All eyes on US inflation data
Gold => The commodity falls below $1850
USD/CAD => The pair rises above 1.27
DAX => The index falls toward 1400
Gold looks to inflation data
Gold inched lower in the previous session ad is falling further today, pulled lower by rising treasury yields as the market looks toward US inflation data.
US CPI inflation could provide the market with further clues as to how aggressively the Federal Reserve is likely to tighten monetary policy. The Fed has already hinted at a 50-basis point rate hike in the June and July meeting but has been less clear as to what to expect thereafter. Hot inflation could prompt bets of a more aggressive Federal Reserve, boosting the USD higher, dragging non-yielding, USD denominated Gold lower.
| US CPI YoY May | Expected: 8.2% (0.1%) | Previous: 8.3% |
Where next for Gold?
Gold has been trading rangebound just above the 200 sma, which is offering support but below the rising trendline support dating back to the end of last year.
The RSI is pointing lower, below 50 suggesting that the bear could stay in control. Sellers will need to break below the 200 sma at 1843 and below 1830 the June low to break out lower to 1806 the May 18 low. Buyers need to rise above 1875 to expose the 50 sma at 1883 ad target 1890 the March 29 low
The loonie falls ahead of jobs data
USD/CAD rallied over 1% on Thursday as the USD rallied on safe-haven flows and as oil prices fell lower.
The US dollar rose amid rising concerns over the health of the global economy and despite jobless claims rising to a 12-week high. Meanwhile, CAD tracked oil prices lower, shrugging off comments by BoC’s Governor Tiff Macklem who said that the central banks need to take a larger step with rates now more likely than before to go over 3%.
Today, the pair is inching higher as the USD is supported by hawkish Fed bets ahead of US inflation data. Attention will be on the Canadian labour market, with data expected to show an improving picture.
| Cad. Change in employment | Expected: 30k (15k) | Previous: 15k |
DAX falls after the ECB meeting
The DAX closed 1.7% lower in the previous session after the ECB monetary policy meeting.
The ECB left rates unchanged as expected but signaled to a 25-basis point rate hike in July and hinted toward a potential 50 basis point rate hike in September. The ECB slashed the growth outlook for this year to 2.8% and raised the inflation forecast to 6.8% up from 5.1%. A gloomy outlook for the eurozone economy.
Today the index continues falling as inflation concerns and more lockdowns in China hit risk sentiment. There is no high impacting eurozone data today. Risk sentiment is likely to drive the DAX.
Support can be found at 14000 (round number) and 13900 (April 12 low).
Resistance for the pair can be seen at 14300 (May 17 high) and 14700 (June 6 high).
