A sense of anxiety threatened the financial markets during trading on Thursday following the unexpected currency depreciation by the People’s Bank of China that rekindled concerns over the health of the world’s second largest economy. This abrupt move by the central bank signaled early warning signs of future woes which consequently sent China stocks plummeting to fresh two and a half month lows. With GDP growth potentially faltering below the 6.5%-7% yearly target, Beijing may be forced to implement further aggressive stimulus measures as the nation continues to transition into a service-led economy. Although the ongoing Fed rate hike and Brexit developments have dominated the headlines, China woes continue to linger unforgotten in the background. Concerns remain elevated over the economic growth of the world’s second largest economy and with domestic data repeatedly missing expectations this month; sentiment remains firmly bearish towards China.

 

Sterling bulls rampage

The Sterling surged with vitality across the board during trading the week as the leading “Bremain” poll reinforced expectations that the UK could remain in the Eurozone after the E.U referendum vote on the 23rd of June. Most participants may have been swayed to the “Bremain” camp after major financial institutions repeatedly voiced their concerns over the untold impacts of a Brexit to the UK economy. Although the Sterling has been depressed from a mixture of tepid domestic data and diminishing expectations over the Bank of England raising UK rates, the elevated hopes that the UK may remain in the EU has offered a foundation for bulls to attack. With second estimate GDP meeting expectations at 0.4%, the focus may remain on the Brexit developments.

Sterling bulls have taken the GBPUSD above the tough 1.4700 resistance and a solid weekly close above this level should open a path towards 1.4800. Although the Brexit uncertainty was the main force which haunted investor attraction towards the Sterling, if the “Bremain” camp retains dominance then bulls could be a force to be reckoned with.

GBPUSD

 

Dollar bulls dominate

The Dollar bulls received encouragement during trading this week following the impressive home sales report that elevated expectations over the Federal Reserve raising US rates in Q2. Dollar resurgence continues to rattle the global markets with the Dollar Index trading closer to 96.00. With US home sales amalgamating with the positive retail sales and inflation, the Fed have been provided a compelling reason to take action. If the NFP results exceed expectations next Friday, this could cause the Dollar to appreciate violently as speculations heighten further over a US rate hike in June or July. The Major barrier which could sabotage efforts taken by the central bank could be the lingering China woes and ongoing fears over slowing global growth that has exposed most nations to downside risks.

 

WTI Crude pierces $50

WTI crude surged sharply towards $50 as the declining crude stock piles bolstered expectations that supply could be dwindling. The combination of declining stock piles, short term production disruptions in major oil export nations and speculations of renewed demand have offered a foundation for bulls to attack. Although bulls may be commended once again for this over extended correction, the upcoming OPEC meeting in June could shatter this unstable tower. Eventually, global production may return to all-time highs while the little optimism that a production freeze deal may be struck should keep prices capped. From a technical standpoint, $50 is a critical resistance on the weekly timeframe. A breakout above this level could spell trouble for the bears.

WTI Oil

 

Commodity spotlight – Gold

Gold remains under pressure as a mixture of an appreciating Dollar and elevated US rate hike expectations have heavily eroded the metals allure. This yellow metal has received extensive punishment from sellers and could be poised to decline further if US core durable goods exceed expectations. Although there are still concerns over slowing global growth and renewed China woes, US rate hike expectations have overwhelmed this metal’s safe-haven attraction consequently leaving prices vulnerable to further losses. From a technical standpoint, the candlesticks are trading below the daily 20 SMA while the MACD has crossed to the downside. Previous support around $1240 could transform into a dynamic resistance for a deeper decline towards $1210.

Gold


 

Disclaimer:This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.

Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 90% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Recommended Content


Recommended Content

Editors’ Picks

BoE set to maintain bank rate at 5%, how will Pound Sterling react? – LIVE

BoE set to maintain bank rate at 5%, how will Pound Sterling react? – LIVE

Following August's 25 basis points cut, the Bank of England (BoE) is forecast to maintain the bank rate at 5%. The statement language and the vote split could provide important clues about the policy outlook and drive GBP/USD's action.

FOLLOW US LIVE
EUR/USD rises further toward 1.1200, focus shifts to ECB-speak

EUR/USD rises further toward 1.1200, focus shifts to ECB-speak

EUR/USD stays strongly bid toward 1.1200 in the European session on Thursday. The pair capitalizes on a renewed US Dollar retreat and an upbeat mood. Traders digest the Fed's dovish outlook, bracing for ECB-speak for fresh trading incentives. US data are also eyed. 

EUR/USD News
Gold hovers close to new high of $2,600 after Fed meeting

Gold hovers close to new high of $2,600 after Fed meeting

Gold (XAU/USD) edges higher and trades back in the $2,580s on Thursday after falling to the $2,540s following the US Federal Reserve (Fed) decision on interest rates the prior day.

Gold News
Solana announces details of Seeker, second mobile device after Saga phone

Solana announces details of Seeker, second mobile device after Saga phone

Solana Lab’s second phone, Seeker, is set to launch in 2025. At Token2049, a global conference for crypto, Solana’s General Manager Emmett Hollyer said that the new mobile would be a “rewards magnet” for its users.

Read more
BoE expected to keep interest rate unchanged at 5% as price pressures persist

BoE expected to keep interest rate unchanged at 5% as price pressures persist

After a close call in August, the Bank of England’s September interest rate decision is keenly awaited for fresh cues on the bank’s future policy action and the pace of its bond sales.

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures