08 Jun

Speculator Extremes: Silver, Peso, 5-Year & Sugar lead weekly bets

By InvestMacro

The latest update for the weekly Commitment of Traders (COT) report was released by the Commodity Futures Trading Commission (CFTC) on Friday for data ending on June 4th.

This weekly Extreme Positions report highlights the Most Bullish and Most Bearish Positions for the speculator category. Extreme positioning in these markets can foreshadow strong moves in the underlying market.

To signify an extreme position, we use the Strength Index (also known as the COT Index) of each instrument, a common method of measuring COT data. The Strength Index is simply a comparison of current trader positions against the range of positions over the previous 3 years. We use over 80 percent as extremely bullish and under 20 percent as extremely bearish. (Compare Strength Index scores across all markets in the data table or cot leaders table)

 

Here Are This Week’s Most Bullish Speculator Positions:

Silver


The Silver speculator position comes in as the most bullish extreme standing this week. The Silver speculator level is currently at a 95.5 percent score of its 3-year range.

The six-week trend for the percent strength score totaled -4.1 this week. The overall net speculator position was a total of 56,403 net contracts this week with a decline of -780 contract in the weekly speculator bets.

Speculators or Non-Commercials Notes:

Speculators, classified as non-commercial traders by the CFTC, are made up of large commodity funds, hedge funds and other significant for-profit participants. The Specs are generally regarded as trend-followers in their behavior towards price action – net speculator bets and prices tend to go in the same directions. These traders often look to buy when prices are rising and sell when prices are falling. To illustrate this point, many times speculator contracts can be found at their most extremes (bullish or bearish) when prices are also close to their highest or lowest levels.

These extreme levels can be dangerous for the large speculators as the trade is most crowded, there is less trading ammunition still sitting on the sidelines to push the trend further and prices have moved a significant distance. When the trend becomes exhausted, some speculators take profits while others look to also exit positions when prices fail to continue in the same direction. This process usually plays out over many months to years and can ultimately create a reverse effect where prices start to fall and speculators start a process of selling when prices are falling.

Mexican Peso


The Mexican Peso speculator position comes next in the extreme standings this week. The Mexican Peso speculator level is now at a 92.6 percent score of its 3-year range.

The six-week trend for the percent strength score was 0.5 this week. The speculator position registered 124,671 net contracts this week with a weekly rise of 3,752 contracts in speculator bets.

Coffee


The Coffee speculator position comes in third this week in the extreme standings. The Coffee speculator level resides at a 91.8 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at -4.1 this week. The overall speculator position was 67,649 net contracts this week with a boost of 4,616 contracts in the weekly speculator bets.

Copper


The Copper speculator position comes up number four in the extreme standings this week. The Copper speculator level is at a 90.2 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a change of 2.5 this week. The overall speculator position was 61,127 net contracts this week with a drop of -4,395 contracts in the speculator bets.

Brent Oil


The Brent Oil speculator position rounds out the top five in this week’s bullish extreme standings. The Brent Oil speculator level sits at a 84.0 percent score of its 3-year range. The six-week trend for the speculator strength score was 20.3 this week.

The speculator position was -14,745 net contracts this week with a gain of 15,361 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

5-Year Bond


The 5-Year Bond speculator position comes in as the most bearish extreme standing this week. The 5-Year Bond speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -28.9 this week. The overall speculator position was -1,573,037 net contracts this week with a decrease by -195,920 contracts in the speculator bets.

Canadian Dollar


The Canadian Dollar speculator position comes in next for the most bearish extreme standing on the week. The Canadian Dollar speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -11.1 this week. The speculator position was -91,639 net contracts this week with a decline of -5,054 contracts in the weekly speculator bets.

Swiss Franc


The Swiss Franc speculator position comes in as third most bearish extreme standing of the week. The Swiss Franc speculator level resides at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -5.4 this week. The overall speculator position was -45,763 net contracts this week with a dip of -1,397 contracts in the speculator bets.

Sugar


The Sugar speculator position comes in as this week’s fourth most bearish extreme standing. The Sugar speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -16.0 this week. The speculator position was -4,040 net contracts this week with a decline of -9,145 contracts in the weekly speculator bets.

Cotton


Finally, the Cotton speculator position comes in as the fifth most bearish extreme standing for this week. The Cotton speculator level is at a 3.7 percent score of its 3-year range.

The six-week trend for the speculator strength score was -26.8 this week. The speculator position was -6,691 net contracts this week with a reduction by -14,369 contracts in the weekly speculator bets.

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Opinions
07 Jun

Market awaits NFP data: Euro/Dollar consolidates

By RoboForex Analytical Department

At the end of the week, the US dollar is hovering around an eight-week low against the euro, but trading activity remains subdued. Everyone is conserving energy ahead of this evening’s May employment data from the US. These reports are expected to provide more insight into the timing of the Federal Reserve’s monetary policy easing.

Yesterday, the European Central Bank lowered its interest rate by 25 basis points, from 4.50% to 4.25% per annum. The euro retained its daily gains. The ECB gave few indications about its future steps, and the market remains uncertain whether there will be further rate cuts. Persistent inflationary pressures dim the prospects for the ECB.

In its comments, the ECB mentioned that the consumer price index will remain above the target of 2% until the end of next year.

The market is preparing for relatively soft non-farm payroll (NFP) data from the US. The final figure may fall below the forecast of 185,000.

Investor expectations regarding the Federal Reserve’s decisions are constantly shifting. The market now predicts the first rate cut in September, followed by another in November.

EUR/USD Technical Analysis

On the H4 chart, EUR/USD has formed an initial wave of decline to 1.0854 and a correction up to 1.0901. We expect the start of a new wave of decline to the level of 1.0833. A break below this level will open the potential for a wave down to 1.0760, with a trend continuation prospect to 1.0750. This first target of the decline wave is technically confirmed by the MACD indicator, whose signal line is at its peak and ready to continue descending.

On the H1 chart, EUR/USD is forming a consolidation range around 1.0882. An expansion of the range to 1.0908 is possible. After reaching this level, we will consider the likelihood of a new wave of decline to 1.0882. A break below this level will open the potential for a wave down to 1.0835, with a trend continuation prospect to 1.0765. This local target is technically confirmed by the Stochastic oscillator, whose signal line is below the level of 80. We expect a decline to the level of 20.

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Financial News Forex and Currency News
06 Jun

AI plus gene editing promises to shift biotech into high gear

By Marc Zimmer, Connecticut College 

During her chemistry Nobel Prize lecture in 2018, Frances Arnold said, “Today we can for all practical purposes read, write and edit any sequence of DNA, but we cannot compose it.” That isn’t true anymore.

Since then, science and technology have progressed so much that artificial intelligence has learned to compose DNA, and with genetically modified bacteria, scientists are on their way to designing and making bespoke proteins.

The goal is that with AI’s designing talents and gene editing’s engineering abilities, scientists can modify bacteria to act as mini factories producing new proteins that can reduce greenhouse gases, digest plastics or act as species-specific pesticides.

As a chemistry professor and computational chemist who studies molecular science and environmental chemistry, I believe that advances in AI and gene editing make this a realistic possibility.

Gene sequencing – reading life’s recipes

All living things contain genetic materials – DNA and RNA – that provide the hereditary information needed to replicate themselves and make proteins. Proteins constitute 75% of human dry weight. They make up muscles, enzymes, hormones, blood, hair and cartilage. Understanding proteins means understanding much of biology. The order of nucleotide bases in DNA, or RNA in some viruses, encodes this information, and genomic sequencing technologies identify the order of these bases.

The Human Genome Project was an international effort that sequenced the entire human genome from 1990 to 2003. Thanks to rapidly improving technologies, it took seven years to sequence the first 1% of the genome and another seven years for the remaining 99%. By 2003, scientists had the complete sequence of the 3 billion nucleotide base pairs coding for 20,000 to 25,000 genes in the human genome.

However, understanding the functions of most proteins and correcting their malfunctions remained a challenge.

AI learns proteins

Each protein’s shape is critical to its function and is determined by the sequence of its amino acids, which is in turn determined by the gene’s nucleotide sequence. Misfolded proteins have the wrong shape and can cause illnesses such as neurodegenerative diseases, cystic fibrosis and Type 2 diabetes. Understanding these diseases and developing treatments requires knowledge of protein shapes.

Before 2016, the only way to determine the shape of a protein was through X-ray crystallography, a laboratory technique that uses the diffraction of X-rays by single crystals to determine the precise arrangement of atoms and molecules in three dimensions in a molecule. At that time, the structure of about 200,000 proteins had been determined by crystallography, costing billions of dollars.

AlphaFold, a machine learning program, used these crystal structures as a training set to determine the shape of the proteins from their nucleotide sequences. And in less than a year, the program calculated the protein structures of all 214 million genes that have been sequenced and published. The protein structures AlphaFold determined have all been released in a freely available database.

To effectively address noninfectious diseases and design new drugs, scientists need more detailed knowledge of how proteins, especially enzymes, bind small molecules. Enzymes are protein catalysts that enable and regulate biochemical reactions.

AI system AlphaFold3 allows scientists to make intricately detailed models of life’s molecular machinery.

AlphaFold3, released May 8, 2024, can predict protein shapes and the locations where small molecules can bind to these proteins. In rational drug design, drugs are designed to bind proteins involved in a pathway related to the disease being treated. The small molecule drugs bind to the protein binding site and modulate its activity, thereby influencing the disease path. By being able to predict protein binding sites, AlphaFold3 will enhance researchers’ drug development capabilities.

AI + CRISPR = composing new proteins

Around 2015, the development of CRISPR technology revolutionized gene editing. CRISPR can be used to find a specific part of a gene, change or delete it, make the cell express more or less of its gene product, or even add an utterly foreign gene in its place.

In 2020, Jennifer Doudna and Emmanuelle Charpentier received the Nobel Prize in chemistry “for the development of a method (CRISPR) for genome editing.” With CRISPR, gene editing, which once took years and was species specific, costly and laborious, can now be done in days and for a fraction of the cost.

AI and genetic engineering are advancing rapidly. What was once complicated and expensive is now routine. Looking ahead, the dream is of bespoke proteins designed and produced by a combination of machine learning and CRISPR-modified bacteria. AI would design the proteins, and bacteria altered using CRISPR would produce the proteins. Enzymes produced this way could potentially breathe in carbon dioxide and methane while exhaling organic feedstocks, or break down plastics into substitutes for concrete.

I believe that these ambitions are not unrealistic, given that genetically modified organisms already account for 2% of the U.S. economy in agriculture and pharmaceuticals.

Two groups have made functioning enzymes from scratch that were designed by differing AI systems. David Baker’s Institute for Protein Design at the University of Washington devised a new deep-learning-based protein design strategy it named “family-wide hallucination,” which they used to make a unique light-emitting enzyme. Meanwhile, biotech startup Profluent, has used an AI trained from the sum of all CRISPR-Cas knowledge to design new functioning genome editors.

If AI can learn to make new CRISPR systems as well as bioluminescent enzymes that work and have never been seen on Earth, there is hope that pairing CRISPR with AI can be used to design other new bespoke enzymes. Although the CRISPR-AI combination is still in its infancy, once it matures it is likely to be highly beneficial and could even help the world tackle climate change.

It’s important to remember, however, that the more powerful a technology is, the greater the risks it poses. Also, humans have not been very successful at engineering nature due to the complexity and interconnectedness of natural systems, which often leads to unintended consequences.The Conversation

About the Author:

Marc Zimmer, Professor of Chemistry, Connecticut College

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Opinions Programming
06 Jun

The Bank of Canada has started a cycle of rate cuts. Today the same step is expected from the ECB

By JustMarkets

On Wednesday, the Dow Jones (US30) rose 0.25%, while the S&P 500 (US500) rose 1.18%. The NASDAQ Technology Index (US100) closed yesterday at a positive 1.96%. Stock indices rose on Wednesday, with the S&P 500 and Nasdaq 100 setting new all-time highs and the Dow Jones Industrials rising to a 1-week high. The strength in chip maker stocks on Wednesday led tech stocks higher and was a positive for the broader market. Shares of Nvidia (NVDA) surged 5% to a record high, surpassing a market value of $3 trillion, after briefly outperforming Apple (AAPL) during the intraday session. Additionally, technology stocks were supported by some positive corporate news on Wednesday, with Hewlett Packard Enterprise (HPQ) reporting better-than-expected second-quarter earnings.

Friday will see the release of the monthly US payrolls report for May, looking for clues about the labor market’s strength that will prompt when the Federal Reserve could start cutting interest rates. The consensus expects non-farm payrolls for May to increase by 190,000 and the unemployment rate to remain at 3.9%.

The Canadian dollar weakened past 1.37 per dollar, hitting one-month lows, as investors assessed the Bank of Canada’s latest rate decision. The Bank of Canada cut its key interest rate by 25 basis points to 4.75% at its June meeting, marking a departure from 11 consecutive months of the highest interest rates in the tightening cycle as expected. The decision was reinforced by recent data pointing to continued disinflation towards the target level, prompting the central bank to adopt a less stringent policy stance. The decision was also influenced by lower-than-expected GDP growth in the first quarter and a softer labor market.

Equity markets in Europe mostly rose yesterday. Germany’s DAX (DE40) added 0.93%, France’s CAC 40 (FR40) closed higher by 0.87%, Spain’s IBEX 35 (ES35) rose by 0.59%, and the UK’s FTSE 100 (UK100) closed positive 0.18% on Wednesday. European stocks extended early gains, recovering from losses in the previous session, as markets anticipated improved credit conditions in the eurozone ahead of the ECB’s decision.

The European Central Bank (ECB) will hold a monetary policy meeting today. With almost a 100 percent probability, the ECB will cut the rate by 0.25%. With a 25 basis point rate cut already virtually promised by policymakers, market watchers will focus on what ECB President Christine Lagarde says. Ms. Lagarde will likely say that future rate cuts will be “data dependent.” But in a news release, the euro could rise because the latest wage data could boost inflation going forward, and Lagarde will mention that.

WTI crude oil prices rose 1.1% on Wednesday, breaking a five-day losing streak. That rise was fueled by optimism about a possible Fed rate cut in September, which outweighed a rise in US oil and fuel inventories. There is a 69% chance that the Fed will lower borrowing costs in September, which could stimulate economic activity and boost oil demand. EIA data showed that US crude inventories rose by 1.233 million barrels last week, a reversal after a 4.156 million barrel decline the previous week and contrary to market expectations for a 2.3 million barrel decline.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) was down 0.89%, China’s FTSE China A50 (CHA50) added 0.44%, Hong Kong’s Hang Seng (HK50) decreased by 0.10% and Australia’s ASX 200 (AU200) was positive 0.41%.

Board member Toyoaki Nakamura said in a speech that the Bank of Japan should maintain its current monetary policy settings as the impact of wage growth on inflation remains weak. Nakamura was one of two dissenters when the board voted to remove the negative interest rate in March and implemented the first rate hike in 17 years.

S&P 500 (US500) 5,354.03 +62.69 (+1.18%)

Dow Jones (US30) 38,807.33 +96.04 (+0.25%)

DAX (DE40) 18,575.94 +170.30 (+0.93%)

FTSE 100 (UK100) 8,246.95 +14.91 (+0.18%)

USD Index 104.32 +0.21 (+0.20%)

Important events today:
  • – Australia Trade Balance (m/m) at 04:30 (GMT+3);
  • – Switzerland Unemployment Rate (m/m) at 08:45 (GMT+3);
  • – Eurozone Retail Sales (m/m) at 12:00 (GMT+3);
  • – Eurozone ECB Interest Rate Decision at 15:15 (GMT+3);
  • – Eurozone ECB Rate Statement at 15:15 (GMT+3);
  • – US Trade Balance (m/m) at 15:30 (GMT+3);
  • – Canada Trade Balance (m/m) at 15:30 (GMT+3);
  • – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
  • – Eurozone ECB Press Conference at 15:45 (GMT+3);
  • – Canada Ivey PMI (m/m) at 17:00 (GMT+3);
  • – US Natural Gas Storage (w/w) at 17:30 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
06 Jun

Job figures are coming out, and here’s my prediction: The markets will overreact to the headlines

By Jeffrey Hart, Auburn University 

As the saying goes, “There are lies, damn lies and statistics.”

And on the first Friday of every month, the American public gets a ton of new statistics to peruse. That’s when the U.S. Bureau of Labor Statistics releases its latest jobs figures. Within minutes of the data drop, news organizations send out push alerts, pundits start opining, and the headlines — and headline numbers — coagulate into a simple narrative, often along the lines of “Jobs are up; the economy is saved” or “Jobs are down; we’re all doomed.”

These narratives consistently influence investors and financial markets.

As a professor of finance, I think these simple storylines aren’t helpful to investors. In fact, they’re actually harmful. Initial narratives stick even when underlying statistics contradict the numbers that make the headlines. So on June 7, 2024, when the latest jobs data will be released, I predict that financial markets will overreact to the headlines.

I get it: There’s so much information in the two job reports the Bureau of Labor Statistics releases each month that you can pick and choose the data you find important. But ignoring nuance isn’t a good investment strategy. And it turns out that economic reality is too complex to fit neatly into a headline. For proof, consider how markets responded to the past two months of jobs data.

Dig into the data

Let’s start with the April jobs numbers, which came out on May 3.

The headline numbers were worse than expected: The unemployment rate ticked up to 3.9% from 3.8% the previous month, and both nonfarm payrolls and private nonfarm payrolls were lower than anticipated.

The stock market rallied on this seemingly bad news because it saw the disappointing jobs reports as a sign that inflation might be slowing. That, in turn, could encourage the Federal Reserve to put interest rate cuts back on the table for 2024 – or at least investors had hoped.

But things look a little more complex when you dig into the data.

The unemployment rate did get worse, rising one-tenth of a percentage point with virtually no change in the labor force participation rate. On its surface, that doesn’t look so good: It seems the unemployment rate has increased by 10 basis points. But that’s because the bureau calculates the unemployment rate only out to one decimal place. But what if you go out to two decimal places?

To do that, you need to crunch some numbers yourself.

You can do that by going to the the bureau’s Current Employment Statistics news release, navigating various rows and columns, and then getting the calculator out to work out a figure for the month that goes one decimal place further than what’s released to the media. Then you have to repeat the process for last month’s data.

When you do that, you can see that the unemployment rate barely budged in April: It rose from 3.83% in March to 3.86%, an increase of just .03%, or 3 basis points. This suggests those seemingly disappointing official unemployment numbers weren’t actually that disappointing after all.

Good headlines, bad news

You’ll see something similar if you look at the March jobs figures, which came out on April 5.

The headline numbers came in much better than expected, and financial markets celebrated. Total nonfarm payrolls came in way above expectations, at 303,000 jobs created, as did private nonfarm payrolls. The official unemployment rate dipped to 3.8%. On its surface, all great news.

But you would get a different perspective if you dig deeper into the data — especially the figures showing how many jobs were created in government and in manufacturing. You have to scroll a few pages into the Current Employment Statistics news release to find the relevant data – in “Employment Situation Summary Table B” – but it’s all there.

If you look at the March statistics, you’ll see that positions in government make up more than 20% of new jobs added. What’s more, the data shows that zero manufacturing jobs were created in March.

This data suggests the March headline numbers — which suggested a very robust job market — may have been deceptively sunny. Too many jobs were created in government, and too few in manufacturing. That’s not a very healthy jobs market.

When pundits and the public ponder the job statistics that come out on the first Friday of each month, they should be be careful not to simply accept the headlines as the entire story.

When it comes to the economy, simple narratives can be misleading.The Conversation

About the Author:

Jeffrey Hart, Senior Lecturer of Finance, Auburn University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Economics & Fundamentals Opinions
06 Jun

Gold prices reach 2368 USD amid speculation of Fed rate cuts

By RoboForex Analytical Department

Gold prices climbed to 2368 USD per troy ounce on Thursday, continuing the upward momentum for the second session. This surge comes as market expectations adjust to the likelihood of future interest rate cuts by the Federal Reserve, fuelled by recent employment data.

Data from ADP indicated that the number of private-sector jobs in the US for May increased less than expected, with April’s figures also revised downwards. This suggests a cooling but robust employment market, reinforcing speculation about impending rate cuts. According to the CME Group’s FedWatch tool, market participants anticipate two rate cuts in 2024, with a 70% probability of easing by September.

Attention is now turning to Friday’s comprehensive labour market reports from the US, which will provide further insights into the economic health and possible direction of monetary policy. Additionally, recent global movements by central banks, such as the Bank of Canada’s first rate cut in four years and the expected rate cut by the European Central Bank today, are influencing gold prices.

XAU/USD technical analysis

The H4 chart shows that gold has broken out of a consolidation range established above the 2315.00 USD level, moving upwards. The market is now poised to reach 2395.00 USD potentially. Once this target is met, a retraction to 2356.20 USD for a test from above could occur before another possible rise to 2399.00 USD. The MACD indicator supports this bullish outlook, with its signal line below zero but ascending sharply towards new highs.

On the H1 chart, gold developed a growth wave towards 2356.20 USD, followed by a consolidation range forming below this level. The market has since broken upwards, continuing the growth trajectory towards 2378.23 USD. After reaching this level, a corrective movement back to 2356.20 USD may occur, potentially setting the stage for a push towards the 2395.00 USD mark. The Stochastic oscillator indicates that, while the signal line has dipped below 80, it is expected to rise again towards 80, suggesting continued upward momentum.

Market outlook

Gold prices are experiencing a bullish phase, underpinned by shifting expectations regarding US monetary policy and actions by other central banks. Investors should closely monitor the upcoming US employment data and global central bank decisions. These events could significantly influence gold’s price dynamics in the short term. The technical indicators suggest a continuation of the current uptrend, with key levels to watch for potential reversals or further gains.

 

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Financial News Metals
05 Jun

Australia’s economy is slowing down. The BoC meeting is in the spotlight today

By JustMarkets

At Tuesday’s close, the Dow Jones Index (US30) was up 0.36%, while the S&P 500 Index (US500) added 0.15%. The NASDAQ Technology Index (US100) closed positive 0.17% yesterday. The April JOLTS job openings number fell more than expected to a 3-year low, pushing 10-year T-note yields to a 2-week low and reinforcing expectations that the Fed may cut interest rates sooner rather than later. The April JOLTS US Job Openings Index fell by 296,000 to a 3-year low of 8.059 million, indicating a weak labor market compared to expectations of 8.350 million.

Weakness in energy stocks weighed on the overall market on Tuesday after WTI crude fell more than 1% to a 3-month low on concerns that OPEC+’s plan to bring oil production back to the market sooner than expected will lead to a glut in global oil supplies.

Friday will see the release of the monthly US payrolls report for May, looking for signs of labor market strength that could decide when the Fed can start cutting interest rates. The consensus is that non-farm payrolls for May will increase by 190,000, and the unemployment rate will remain unchanged at 3.9%.

The Bank of Canada (BOC) will hold a monetary policy meeting today. In April, the Bank of Canada kept its key rate at 5% as expected and refrained from hinting at the start of rate cuts due to rising inflation risks. However, the latest GDP report showed that the Canadian economy has not recovered as much from the soft period last year as previously thought and may convince the central bank to start lowering borrowing costs. Thus, the Bank of Canada could deliver a surprise 0.25% rate cut.

Equity markets in Europe mostly fell yesterday. Germany’s DAX (DE40) fell by 1.09%, France’s CAC 40 (FR40) closed down 0.75%, Spain’s IBEX 35 (ES35) lost 0.97%, and the UK’s FTSE 100 (UK100) closed negative 0.37% on Tuesday. European equity markets opened higher on Wednesday as investors await the European Central Bank’s decision this week. The ECB is widely expected to cut interest rates on Thursday for the first time since 2019, but markets will be watching to see if last week’s Eurozone inflation data will influence the ECB’s decision.

Germany’s unemployment rate change for May rose by 25,000, the largest increase in 7 months, and showed a weaker labor market than expected at 7,000. Swaps discount the odds of a 25 bps ECB rate cut at Thursday’s ECB meeting to 99%. If the ECB cuts rates by 25 bps on Thursday, markets expect a 0% chance of another rate cut at the next meeting on July 18 and a 62% chance of a 25 bps rate cut at the September 12 meeting.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) was down 0.22%, China’s FTSE China A50 (CHA50) was up 0.60%, Hong Kong’s Hang Seng (HK50) added 0.22% and Australia’s ASX 200 (AU200) was negative 0.31%. Hong Kong (HK50) stocks were up 0.4% in early trading on Wednesday, rising for a third session amid growing hopes of fresh supportive measures from China as the country’s regulator unveils capital market policy measures at a high-level forum in Shanghai on Saturday. Investors also welcomed private survey data that showed activity in the mainland’s service sector rose by the most in 10 months in May, rising for the 17th month and matching official data.

In Japan, real wages fell for the 25th consecutive month in April, with domestic inflation continuing to outpace wage growth. It also became known that the Bank of Japan is likely to discuss reducing bond purchases at its meeting next week. These are positive factors for the Japanese yen.

In the first quarter, the Australian economy grew by 0.1%, slowing down from the growth of 0.3% in the previous quarter and failing to meet market forecasts of 0.2%. Investors breathed a sigh of relief as the economy avoided an outright recession. Nevertheless, markets see little chance of the Reserve Bank of Australia (RBA) easing policy this year, with the probability of that happening in December at 44%.

S&P 500 (US500) 5,291.34 +7.94 (+0.15%)

Dow Jones (US30) 38,711.29 +140.26 (+0.36%)

DAX (DE40) 18,405.64 −202.52 (−1.09%)

FTSE 100 (UK100) 8,232.04 −30.71 (−0.37%)

USD Index 104.16 +0.02 (+0.02%)

Important events today:
  • – New Zealand Trade Balance (q/q) at 01:45 (GMT+3);
  • – Japan Services PMI (m/m) at 03:30 (GMT+3);
  • – Australia GDP (q/q) at 04:30 (GMT+3);
  • – Caixin China Services PMI (m/m) at 04:45 (GMT+3);
  • – German Services PMI (m/m) at 10:55 (GMT+3);
  • – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
  • – UK Services PMI (m/m) at 11:30 (GMT+3);
  • – US ADP Nonfarm Employment Change (m/m) at 15:15 (GMT+3);
  • – Canada BoC Interest Rate Decision at 16:45 (GMT+3);
  • – Canada BoC Rate Statement at 16:45 (GMT+3);
  • – US ISM Services PMI (m/m) at 17:00 (GMT+3);
  • – Canada Press Conference at 17:30 (GMT+3);
  • – US Crude Oil Reserves (w/w) at 17:30 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
05 Jun

New Zealand Dollar shows stability amid US economic concerns

By RoboForex Analytical Department 

The NZD/USD pair is stable, consolidating around 0.6189 on Wednesday. The New Zealand dollar maintains a sideways trend and appears relatively robust in the current market environment.

Recent pressure on the US dollar, triggered by disappointing employment statistics, has led to speculation that the US Federal Reserve might reduce interest rates after the September meeting. The Job Openings and Labor Turnover Survey (JOLTS) revealed a decline in job openings to 8.059 million in April, the lowest since February 2021, indicating a cooling employment market. These developments are of significant concern for the Fed, suggesting a need to adjust monetary policy to support employment.

Market attention is now turning to the upcoming May private sector jobs data from ADP, which is expected to provide further insights into labour market conditions. The week will culminate with a comprehensive set of employment market statistics on Friday.

Regarding the Reserve Bank of New Zealand (RBNZ), there are no expectations of an interest rate cut until at least mid-2025. The RBNZ is expected to maintain a stable policy to allow for a thorough data assessment.

Technical analysis of NZD/USD

On the H4 chart, the NZD/USD pair is evolving within a broad consolidation range around the 0.6136 level. A recent growth impulse has reached 0.6197. Today, a potential decline to 0.6137 is expected, which could test from below. Following this correction, a new wave of decline may initiate, targeting the 0.6136 level, potentially extending to 0.6070 if this level is breached. The MACD indicator supports this bearish outlook, with its signal line below zero and pointed downwards. The notable divergence between the chart peaks and the indicator further reinforces this analysis.

On the H1 chart, the pair showed a downward impulse to 0.6155, followed by a correction to 0.6191. Today, the market may execute an impulse to 0.6160, with the potential for a further decline to 0.6140 and an extension towards 0.6080, the first target of the downward wave. This scenario is technically validated by the Stochastic oscillator, with its signal line currently above 80 but trending sharply downward.

Market outlook

As the NZD/USD pair continues to show resilience amidst fluctuating US economic indicators, it is crucial for investors to closely monitor incoming data, particularly from the US employment market, which could significantly influence the Fed’s next steps. The stability of the New Zealand dollar, supported by the RBNZ’s steady policy stance, contrasts the potential volatility in the US dollar as fiscal and monetary policy expectations evolve.

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Financial News Forex and Currency News
05 Jun

Bitcoin: Breaks $71k ahead of US NFP

By ForexTime 

  • Bitcoin ↑ 5% this week
  • Roughly 4% away from all-time high
  • Over past year NFP triggered moves of ↑ 2.5% & ↓ 1%
  • Key level of interest – $72,000

Are Bitcoin bulls gearing up for another charge higher?

Well, the world’s largest cryptocurrency has jumped almost 5% this week, trading around $71,000 as of writing.

Bitcoin along with other cryptocurrencies seem to be supported by the prospect of lower US interest rates in 2024. But another major factor is the monster inflows into exchange-traded funds holding the tokens.

According to data from Coinglass among other sources, Bitcoin ETFs saw a whopping $886.6 million inflows on Tuesday!

Source: Coinglass 

This was the best day of inflows since mid-March and the second-largest amount since spot ETFs launched this year. These bullish forces may keep the “OG” crypto buoyed ahead of Friday’s US jobs data.

As covered in our trade of the week, the incoming NFP report is likely to influence bets around when the Fed cuts rates in 2024.

Traders are currently pricing in a 75% probability of a 25-basis point Fed cut in November with a move fully priced in by December.

Any changes to these expectations may influence cryptocurrencies which have shown sensitivity to interest rates.

Golden nugget: Over the past year, the US jobs report has triggered upside moves of as much as 2.5% or declines of 1% in a 6-hour window post-release.

 

What does this mean?

Bitcoin is trading roughly 4% away from its all-time high at $73850.

So essentially, a disappointing jobs report that fuels rate cut bets could push prices closer to all-time highs.

Just to be clear, past price movements do not guarantee future results but can be used to highlight how Bitcoin has reacted to the US jobs report.

It’s not only Bitcoin that may experience big moves on Friday…

  • AVALANCH: ↑ 4.0 % or ↓ 2.0%
  • CARDANO: ↑ 3.4% or ↓ 1.6%
  • SOLANA: ↑ 3.2 % or ↓ 2.7%
  • CHAINLINK: ↑ 3.0 % or ↓ 1.2%
  • DOGECOIN: ↑ 2.8 % or ↓ 1.1%
  • LITECOIN: ↑ 2.2 % or ↓ 1.0%
  • BITCOINC: ↑ 2.0 % or ↓ 1.7%
  • ETHEREUM: ↑ 2.0% or ↓ 1.3%
  • POLYGON: ↑ 1.7% or ↓ 1.5%
  • RIPPLE: ↑ 1.7% or ↓ 1.1%

All 10 cryptos listed above are offered by FXTM as Crypto CFD’s.

Technical outlook…

Bitcoin remains trapped within a range on the weekly charts with bulls approaching the $72,000 resistance.

Prices have turned bullish on the daily charts after the breakout above $70,000. The upside momentum may take the crypto towards the $72,000 resistance level in the short term.

  • A solid breakout above $72,000 could open a path toward the all-time high at $73850.
  • Should prices fall back below $70,000, bears may target $67,000.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Cryptocurrencies Opinions
04 Jun

FXTM’s Sugar: Hits 3-week high

By ForexTime

  • Sugar ↑ almost 3% month-to-date
  • Roughly 25% away from 2024 high
  • H1 prices bullish but RSI overbought
  • Technical levels – 19.08, 18.90 and 18.50

Check this out, FXTM’s new Sugar commodity has just touched a fresh three-week high!

After wobbling near multi-week lows, prices clipped above 18.90 cents per pound on Tuesday.

Note: Sugar is priced per pound.

Before we break down the fundamentals, here are some fun facts about sugar:

  • Been around for over 10,000 years
  • Introduced in the West as a “spice”
  • Brazil is the biggest producer 
  • We are all wired to crave sugar!
  • Gained almost 3% month-to-date

 

What is Sugar?

It is a sweet substance obtained from plants such as sugarcane or sugar beets.

Sugar is a very versatile ingredient, used for drinks, cereals, sweets, cakes, jams, and so on.

What does FXTM’s Sugar track?

FXTM’s Sugar tracks the Sugar No. 11 futures, the world benchmark for raw sugar trading.

The lowdown?

Sugar prices are down almost 10% year-to-date.

The soft commodity initially gained 17% in January amid concerns that El Nino weather patterns could disrupt global sugar production.  Fears over severe weather conditions in the world’s two largest producers (Brazil & India) sent prices above 24.00 cents per pound.

Since then, sugar has been under pressure – posting four consecutive months of losses thanks to improving supply prospects.

The bigger picture…

An improving supply outlook from Brazil and a potentially longer monsoon season in India could boost global sugar production.

This may lead to lower sugar prices, especially when factoring in how these two countries account for over 40% of world production.

Conversely, India has extended its sugar export restrictions beyond October 2024. But this could change if the current elections result in a change of leadership and trade policies.

What does this mean?

According to the United States Department of Agriculture (USDA), global consumption of sugar is forecast to rise to a new record high of 179.0 million tons in 2024.

However, global production is also forecast to hit 186.0 million tons this year. This potential surplus of 7.0 million tons could limit upside gains for sugar.

Technical Outlook

Sugar is trending higher on the H1 timeframe with prices above the 50, 100, and 200 SMA. However, the Relative Strength Index (RSI) has crossed above 70 – indicating that prices are overbought.

  • Sustained weakness below 18.90 could open a path towards 18.50 and 18.10.
  • A strong break above 18.90 may see bulls challenge 19.08 and 19.30.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Financial News Soft Commodities
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