Topaz Global Weekly Market Outlook: June 10, 2024
Overview
Welcome to this week’s market outlook. This report provides insights from Exness financial market strategists, covering key instruments, macroeconomic highlights, and technical analysis. Let’s dive into the latest developments and expectations for the week ahead.
Key Highlights
1. Solid US Labor Market
Details: The US labor market continues to show strength with significantly higher Nonfarm Payrolls at 272k (consensus: 182k), despite a higher unemployment rate of 4% (consensus: 3.9%). Average hourly earnings rose to 4.1% YoY, indicating wage growth.
Impact: This robust data has pushed away expectations of a Federal Reserve rate cut, leading to a stronger US dollar. Market participants now anticipate the first Fed rate cut to come in November, with another in January.
2. ECB Rate Cut
Details: The European Central Bank (ECB) cut the main rates by 0.25% for the first time since 2019, bringing the deposit rate to 3.75%. The ECB emphasized that future actions will be data-driven to ensure inflation aligns with the downward trend towards 2%.
Impact: The rate cut was expected, but the lack of specific guidance on future cuts creates uncertainty. The euro weakened against the dollar as the interest rate spread widened.
3. BoE Expectations
Details: The Bank of England (BoE) is expected to cut rates after the ECB and before the Fed, possibly influenced by the upcoming job market data. The UK manufacturing sector showed expansion, but mixed economic data adds uncertainty.
Impact: The pound may continue to weaken against the dollar but hold stronger against other currencies, depending on the BoE’s actions and economic data releases.
4. BoJ Policy
Details: The Bank of Japan (BoJ) is set to hold rates, maintaining its accommodative monetary policy. BoJ Governor Kazuo Ueda mentioned the possibility of gradually reducing asset purchases based on economic and inflation data.
Impact: The yen remains under pressure due to the BoJ’s stance. Traders are closely monitoring whether the BoJ will reduce its bond purchases, adding further pressure on the yen.
5. Gold and Silver
Details: Gold fell $100 from the week-high, pressured by stronger-than-expected US jobs data and reports that the People’s Bank of China (PBoC) paused its bullion purchases for the first time in 18 months. Silver also hit a three-week low.
Impact: The halt in PBoC gold purchases removed significant support for gold’s rise. Both metals are under pressure, with gold potentially retracing to lower support levels.
6. Bitcoin Outlook
Details: The absence of selling pressure maintains a bullish outlook for Bitcoin. On-chain activities showed nearly 22k bitcoins exited exchanges, while investors deposited over $2.9 billion of stablecoins to exchanges.
Impact: The increased confidence and reduced selling pressure suggest a positive outlook for Bitcoin. Institutional adoption and regulatory approvals further support the bullish trend.
7. US Crude Production
Details: US crude production has shown no net growth since October 2023, with production plateauing at nearly 13.2 million barrels per day in March 2024. Unusual weather conditions had previously distorted year-over-year comparisons.
Impact: The plateau in production, coupled with price declines since mid-2022, suggests a potential stabilization in the crude oil market. OPEC+ reassurances and robust US jobs data have dampened expectations of immediate interest rate cuts by the Fed.
8. Stock Market Optimism
Details: Despite mixed economic data, the market remains optimistic about stocks. Robust job data delayed expectations of an interest rate cut, which had little impact on stocks. Notably, Nvidia (NVDA) posted another weekly high, driving gains in the tech sector.
Impact: The US indices edged higher, driven by financial, industrial, and tech sectors. The market sentiment is bullish, with expectations of a continuous positive trajectory for the US economy.
Instrument Outlooks
US Dollar Index (DXY)
Last Week’s Movement: +0.3145 (+0.3%)
Outlook: Neutral
Analysis: The US dollar rebounded, suggesting the Fed might postpone its easing cycle this year. The dollar index currently closes above both EMAs and breaks its descending trendline. If it closes above 105.00, it may head towards 105.60. Otherwise, it may stay within the 104.00-105.00 range.
Gold (XAUUSD)
Last Week’s Movement: -33.396 (-1.43%)
Outlook: Bearish
Analysis: Gold futures fell to their lowest in about a month, pressured by stronger-than-expected US jobs data and reports that PBoC paused its bullion purchases. The price may retrace to 2325 before extending its plunge to the next support at 2210.
Euro – US Dollar (EURUSD)
Last Week’s Movement: -0.00478 (-0.44%)
Outlook: Neutral
Analysis: EURUSD pared recent gains following repeated tests of the 1.0900 resistance. If it closes below 1.0800, it may extend its plunge to 1.0700. Otherwise, it may stay within the 1.0800-1.0900 range.
UK Pound – US Dollar (GBPUSD)
Last Week’s Movement: -0.00233 (-0.18%)
Outlook: Neutral
Analysis: GBPUSD retested the 1.2800 resistance and plunged significantly. If it closes below 1.2700, it may plummet to 1.2600. Otherwise, it may recover to 1.2800.
US Dollar – Japanese Yen (USDJPY)
Last Week’s Movement: -0.504 (-0.32%)
Outlook: Bullish
Analysis: USDJPY has rebounded, testing the 157.00 resistance. If it sustains above this level, it may head towards 160.00. If it revisits 155.00 support, it may decline further to 153.30.
Dow Jones Industrial Average (US30)
Last Week’s Movement: +468.135 (+2.52%)
Outlook: Neutral
Analysis: US30 retraced after a significant plunge. If it extends its plunge, it may test the 38550 support and continue to 37700. Otherwise, it may retest the 39200 resistance before plunging further.
Nasdaq 100 (USTEC)
Last Week’s Movement: +468.135 (+2.52%)
Outlook: Bullish
Analysis: USTEC remains steady near the historical high. If it sustains above 19000, it may obtain additional upward momentum toward 19500. If it dips below 19000, it may decline to 18500.
WTI Crude Oil (USOIL)
Last Week’s Movement: -2.076 (-2.69%)
Outlook: Bearish
Analysis: USOIL may extend its decline toward 72.00. If it reverses above 76.00, it may rise toward 80.00.
Bitcoin (BTCUSD)
Last Week’s Movement: +1609.96 (+2.38%)
Outlook: Bullish
Analysis: BTCUSD consolidated near its all-time high. If it extends its rally above 66800, it may rise to 73000. If it breaks below 66800, it may retrace to 60000.
Economic Calendar Highlights
Monday, June 10, 2024
•China: Dragon Boat Festival (Holiday)
•Australia: King’s Birthday (Holiday)
•CHF: SECO Consumer Climate
•EUR: German Buba President Nagel Speaks
•USD: 3-Year Note Auction
Tuesday, June 11, 2024
•AUD: NAB Business Confidence (May)
•GBP: Average Earnings Index +Bonus (Apr)
•USD: EIA Short-Term Energy Outlook
•USD: API Weekly Crude Oil Stock
Wednesday, June 12, 2024
•CNY: CPI (May)
•GBP: GDP (Apr)
•USD: CPI (May)
•USD: FOMC Economic Projections
•USD: Fed Interest Rate Decision
Thursday, June 13, 2024
•AUD: Employment Change (May)
•EUR: ECB’s De Guindos Speaks
•USD: Initial Jobless Claims
•USD: Core PPI (May)
Friday, June 14, 2024
•JPY: BoJ Interest Rate Decision
•EUR: Trade Balance (Apr)
•USD: Michigan Consumer Sentiment (Jun)
•USD: Baker Hughes Oil Rig Count
Conclusion
This week’s outlook presents a mix of bullish, bearish, and neutral stances across different instruments. The macroeconomic environment remains pivotal, with significant events and data releases expected to drive market sentiment. Stay informed and consider the outlined strategies for navigating the markets effectively.
For more detailed information on how you can suceed in this market with our Algo, visit Topaz Global.
Resources
•EIA
