This preview of weekly data looks at USOIL and XAUUSD where economic data coming up later this week are the main market drivers for the near short-term outlook.
Top news coming up: Canadian inflation, British Inflation, FOMC minutes
Tuesday:
- Canadian Inflation rate at 12:30 GMT. The anticipation here is for a decline of around 0.1% reaching the figure of 2.8%. In the event of this anticipations becoming reality then the loonie might see some short term losses against its pairs.
- Japanese Balance of trade at 11:50 PM GMT where the expectations are for a decline from ¥366.5 billion to ¥-339.5 billion for the month of April. If the expectations are correct then the yen could face some pressure against the currencies traded against it.
Wednesday:
- UK inflation rate at 06:00 AM GMT. The consensus is for a decline from 3.2% to 2.1% in April. If the consensus is correct then it would be a new 2 year low figure of British inflation and could potentially create some short minor losses for the quid since it could influence the decisions of the Bank of England on their next meeting.
- FOMC Minutes at 18:00 GMT where investors and traders will be paying close attention to any hints from the Federal Reserve in terms of future developments on the monetary policy. Currently, the possibilities of a rate cut have been pushed back to the September meeting according to the Fedwatch tool whereas any hawkish narratives might push the prospectus of a rate cut further down the road.
Thursday:
- Japanese inflation rate at 23:30 GMT. The expectations for the month of April is that the rate could go down to 2.3% from the previous 2.7%. This might be somewhat bearish news to the market participants trading the yen.
USOIL, daily
Oil prices rose after Iran’s president died in a helicopter crash and Saudi Arabia’s crown prince postponed his trip to Japan due to the king’s health issues. The market remains uncertain amid ongoing geopolitical tensions and the OPEC+ meeting scheduled for June 1. Despite the volatility, there were no exaggerations in the daily activity of oil prices in the last couple of weeks with the oil market remaining largely rangebound and without any fresh catalyst having a major impact on the market. Strong economic data from China and US last week also had a positive impact on the price of crude oil especially the industrial production data from China which came out higher than anticipated beating previous expectations.
On the technical side, the price is testing the resistance of the 50% of the daily Fibonacci retracement level and the 100-day moving average level at the time of this report being written. At the same time the Stochastic oscillator is in the extreme overbought area hinting that a correction might happen in the coming sessions while the Bollinger bands are still quite expanded indicating that volatility is still strong in the crude oil market. If we witness a continuation of the recent bullish run then the next area of technical resistance might be found around the $81 price area which consists of the 38.2% of the daily Fibonacci retracement level as well as a previous price reaction in mid April. On the other hand if the bears prove to be stronger than the bulls then we might see the price declining around $77.60 which is the 61.8% of the Fibonacci level creating a sideway channel for the short term outlook.
Gold-dollar, daily
Gold prices are climbing to record highs due to renewed hopes for interest rate cuts from the US Federal Reserve especially after the inflation data of last week that showed a slight cooldown on the figure and increased gold purchases by central banks, like the Peoples Bank of China which added more gold to their reserve for the 18th month straight.
Gold is widely regarded as a safe-haven asset, with its value being bolstered by its inverse correlation with the US Dollar, US Treasuries, and risk assets. The price of gold can be influenced by geopolitical instability, fears of recession, and fluctuations in the US Dollar, making it a key asset to watch for investors seeking to hedge against economic uncertainties.
From a technical point of view, the aggressive rally on the price of gold resumed reaching a new all-time high above $2,440 in today’s session. Currently the price is trading above the upper band of the Bollinger bands reassuring that the volume is fueled-up while the Stochastic oscillator has reached 95% in recent sessions showing that there is a high probability of a correction in the near short term. On the other hand the faster moving averages of 20 and 50 days are trading well above the slower 100-day moving average further validating the overall bullish momentum in the market for the yellow metal.
Disclaimer: the opinions in this article are personal to the writer…
Read More: Weekly data: Oil and Gold: Price review for the week ahead.