FOMC minutes released last night caught the market off-guard as commentary from the Fed increases the likelihood of a hike in June. Minutes from the April FOMC meeting made clear the potential for a June rate hike given a continued improvement in economic growth, labor market conditions and inflation. Since the FOMC meeting in April, retail sales have been strong while NFP and durable goods were weak. With Q2 data not released until the end of July, analysts are at odds with the ability for the Fed to tighten monetary policy given existing and incoming data. Despite this, expectations of a June rate hike increase to 32% up from the previous day’s 14%.
Gold bulls remain cautious as gold falls $18 off the back of the FOMC minutes. The precious metal fell from $1273.50 an ounce to $1255 as more hawkish than expected commentary shifted market interest rate expectations. Significant net short positions being held by commercial traders are pressuring the current gold price. Although there is scope for a correction in the yellow metal, an unexpected economic event could spike the price of gold resulting in a rally as funds scramble to cover net short positions. As we head towards the middle half of the year, a halt in China growth or a shock outcome in the British referendum could act as a catalyst for the rally.
Currency Updates:
Trade EUR/USD Intraday: the downside prevails.
Pivot: 1.1290
Our preference: short positions below 1.1290 with targets @ 1.1210 & 1.1170 in extension.
Alternative scenario: above 1.1290 look for further upside with 1.1325 & 1.1350 as targets.
Comment: a break below 1.1210 would trigger a drop towards 1.1170.
Supports and resistances:
1.1350 ***
1.1325 **
1.1290 ***
1.1223 Last
1.1210 ***
1.1170 ***
1.1140 **
Trade USD/JPY Intraday: further advance.
Pivot: 109.25
Our preference: long positions above 109.25 with targets @ 110.50 & 111.00 in extension.
Alternative scenario: below 109.25 look for further downside with 108.65 & 108.20 as targets.
Comment: the RSI is bullish and calls for further upside.
Supports and resistances:
111.45
111.00
110.50
110.13 Last
109.25
108.65
108.20
Trade GBP/USD Intraday: the bias remains bullish.
Pivot: 1.4520
Our preference: long positions above 1.4520 with targets @ 1.4640 & 1.4685 in extension.
Alternative scenario: below 1.4520 look for further downside with 1.4465 & 1.4430 as targets.
Comment: technically the RSI is above its neutrality area at 50.
Supports and resistances:
1.4710 ***
1.4685 ***
1.4640 ***
1.4602 Last
1.4520 ***
1.4465 ***
1.4430 ***
Trade AUD/USD Intraday: under pressure.
Pivot: 0.7300
Our preference: short positions below 0.7300 with targets @ 0.7210 & 0.7190 in extension.
Alternative scenario: above 0.7300 look for further upside with 0.7335 & 0.7365 as targets.
Comment: a break below 0.7210 would trigger a drop towards 0.7190.
Supports and resistances:
0.7365
0.7335
0.7300
0.7234 Last
0.7210
0.7190
0.7160
Trade SPI 200 (ASX) (M6) Intraday: the bias remains bullish.
Pivot: 5350
Our preference: long positions above 5350 with targets @ 5415 & 5450 in extension.
Alternative scenario: below 5350 look for further downside with 5302 & 5270 as targets.
Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
Supports and resistances:
5500
5450
5415
5396 Last
5350
5302
5270
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