North American News
Little movement in the major indices today, but indices all close higher
- NASDAQ leads the way
The major indices are closing higher on the day but with not much activity:
- Dow Industrial Average Rose 10.40 points or 0.03% at 33573.29
- S&P index rose 9.94 points or 0.23% at 4283.74
- NASDAQ index rose 46.90 points or 0.36% at 13276.41
The biggest mover was the small-cap Russell 2000 which surged by 48.68 points or 2.69% at 1855 point.
The index closed above both its 100 and 200 day moving averages. The 200 day moving average is down at 1811.35. The 100 day moving averages at 1822.77. It would take a move below each to tilt the buyers back to the downside.
Canada April building permits -18.8% vs -5.0% expected
- Canadian April 2023 building permit data
- Prior was +11.3% (revised to +12.3%)
- Non-residential -34.6%
- Residential -6.1%
Chris Christie enters the US presidential race
- He’s a long shot but he might have a role
It looks like the 2024 US Presidential race will be a repeat of the last one but there’s still plenty of time between now and November 2024 for that to change.
One guy who will look to mix it up is former New Jersey governor Chris Christie.
He’s an extreme long shot but he might have a role to play as a stalking horse. That would mean he’s used to ruthlessly attack a favorite in order to bolster the chances of someone in 2nd or 3rd place. Presumably in this case, he would be attacking Trump to help out DeSantis or Pence but that’s far from a sure thing and could certainly be reversed.
Commodities
Silver trapped within EMAs as US bond yields climb
- Rising US bond yields curtail Silver’s momentum as it moves between key daily Exponential Moving Averages.
- XAG/USD breaking resistance at around $23.88 may propel Silver to challenge $24.00.
- A drop below the 100-day EMA and the June 5 low of $23.25 could trigger a steeper decline.
Silver price stopped its fall amidst rising US Treasury bond yields, cushioned by the 100-day Exponential Moving Average (EMA) lying at $23.47. Still, it also failed to rally, capped by solid resistance at around the $23.74-88 area, where the 20 and 50-day EMAs lie. Therefore, XAG/USD is trading at $23.52, almost flat.
XAG/USD Price Analysis: Technical outlook
From a daily chart perspective, the XAG/USD path remains unclear, trapped between daily EMAs, pending cracking resistance at around $23.74-88, which would pave the way to challenge the June 2 high of $24.01. A breach of the latter would shift Silver upwards and open the door to test the April 25 low turned resistance at $24.49 before aiming towards February 2 high at $24.63.
Conversely, XAG/USD falling below the 100-day EMA and sliding beneath the June 5 low of $23.25 could exacerbate a more profound fall toward the May 30 daily low of $22.93. Once broken, the XAG/USD next challenge will be the 200-day EMA at $22.87
The Relative Strength Index (RSI) indicator is in bearish territory, while the 3-day Rate of Change (RoC) followed suit. Therefore, in the near term, Silver’s path could be downwards.
Gold steadily around $1960s amid higher US bond yields
- Gold’s rise was capped by US bond yields despite concerns for a gloomy economic outlook in the US sparked by weakness in business activity.
- The US Federal Reserve is expected to maintain interest rates unchanged at the June reunion, but recent central bank decisions worldwide suggest tightening monetary conditions loom.
- Technical analysis of XAU/USD suggests a potential inverse head-and-shoulders pattern, with a crucial resistance confluence of the 50 and 20-day EMAs to validate it.
Gold price retreats after hitting a daily high of $1966.34 as US bond yields edge higher, a headwind for the yellow metal. Investors sentiment is negative after reports of business activity in the United States (US) raised worries about a recession, underpinned the US Dollar (USD) by last week’s Federal Reserve (Fed) dovish comments, cushioned XAU/USD fall. At the time of writing, XAU/USD is trading at $1959.40, with losses of 0.10%.
EIA raises forcast for 2023 world oil demand growth by 30,000 bpd
- That’s a marginal increase, but it’s an increase
The World Bank’s higher global growth estimates today are a hint of what’s happening in the oil market, though you wouldn’t know it from prices this year.
In any case, the EIA just raised its 2023 world oil demand growth forecast by 30K bpd and now sees an increase of 1.59m bpd this year.
EU News
European equity close: A comeback and a finish at the highs of the day
- Closing changes for the main European bourses
- Stoxx 600 +0.4%
- German DAX +0.2%
- French CAC +0.2%
- UK FTSE 100 +0.4%
- Italy MIB +0.6%
- Spain IBEX +0.2%
Eurozone April retail sales 0.0% vs +0.2% m/m expected
- Latest data released by Eurostat – 6 June 2023
- Prior -1.2%; revised to -0.4%
- Retail sales -2.6% vs -3.0% y/y expected
- Prior -3.8%; revised to -3.3%
Eurozone consumers lower inflation expectations, hope for slowing inflation – ECB survey
- The findings from the ECB’s latest survey on inflation expectations
Inflation expectations over the next 12 months was seen falling to 4.1% in April, down from 5.0% in March. And that will be a bit of relief for the ECB as the perception is that price pressures will perhaps decline further in the months ahead. It will still take a long period before converging towards the target of 2% but this is at least a welcome first step.
ECB’s Knot: Inflation is still way too high but the worst is behind us
- Remarks by ECB policymaker, Klaas Knot
- Will keep tightening policy until we see inflation returning to 2%
- But this must be done step by step
- Seeing first signs that policy tightening is being transmitted to the real economy
Germany May construction PMI 43.9 vs 42.0 prior
- Latest data released by HCOB – 6 June 2023
- Prior 42.0
Germany April industrial orders -0.4% vs +3.0% m/m expected
- Latest data released by Destatis – 6 June 2023
- Prior -10.7%; revised to -10.9%
UK May construction PMI 51.6 vs 51.1 expected
- Latest data released by S&P Global – 6 June 2023
- Prior 51.1
Other News
World Bank raises global growth forecast to 2.1% from 1.7%
- The latest forecasts from the World Bank
- Raises global growth forecasts versus January
- Forecasts 2024 global growth at 2.4% vs 2.7% prior
- Sees 2025 growth at 3.0%
- Sees US growth at 1.1% vs 0.5% in January
- 2024 US growth at 0.8% vs 1.6% in Jan
- Sees China 2023 growth at 5.6% vs 4.3% in Jan
- 2024 China growth at 4.6% vs 5.0% in Jan
- Global inflation to edge lower but remain above target in many countries in 2024
Australian Q1 GDP estimate a touch higher to +0.3% q/q (from +0.2% q/q)
Westpac have nudged their expectation for tomorrow’s GDP data from Australia a touch higher, to 0.3% q/.q (from previously +0.2%) and +2.4% y/y.
January – March economic growth data is expected on Wednesday, 7 June 2023 at 11.30am Sydney time
China regulator reportedly asks major state-owned banks to lower dollar deposit rates
- Reuters reports, citing four people with direct knowledge of the matter
The Chinese self-regulatory body overseen by the central bank has reportedly asked major state-owned banks to lower their dollar deposit interest rates, with the cap now being at 4.3% (previously 5.3%) for dollar deposits of $50,000 and above. This is largely to try and encourage Chinese firms, particularly exporters, to settle their FX receipts in the yuan – after the currency has fallen considerably over the past few weeks against the dollar.
China calls on biggest banks to cut deposit rates to bolster the economy
- Beijing continues to call for more measures to prop up economic prospects
The story continues as China is requesting banks to do more in order to boost the economy.
Cryptocurrency News
SEC sues Coinbase for operating as an unregistered broker
- SEC comes for Coinbase a day after Binance
From the complaint:
- SEC says Coinbase has operated as an unregistered broker since at least 2019
- Crypto assets that Coinbase makes available put Coinbase’s operatings ‘squarely within the purview of the securities laws’
- Coinbase’s staking program includes five stakeable crypto assets, makign the staking program an investment contract and therefore a security
- Coinbase has never registered as a broker, evading the disclosure scheme for securities markets
Yesterday regulators came for Binance and today it’s Coinbase. Everyone in the forex market saw this years ago; when regulators come, they leave with body bags.
SEC’s Gensler: Tokens are speculative investment vehicles
- Comments from Gary Gensler on CNBC
- It takes time to build a case, we do things by the book
- Exchanges are commingling a number of functions
- Platforms offer a web of deceptions, with some individuals trying to evade law
- The public would be aghast if they found out the NYSE was also running a hedge fund
- One sector running around like the wild west undermines trust in all US capital markets
- Binance sister organizations boosted volumes and corrupted the market
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