Investors shrugging off hawkish Fed Minutes

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The latest push to a fresh 2024 high beyond 1.2830 confirms the outlook and opens the door for the next major upside extension towards the 2023 high at 1.3143. Any setbacks should now be well supported ahead of 1.2000.

• R2 1.2804 – 21 March high – Medium
• R1 1.2762 – 21 May high – Medium
• S1 1.2643 – 16 May low – Medium
• S2 1.2578 – 15 May low – Medium

GBPUSD – fundamental overview

BOE rate cut bets have been dramatically repriced to about a 10% chance for a June cut from 60% a week ago, this after the latest round of much hotter UK CPI data than expected. The futures market now sees just 38 basis points of BOE cuts in 2024. The data has enabled the Pound to outperform despite the more hawkish leaning Fed Minutes. Key standouts on Thursday’s calendar come from German, Eurozone, and UK PMI reads, Canada housing data, US initial jobless claims, the Chicago Fed national activity index, and US new home sales.

USDJPY – technical overview

The market remains confined to a strong uptrend, most recently extending to a multi-year high through 160.00. Key support comes in at 151.95, with only a weekly close below to delay the constructive outlook.

• R2 157.99 – 1 May high – Medium
• R1 157.00 – Figure – Medium
• S1 153.60 – 16 May low – Medium
• S2 151.86 – 3 May low – Strong

USDJPY – fundamental overview

We're seeing some more demand from Japanese importers and carry trade investors after the Fed Minutes came out more hawkish than expected. Meanwhile, the BOJ left its JGB purchasing amounts unchanged from the previous operation, which fueled more Dollar demand. On the data front Japan PMI reads showed the manufacturing component pushing back into expansion for the first time since May 2023. Key standouts on Thursday’s calendar come from German, Eurozone, and UK PMI reads, Canada housing data, US initial jobless claims, the Chicago Fed national activity index, and US new home sales.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6200 would give reason for rethink. Back above 0.6900 will take the big picture pressure off the downside and strengthen case for a bottom.

• R1 0.6800– Figure – Medium
• R2 0.6715 – 16 May high – Medium
• S1 0.6608– 22 May low – Medium
• S2 0.6558 – 8 May low – Strong

AUDUSD – fundamental overview

The Australian Dollar is trying to recover after taking a hit from the more hawkish leaning Fed Minutes and some softer Aussie PMI data. We have seen some demand into the dip on the May Judo Bank PMI print which showed the economy growing on track, if not a little higher than the long term trend. Key standouts on Thursday’s calendar come from German, Eurozone, and UK PMI reads, Canada housing data, US initial jobless claims, the Chicago Fed national activity index, and US new home sales.

USDCAD – technical overview

Above 1.3000 signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.

• R2 1.3847 – 16 April/2024 high – Strong
• R1 1.3785 – 30 April high – Medium
• S1 1.3586 – 10 May low – Medium
• S2 1.3547 – 9 April low – Strong

USDCAD – fundamental overview

Sliding oil, this week's softer Canada inflation data, and a more hawkish Fed Minutes have all contributed to the latest run of weakness in the Canadian Dollar. Meanwhile, a bank regulator has warned of a mortgage shock by 2026 as pandemic era loans reset. June Bank of Canada rate cut odds have been holding around 60% since Tuesday's softer Canada inflation read. Key standouts on Thursday’s calendar come from German, Eurozone, and UK PMI reads, Canada housing data, US initial jobless claims, the Chicago Fed national activity index, and US new home sales.

NZDUSD – technical overview

Overall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.

• R2 0.6200 – Figure – Medium
• R1 0.6153 – 22 May high– Medium
• S1 0.6031 – 15 May low – Medium
• S2 0.5981 – 8 May low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has done a good job shrugging off weakness from the more hawkish leaning Fed Minutes, with the currency getting a nice boost from a better than expected round of Kiwi retail sales. Key standouts on Thursday’s calendar come from German, Eurozone, and UK PMI reads, Canada housing data, US initial jobless claims, the Chicago Fed national activity index, and US new home sales.

US SPX 500 – technical overview

Longer-term technical studies continue to look quite extended, begging for a deeper correction ahead. At the same time, the latest bullish breakout to a fresh record high beyond the 2024 high opens the door for the next measured move upside extension targeting the 5650 area. Key support comes in at 4928.

• R2 5400 – Round Number – Strong
• R1 5347 – 23 May/Record high – Medium
• S1 5196 – 14 May low – Medium
• S2 5132 – 6 May low – Medium

US SPX 500 – fundamental overview

Though we have seen a healthy adjustment of investor expectations towards the amount of rate cuts in 2024, the market still hopes policy will end up erring more towards the investor friendly, accommodative side of things. This bet has kept stocks well bid into dips and consistently pushing record highs.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs and this next major upside extension into the 2500-3000 area. Setbacks should now be well supported above 2000 on a monthly close basis.

• R2 2500 – Psychological – Strong
• R1 2451 – 20 May Record high – Medium
• S1 2332 – 13 May low – Medium
• S2 2277– 3 May low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal has pushed record highs in 2024 with solid demand from medium and longer-term accounts. These players are more concerned about inflation, geopolitical risk and a less upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an end.