The Nasdaq has closed above 10,000 for the first time ever on Wednesday, while the DJI and the S+P are both down by around 0.75%, in a mixed session after the Fed Meeting, at which the bank was more accommodative than the market had expected while reassuring investors of its support for the economy, but also projecting a 6.5% decline in GDP this year. The Fed also forecast a 9.3% US unemployment rate for the end of this year and suggested that the Fed Funds rate will remain near 0% until 2022 at the earliest.
While stocks were mixed, the US$ has remained under pressure after the Fed lived up to the dovish expectations, and the DXY has moved down by another 0.3% (96.10), the 11th decline in the last 12 days. Individually, the Euro rose to 1.1422 – a 3-month high, while US$Jpy fell to 107.00 – a 1-month low. The commodity currencies also performed well although they have finished well below their session highs of 0.7063 (AudUsd) – its highest level since July 2019, while the Kiwi traded up to 0.6584 – a 5 month peak.
Elsewhere, Oil was unworried by the Fed’s growth outlook and put on another 1.8%, to end the day just below $40.00, while the precious metals also had a good day, underpinned by the outlook for low interest rates, with Gold and Silver up by 1.4% and 3.1% respectively. Copper also had a strong session and rallied by 3%. Iron Ore was steady at 102.00.
Ahead of the Fed, and underscoring its dovish outlook, the other main point of interest of the day saw the US CPI slow to -0.1% yy in May, below expectation of 0.0%, while the Core CPI also dropped -0.1% mm, below expectation of 0.0% mm.
Looking ahead, Thursday gets under way with the REINZ House Price Index and the Australian Consumer Inflation Expectation (exp 4.2%-June) but it will otherwise be a very quiet day for the calendar, with just the US PPI (exp+0.1%mm, -1.2%yy) and the weekly Jobless Claims (exp: Initial;1.555mio) on the agenda. Have a good day.
Economic data highlights will include:
Thur: REINZ House Price Index, Australian Consumer Inflation Expectation, Eurogroup Meeting, US PPI, Jobless Claims,
Market moves, in brief:
FX: DXY 96.10 (-0.3%)
Bonds: US10Y; 0.733% (-11.33%), German 10Y; -0.332% (-7.45%), UK 10Y; +0.264% (-20.11%), Australian 10Y; 1.025% (-3.28%), NZ 10Y; 0.954% (-1.43 %), China 10Y; 2.864% (+0.35%)
Stock Indices: DJI; -1.04%, S+P; -0.53%, NASDAQ; +0.67%, EUStoxx50; -0.81%, FTSE100; -0.10%, Shanghai Composite; -0.54%, ASX200: -0.48%
Metals: Gold $1738 oz (+1.40%), Silver $18.08 oz (+3.10%), Copper $2.677 lb (+3.10%), Iron Ore $102.89 per tonne (NYMEX) (-0.10%),
Oil: WTI $39.10pb (+1.82%)
|INDICES / COMMODITIES|
|1 Hour||Turning Higher?||Turning Higher?||Turning Lower||Turning Lower?||Possible Topping Formation||Neutral – Turning Lower?|
|4 Hour||Neutral – Turning Higher?||Turning Lower||Turning Neutral||Turning Lower||Turning Neutral||Neutral – Turning Lower?|
|1 Day||Up – Overbought||Turning Lower||Turning Higher||Turning Lower||Up||Up|
|1 Week||Turning Neutral||Neutral||Possible Basing Formation||Neutral – Turning Lower?||Up||Turning Higher|
|1 Hour||Bullish Divergence||Turning Lower||Turning Lower||Turning Higher||Turning Higher||Turning Higher?|
|4 Hour||Possible Basing Formation||Possible Topping Formation||Turning Lower||Neutral – Turning Higher?||Turning Neutral||Turning Neutral|
|1 Day||Down||Turning Higher||Up||Neutral – Turning Higher?||Turning Neutral||Turning Higher|
|1 Week||Neutral – Turning Lower?||Turning Higher||Up||Possible Topping Formation||Neutral – Turning Higher?||Turning Higher|
|1 Hour||Turning Neutral||Neutral – Turning Higher?||Neutral – Turning Lower?||Turning Neutral||Turning Neutral||Turning Neutral|
|4 Hour||Neutral – Turning Lower?||Turning Neutral||Turning Neutral||Turning Neutral||Turning Neutral||Neutral – Turning Higher?|
|1 Day||Overbought – Turning Lower?||Turning Neutral||Possible Basing Formation||Possible Topping Formation||Neutral – Turning Higher?||Turning Lower|
|1 Week||Neutral – Turning Higher?||Turning Neutral||Neutral – Turning Lower?||Turning Higher||Down||Turning Higher|
The US$ seems set to remain under pressure, with US$Chf apparently leading the way and looking bearish on all time horizons. While the Dollar Index looks increasingly heavy in the longer time horizons, the Euro looks positive, and buying dips remains the theme although the dally charts are becoming over bought.
DXY – Daily
EurUsd – Daily
The Aud and Nzd also both appear to be a buy-the-dips scenario, albeit once again, the daily momentum indicators are tilting towards being overbought but the weekly/monthly charts do seem to be gaining upside momentum and the Aud in particular is breaking above multiyear downtrend resistance.
NzdUsd – Weekly
In the stock markets, the S+P may be building a small Head/Shoulders top, with a downside target of around 3130, but with the longer term charts looking constructive, buying the dips still seems to be the plan.
The ASX has run into resistance at the 100Week MA (6200) and now looks set to consolidate below there, with good support to be seen at 6000 (200 Week MA). Trading the range seems to be the plan here, but the longer term charts look positive so structurally looking to buy the dips may work. It is possiblre that the ASX can stretch lower, towards the 100Day MA, currently at 5880 although I think we would need to see a radical shift in stentiment to see it back down here in the short term.
Our view on WTI remains unchanged from the video outlook of a couple of weeks ago, and there could still be a good long term trade under way in the oil market. https://orchardforex.com/1-jun-1-june-weekly-video-outlook-from-orchard-forex/ . WTI seems to be building a huge reverse Head/Shoulder formation – as per the chart below. The measured target for WTI would seem to be at around $55per barrel – so worth watching. Ahead of that, major resistance will arrive at 40/43, – but still worth a possible trade. The longer term momentum indicators still look constructive , so buying dips remains preferred.