bullish: Gold, Nasdaq 100, Bitcoin, Natural Gas
• Bearish: US Dollar Index, Crude Oil
• Neutral: Euro-Dollar, Pound-Dollar, Dollar-Yen

These outlooks are derived from a combination of technical analysis and macroeconomic factors. Traders should stay alert to any developments in economic indicators and geopolitical events that could influence these trends.

Macroeconomic Highlights

North America:

• US: Core PCE inflation eased as expected, which might encourage the Fed to maintain a cautious stance on rate hikes. The market sees a 46% chance of a 0.25% rate cut in September, with higher probabilities later in the year.
• Canada: GDP growth was below expectations, which may prompt a rate cut at the upcoming Bank of Canada meeting.

Europe (UK, EU, CH):

• Eurozone: While inflation has risen, the ECB is likely to proceed with rate cuts cautiously. Economic recovery signs are present, but future rate decisions will be data-driven.
• UK: Higher mortgage rates are impacting the housing market, and persistent core inflation makes a June rate cut unlikely.

Asia and Oceania (JP, CN, AU, NZ):

• Japan: Inflation trends and economic data will be crucial in shaping the Bank of Japan’s policy decisions. The yen’s weakness continues to be a significant factor.
• China: Factory activity contraction and the ongoing real estate slump are concerning. Government interventions are crucial to stabilize the economy.
• Australia: High inflation may force the Reserve Bank of Australia to maintain higher interest rates longer, with further rate hikes possible.

Fundamental Information

Metals (Gold and Other Metals):

• Gold: Prices have seen increased volatility, with recent economic data influencing market sentiment. Gold was trading higher during the week but erased gains on Friday.
• Silver: Traded higher during the week before declining sharply due to a stronger dollar.

Energies (Oil and Other Energies):

• Oil: OPEC+ extended production cuts, supporting prices amid global uncertainties. US crude oil inventories showed a significant weekly decline.
• Natural Gas: Prices are influenced by high storage levels and reduced consumption, which could limit upside potential.

Indices:

• Nasdaq 100 and Hang Seng: Showed mixed trends with geopolitical tensions and economic data influencing movements.
• Dow Jones: Bearish sentiment continues, but weaker economic data might prompt earlier rate cuts by the Fed.

Cryptos (Bitcoin and Other Cryptos):

• Bitcoin: Despite regulatory concerns, significant ETF inflows and reduced exchange balances indicate strong long-term confidence.

Instrument Outlooks

Gold (XAUUSD):

• Technical: Bullish, with a new all-time high. Possible test of $2500 resistance.
• Macro: Boost from weaker dollar and central bank buying.

US Dollar Index (DXY):

• Technical: Bearish, potential test of 104.00 support.
• Macro: Mixed inflation data, Fed cautious on rate cuts.

Euro-Dollar (EURUSD):

• Technical: Bullish, possible move to 1.1025 resistance.
• Macro: Optimism on Eurozone recovery and slowing inflation.

Pound-Dollar (GBPUSD):

• Technical: Neutral, support at 1.2600, resistance at 1.2900.
• Macro: Positive UK GDP and potential rate cut by BoE.

Dollar-Yen (USDJPY):

• Technical: Neutral, support at 152.00, resistance at 158.50.
• Macro: BoJ cautious on policy changes, economic contraction.

Nasdaq 100 (USTEC):

• Technical: Bullish, support at 18300, resistance at 18800.
• Macro: Strong earnings, potential easing inflation boosts.

Crude Oil (USOIL):

• Technical: Bearish, resistance at 80.40.
• Macro: Rebounding on lower inventories, summer driving season.

Bitcoin (BTCUSD):

• Technical: Bullish, approaching resistance at 68800.
• Macro: Increased ETF inflows and stablecoin liquidity.

Natural Gas (XNGUSD):

• Technical: Bullish, potential rise to 2.85-3.00.
• Macro: Supply disruptions and geopolitical risks support prices.

This week’s market trends and outlooks provide valuable insights for traders. Stay updated with the latest economic data and geopolitical events to navigate the markets effectively. For more detailed analysis and trading strategies, visit Topaz Global.