US PCE and GDP rates under the market’s magnifying glass

US PCE and GDP rates in the market’s attention

The USD strengthened by market expectations for a hawkish Fed. Inflationary pressures are high in the US economy, yet the outlook may be for inflationary pressures to cool down given the drop of oil prices, yet at a later stage. Today, we get May’s PCE rates and a possibly wider than expected acceleration could support the USD. We also highlight the Fed policymakers scheduled to speak, and a possibly hawkish tone  could also support the USD. Furthermore, should the final US GDP rate for Q1 remain unchanged we may see USD traders being disappointed, while a possible acceleration of the rate could support the USD.

Oil flows from the Straits of Hormuz weigh on Oil prices

Oil prices continued to drift lower with WTI dropping at some point below the psychological barrier of $70 per barrel. Rising oil supplies passing through the Straits of Hormuz tend to intensify market expectations for a normalization of the international oil market. We still see fundamentals to weigh on oil prices, yet we may see them landing slightly higher than before the US-Iran crisis, give the uncertainty in the Middle East.

Gold extends losses on Fed tightening outlook

Gold’s price extended its losses dropping below the $4000 per ounce for the first time since November last year. The negative correlation of the USD with gold’s price, seems to be still active and the market’s expectations for a hawkish Fed tends to weigh on the precious metal’s price. Should we see the USD rising further we may see gold’s price experiencing further losses.

Signals from US equity markets remain mixed

US stock markets showed little movement, failing to rebound from sharp losses, especially for tech shares, suffered at the start of the week. US equities seem to be caught between conflicting fundamentals with expectations for the Fed weighing and the easing of oil market worries lifting the market sentiment. Meanwhile the selling pressure in tech stocks seems to be maintained given worries for overvaluations and massive spending of the sector on AI technology.  

Other highlights for today

Today we get UK’s CBI distributive trades for June, the US Durable goods orders for May and the weekly initial jobless claims figure. In tomorrow’s Asian session, we get from Japan, Tokyo’s CPI rates for June. 

Charts to keep an eye out

WTI’s price dropped yesterday and is currently teasing the 69.00 (S1) support line. We have a bearish outlook for WTI’s price and intend to maintain it as long as the downward trendline continues to lead WTI’s price. Yet the RSI indicator has dipped below the reading of 30, implying that the commodity’s price has reached oversold levels and may be ripe for a correction higher. Should the bears remain in charge of WTI’s direction, it could breach the 69.00 (S1) support line and start aiming for the 60.90 (S2) support level. Should the bulls take over, we may see the pair reversing direction, breaking the prementioned downward trendline and continue higher aiming if not reaching the 76.60 (R1) resistance level.

Gold’s price action dropped yesterday breaking the 4020 (R1) support line, now turned to resistance. We remain bearish for the gold’s price and note that the RSI indicator has reached the reading of 30, implying a strong bearish market sentiment for gold’s price. Should the bears remain in control, gold’s may start actively aiming for the 3600 (S1) support line. Yet a stabilisation is also possible as the price action has reached the lower Bollinger band. Should the bulls take over, we may see gold’s price reversing course, breaking the 4020 (R1) resistance line, paving the way for the 4380 (R2) resistance level.

Calendar follows

WTI daily chart

• Support: 69.00 (S1), 60.90 (S2), 55.00 (S3).
• Resistance: 76.60 (R1), 82.00 (R2), 88.60 (R3).

XAU/USD daily chart

• Support: 3600 (S1), 3250 (S2), 2960 (S3).
• Resistance: 4020 (R1), 4380 (R2), 4770 (R3).