North American News
Holiday trading during the US session
The US traders were off in observance of Juneteenth with banks, federal offices and exchanges closed for the day. As a result, there was little in the way of news headlines and there was no economic releases.
There was some chatter from central bank figures from the ECB, BOE and Fed.
Fed’s Bullard: The economy is slowing to trend rate of growth as expected with Fed’s actions
- Fed’s Bullard speaks at from Barcelona
- Economy slowing to trend rate of growth as expected with Fed’s actions
- There are risks to the outlook from Ukraine war, supply chain issues in China
- But there are always risks and as things stand, expect continued expansion in the US through 2022
- Household wealth near all time high
- Fed’s reaction to pandemic wasn’t bad policy, difficult to know what to do in the middle of a storm
- Fed now has some work to do to bring inflation down
- I have been pleased with US market reaction to Fed policy
- I am hopeful global central bank actions will help contain inflation
- We moved a lot on rates, but from a very low level
- We are moving quickly
- current balance sheet reduction a good pace to start with
Commodities
Gold Price Forecast: XAUUSD retraces below the 200-DMA and clings to $1830s despite soft US dollar
- Gold spot (XAUUSD) begins the week on the wrong foot, down some 0.12%.
- A risk-on impulse was a headwind for safe-haven assets and weighed much more in Gold.
- Gold Price Forecast (XAUUSD): Failure at the 200-DMA to send gold prices tumbling towards $1800.
Gold spot (XAUUSD) slides for the second consecutive day and fails to break above the 200-day moving average (DMA) at $1843.71, a zone briefly tested on Monday. However, bulls were quickly rejected, with sellers taking over and dragging prices below Friday’s close. At $1836.79, XAUUSD records losses of 0.05% amidst a thin liquidity trading session.
US real yields remain a headwind for gold prices, despite a softer greenback
Global equities recovered some ground, while US futures gained. The US Dollar Index, a measure of the buck’s value vs. a basket of its rivals, drops 0.31%, down at 104.314. The risk-on impulse courtesy of China’s Covid-19 news weighed in safe-haven status assets, in this case, Gold and the greenback. However, the uptick in real yields, as depicted by US 10-year Treasury Inflation-Protected Securities (TIPS) yield, unchanged at 0.648%, in positive territory, remains a headwind for the non-yielding metal.
In the meantime, speculation of the US reaching a recession begins to mount. Analysts at Nomura warned that tightening conditions, consumer sentiment souring, and energy and food supply distortions have worsened the global growth outlook.
“With rapidly slowing growth momentum and a Fed committed to restoring price stability, we believe a mild recession starting in the fourth quarter of 2022 is now more likely than not,” analysts at Nomura wrote.
Elsewhere, Fed speakers throughout the weekend crossed wires. Firstly, Fed Governor Christopher Waller said that he supported the 75 bps rate hike in June and will support another rate increase of that size in July if data comes as expected. Similarly, Atlanta’s Fed President Raphael Bostic said he endorsed the 75 bps rate hike last week and said they need to act decisively and affirmatively to get inflation under control.
Furthermore, Treasury Secretary Janet Yellen also mentioned her expectations of a slowing economy but ruled out recession concerns.
Gold Price Forecast (XAUUSD): Technical outlook
Last Friday’s fall below the 200-DMA opened the door for selling pressure. Although the yellow metal is in consolidation in the $1800-$1850 range, a move towards the bottom area of it is on the cards. Why? Gold’s failure to print a daily close above the 200-DMA, alongside the Relative Strength Index (RSI) pushing lower in negative territory and crossing below the RSI’s 14-period moving average (MA), gives enough reasons for bears to drag prices towards the $1800 area.
Therefore, the XAU/USD first support would be the Jun 1 daily low at $1828.33. A break below would open the door for a May 18 test at a $1807.23 cycle low. Once broken, a fall to $1800 is next.
Upwards, XAU/USD’s first resistance would be the 200-DMA. If XAU bulls achieve a daily close above it, a move towards the 50-DMA at $1874.80 is on the books. Once cleared, the XAU/USD following resistance level would be the 100-DMA at $1891.92.
EU News
Major European indices are closing higher
- German DAX, +1.06%.
The major European indices are closing higher on the day – and near session highs – led by Spain’s Ibex which is up 1.72%
A look at the levels at the close show:
- German DAX, +1.06%
- France’s CAC, +0.64%
- UK’s FTSE 100 +1.5%
- Spain’s Ibex +1.72%
- Italy’s FTSE MIB
Other News
Lagarde: Must be attentive to recession risk
ECB’s Lagarde:
- Fight against fragmentation is preconditioned to success of monetary policy
- Must preempt fragmentation
- must be attentive to recession risk
- ECB does not have a recession in baseline
Cryptocurrency News
Why Tron price is due for a breakout
- Tron price trading in the least possible space of a pennant formation.
- TRX price will see a breakout unfolding soon, with possibly another drop towards $0.05.
- With this drop, another 16% of the value would be lost.
Tron (TRX) price is set to near its endgame as the pennant formation nears completion. Considering the current headwinds and global themes changing financial markets, expect a drop to the downside as the cash drain continues out of cryptocurrencies. TRX price is thus set to drop back to $0.050 or possibly even $0.046 as the pain trade continues.
TRX price set to wobble further
Tron price is set to break lower on completion of a pennant formation that materialised at the end of last week. Taking into account the current positioning of the markets and the cash drain that is going on in cryptocurrencies, expect for a bearish outcome. The supportive levels to the downside are $0.051 and $0.0046 – both of which are coming back into play.