US PCE and GDP rates under the spotlight

US PCE and GDP rates to shake the markets

The USD edged higher yesterday and during today’s Asian session. Today, we highlight the release of the US PCE rates for April as the next big test for the greenback. Should the rates accelerate beyond market expectations, we may see more pressure being exercised on the Fed to tighten its monetary policy and thus, we may see the USD getting some support. We also note the release of the 2^nd estimate of the US GDP rate for Q1, and a possible acceleration could also provide some support for the USD.

US stock markets take a hit

US stock markets seem to be taking a hit today as Dow Jones, S&P 500 and Nasdaq are currently in the reds. The release of the US PCE rates could also affect the direction of US equities as a possible enhancement of market expectations for the Fed to turn more hawkish could weigh on US equities. 

Oil prices edged lower

Oil prices yesterday edged lower as market hopes for a possible diplomatic resolution of the US-Iran conflict were enhanced. Yet the drop was halted today as the US and Iran traded air strikes, highlighting how fragile the negotiation process is. Should we see market worries intensifying we may see oil prices gaining further ground and vice versa.

Bitcoin drops below $74k

Bitcoin’s price dropped below $74k today and some analysts highlighted that the increased market worries tended to weigh on the cryptocurrency. We also highlight as a possible fundamental reason, the shedding by BlackRock of $527 million in BTCs, underscoring the weak demand by institutional investors. 

Other highlights for today

Today we get Norway’s GDP rate for Q1, Euro Zone’s Business climate for May and from the US the PCE rates for April, the 2^nd estimate of the GDP rate for Q1, the durable goods orders for April, the weekly initial jobless claim figure and the weekly EIA crude oil inventories figure. On a monetary level we note that BoC is to release its financial stability report and later on BoC Governor Tiff Macklem and Deputy Governor Rogers speak. In tomorrow’s Asian session we get Tokyo’s CPI Rates for April.

Charts to keep an eye out

USD/JPY edged higher nearing the 159.85 (R1) resistance line. We maintain a bullish outlook for USD/JPY and intend to maintain it as long as the upward trendline guiding it remains intact. We also note that the RSI indicator remains above the reading of 50, implying a bullish predisposition of the market for the pair. Should the bulls maintain control over the pair, we may see USD/JPY breaking the 159.85 (R1) resistance line and start aiming for the 161.90 (R2) resistance level. On the other hand the pair is nearing levels at which BoJ and/or the Japanese government may be tempted to intervene in the markets to JPY’s rescue. Hence should the bears take over, we may see USD/JPY breaking the prementioned upward trendline in a first signal of an interruption of the upward movement and continue lower to break clearly the 157.60 (S1) support line.     

Gold’s price dropped clearly breaking the 4500 (R1) support line, now turned to resistance. We maintain a bearish outlook for gold’s price and intend to keep it as long as the downward trendline continues to guide it. We note that the RSI indicator has dropped even further nearing the reading of 30, implying an intensifying bearish market sentiment for the precious metal’s price. Should the bears remain in charge, we may see Gold’s price aiming if not breaching the 4250 (S1) support level. Should the bulls take over, we may see the gold’s price breaking the 4500 (R1) resistance line and start aiming for the 4850 (R2) resistance level.

Calendar follows

USD/JPY daily chart

Support: 157.60 (S1), 154.30 (S2), 152.10 (S3).

Resistance: 159.85 (R1), 161.90 (R2), 164.45 (R3).

XAU/USD daily chart

• Support: 4250 (S1), 3890 (S2), 3600 (S3).
• Resistance: 4500 (R1), 4850 (R2), 5245 (R3).