Today's Market Pulse

Reminders

While the market is set up before Friday's PCE release, it is good to check where the current market is going and be aware of each one's sentiment and economic standpoint. While it is true that everyone's on the lookout for what the US economy is doing, news is often used to turn the market around or move it aggressively toward its direction. Thus, we suggest staying away from speculation and waiting for a more sure trading environment.

Market Overview

The DXY saw some strength as the treasury yields climbed across the board, with the 10-year rise all the way to 4.616%. Tuesday FED's official statement carried sentiment of the market about his hawkish perspective of the market, pulling the dollar up as uncertainties were lifted for some of the investors.

Equities are also experiencing a slowdown as the market nears PCE release.

“On the equity market side we're getting close to month-end” so people may be taking profit, said Charlie Ripley, senior investment strategist for Alliance Investment Management, also citing a weak 7-year U.S. Treasuries note auction following similar results for Tuesday's 2-year and 5-year note auctions.

“With the seven-year auction selling notes at a higher rate than the pre-auction level, that's three auctions in a row where yields came in higher. Higher rates are less attractive from an equity valuation standpoint,” said Ripley.

He noted that investors focused on the Treasury auctions as they were waiting for key economic data releases.

The FED beige book was released and mentioned there that national economic activity continued to expand from early April to mid-May. It also mentioned that employment rose at a slight pace overall along with an increase in price at a modest pace. This shows that despite high interest rates, the economy can still keep going and growing, and intervention can be kept at a minimum. 

Oil prices eased on worries over weak U.S. gasoline demand and concerns the Fed will keep interest rates higher for longer.

U.S. crude settled down 0.75% at $79.23 a barrel and Brent fell 0.74% at $83.60 per barrel.

GOLD -While discussions continue about how the FED will decide on the policies, GOLD is being pressured to lower as the price failed to reach the key structure at 2365.443. If the price breaks through 2332.174, we may expect a deeper retracement toward 2295.536. We can follow the near-term momentum while Friday's release is yet to come and position ourselves safely from the market's possible sudden movement. However, this move made by GOLD is a plausible call to action for some traders to catch prices lower and buy-in.

SILVER - Despite market influences, the high expectations on rate cuts to be done by ECB, BoE, and PBoC, lower opportunity costs to hold the bullion coupled with growing interests of central banks to diversify themselves away from the dollar and hold precious metals, Silver grew considerably over the second quarter. We expect for more growth to come as the silver sways along the 30.938 and 32.518 range. Once the silver breaks through the top of the range, we may see further developments to unfold from there.

DXY - The dollar has risen considerably over the span of yesterday after carrying Tuesday's hawkish statement made by a FED official. The price has broken through 105.071 and we are waiting to see if the price will settle above said structure or continue its aggressive move above it. 

GBPUSD -The market was pushed lower after reaching the top of the range and seemingly reaching the anchor point at 1.26487. We expect the price to drop lower from here or we may see a possibility for the price to hold steady at 1.27006 and consolidate until tomorrow's news release.

AUDUSD - The AUD has fallen to 0.66145 after failing to hold a price above 0.66541. We await for further developments but as it stands, the bullish structure is still respected with the possibility of the second leg of the M formation is being completed.

NZDUSD - The NZD has returned to the range and is showing a possibility of testing 0.60954. We may see the price extend its stay within the range, but we continue to wait for how price will move from here.

EURUSD -With the EUR now showing a large M formation, the second leg of the price is seemingly breaking through the top side of the trendline, showing a possible return toward the downtrend from here. We wait for further confirmations to come in as the ECB rate cuts are highly expected, showing a slowdown in their currency growth.

USDJPY -The Yen trades toward the May 1 high--the level at BoJ intervened in the markets to control Yen's weakness. Currently, the prices are at 157.508, several percentages up from yesterday's close. We suggest trades to remain prudent of the price and to control speculation risk to avoid big losses.

USDCHF -The CHF respected a bullish structure at 0.90940 and has risen back to 0.91329. While this may be the formation of a huge M pattern, it may also be the completion of the bounce away for another bullish run. For this, we wait for further movements to occur to confirm market movement.

USDCAD - The market has gained after failing to reach 1.36052, showing a lack of momentum and volume for sellers in this market. The price may consolidate and react at 1.37435, but we wait for further price movements to confirm a break above said structure.