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Recent News
Stay updated on market trends and financial developments with our comprehensive news section tailored for traders.
EURO SELL-OFF CONTINUES AS PERIPHERY BOND PREMIUM SPIKES HIGHER - 2024
The Euro continued to sell-off after Emmanuel Macron’s
dissolved parliament and called for a snap election
after his party’s dismal showing in European elections.
The high stakes wager centers around the belief that
voters will side with President Macron’s party when it
really matters, as the European elections have a history
of being a ‘protest vote’ to express dissatisfaction
with the status quo but ultimately voters have backed
away from populist parties when electing lawmakers.
However, the first round of elections takes place as
soon as the 30th of June with a wave of populist parties
sweeping across Europe, most recently seen in Italian
politics and now, seemingly making a reappearance in
France.
The chart below shows the rise in risk premium for
French Government bonds (representative of a higher
perceived risk of holding French bonds) over safer
German bonds of the same duration. When riskier bonds in
the euro zone start to sell-off, investors may recall
the European debt crises of 2011 when periphery bonds
sold-off massively and the euro followed suit. The chart
below shows the recent spike higher in French-German
yields while EUR/USD continues its sell-off which, to be
fair, originated on Friday after a massive upward
surprise in US NFP data.
US DOLLAR JUMPS AFTER NFPS THUMP EXPECTATIONS, GOLD HITS A ONE-MONTH LOW - 2024
The latest US Jobs Report showed 272k new roles created
in May, dwarfing expectations of 185K and April’s 165k
(revised lower from 175k). The unemployment rate rose to
4.0%, from 3.9%, while monthly average earnings rose to
0.4% from 0.2% last month.
The dollar index has been under pressure this week from
the weak ADP and JOLTs data but regained all of this
week’s losses after the NFP numbers hit the screens. The
dollar index has broken back above the 200-dsma and the
38.2% Fib retracement and is currently testing the
multi-month trend support.
Gold is now posting a fresh one-month low and gold bulls
have endured a difficult day. Earlier today a Bloomberg
report noted that China had stopped buying gold, sending
the precious metal down $20/oz. in quick order. A
confirmed break and open below the $2,315/oz. would
bring $2,280/oz. back into play.
GOLD AND SILVER ANALYSIS AND CHARTS - 2024
US rate cut expectations are being pushed back further
after Friday’s forecast-beating NFPs showed the US labor
market in robust health. The first 25 basis point cut is
not fully priced-in until the December meeting, although
the November meeting is a live option. In total, 38
basis points of cuts are seen this year, suggesting that
it is currently a coin toss between one of two moves.
Friday’s US Jobs Report shocked the market and sent US
Treasury yields spinning higher and gold and silver
sliding lower. Later this week we have May consumer and
producer inflation, while the latest FOMC meeting will
see all policy settings left untouched. The FOMC press
conference may give some clues as to the Fed’s current
thinking, along with the latest Summary of Economic
Projections (dot plot).
Gold is looking to push higher today but the move lacks
conviction. The recent $170/oz. range ($2,280/oz. -
$2,450/oz.) remains in place and resistance is unlikely
to be tested in the near term. A break below support
would see $2,200/oz. come into play ahead of $2,193/oz.
US Dollar Slips Further, Gold Nudges Higher, Bitcoin Poised for a New ATH - 2024
The yield on the US 2-year government is within a couple
of basis points of posting a new two-month low and is
dragging the US dollar lower. The recent double-high at
5.05% seems likely to be this cycle’s high, unless the
Fed takes an unexpected hawkish turn, and further losses
are expected over the next few weeks sheds of the Fed’s
first rate cut. Six red candles in a row have pushed
two-year yields into oversold territory so a small
retrace higher may occur before the sell-off resumes.
The dollar index is also looking under pressure and now
trades below the 200-day simple moving average, the
38.2% Fibonacci retracement level, and recent trend
support. Friday’s US Jobs Report has the ability to send
the greenback higher in the short-term, but in the
medium-term, the dollar index may drift down to the 50%
Fib retracement at 103.44 before testing the early March
swing-low at 102.34. The US dollar index is also in
oversold territory so a period of consolidation is
needed before the next move lower.
Gold is re-testing the $2,360/oz. level and a break
above here would see the precious metal above the last
simple moving average, adding credence to a further move
higher. The recent $2,280/oz. - $2,450/oz. range should
hold in the short- to medium-term.
Markets Week Ahead: Gold, EUR/USD, GBP/USD, USD/JPY; Eurozone Inflation, US Core PCE - 2024
The new week will start off slowly, as both the US and
UK markets will be closed on Monday— the former for
Memorial Day and the latter for a bank holiday. Holidays
in these financial hubs mean lower trading volume,
possibly leading to sluggish price action. But there's a
catch: thin liquidity can at times magnify price
movements if unexpected news hits the wires, with fewer
traders around to absorb buy and sell orders. That said,
caution is warranted for those who still decide to trade
on Monday.
As we progress through the week, we anticipate a
relatively calm period with few high-impact events
likely to spark significant volatility. Nonetheless, the
landscape could change on Friday with the release of
critical economic indicators. On one side of the
Atlantic, Eurozone May CPI figures will be released. On
the other side of the pond, we’ll get core price
consumption expenditure data, the Federal Reserve’s most
closely watched inflation gauge.
The European Central Bank is likely to reduce borrowing
costs from a record high of 4% at its upcoming June
meeting. However, the extent of additional rate cuts
will depend on the inflation outlook. In this sense, the
May Flash CPI report will be crucial, offering valuable
insights into recent price trends within the regional
economy, which will play a pivotal role in guiding the
monetary policy trajectory.
Hi! I’m
Leonida Markus
Hello everyone, I am in charge of new news and articles.
Happy Trading!
