Fundamentals to lead the way

In a rather easy-going Monday with no major financial releases expected, we tend to turn our attention towards fundamentals, seeking more guidance as for the direction of the markets. Market sentiment seems to have been reversed to the positive, amidst growing optimism about a possible deal between the White House and the House of Representatives about the US debt ceiling. The positive sentiment may grow further as Biden stated that the final debt ceiling deal is ready to be moved to Congress for a vote, yet US Treasury Secretary Yellen stated that Congress has to resolve the issue by June 5th setting the deadline. For the time being, we expect that should the improved market sentiment be extended, riskier assets may get some support, yet we would also like to note on second base the market’s worries for the Fed’s rate hiking path which could moderate the risk on sentiment, while we note that today US stockmarkets are to be closed.

USD/JPY continued to be on the rise breaking clearly the 139.90 (S1) resistance line, now turned to support. We maintain our bullish outlook, given that the upward trendline guiding the pair since the 11 of May remains intact. Furthermore, the RSI indicator despite correcting a bit lower, reflecting the price action, still remained at rather high levels, just below the reading of 70, implying that USD/JPY remains under the spell of the bulls. Should the bulls maintain control over the pair as expected, we may see USD/JPY rising and aiming if not breaking the 142.20 (R1) resistance line. Should the bears take over, we may see the pair reversing course, breaking the upward trendline in a first sign that the bullish movement has been interrupted, break the 139.90 (S1) support line and aim if not break the 137.55 (S2) support level.

금일 주요 경제뉴스

No major financial releases are expected in today’s easy-going Monday. During tomorrow’s Asian session, we note the release of New Zealand’s and Australia’s building approvals growth rates, both being for April. AUD/USD seems about to start reversing the downward motion guiding it till late last Thursday as the downward trendline was interrupted and the pair now has broken the 0.6520 (S1) resistance line, now turned to support. We note the upward movement, yet for a clear bullish outlook we would require the pair to break the 0.6575 (R1) resistance line and also we would require the RSI indicator to move decisively higher than the 50 cut-off point. Should the pair find extensive buying orders along its path then we should be able to draw an upward trendline, showing us the limitations of the upward movement as AUD/USD breaks the 0.6575 (R1) resistance level clearly and starts navigating towards the 0.6640 (R2) resistance barrier. Should a selling interest be expressed by the market, we may see the AUD/USD dropping, breaking the 0.6520 (S1) support line and take aim if not break the 0.6445 (S2) support level.

As for the rest of the week:

On Tuesday we get Switzerland’s and the Czech Republic’s GDP rates for Q1 and we note the US Consumer Confidence figure for May. On Wednesday, we note the release of Japan’s Preliminary industrial production rate for April, China’s NBS Manufacturing PMI figure for May France’s GDP rate and Turkey’s GDP rate both for Q1, followed by Germany’s preliminary HICP rates for May, Canada’s GDP for Q1 followed by the US JOLTS job openings figure for April. On a busy Thursday, we get Australia’s retail sales for April, China’s Caixin Manufacturing PMI figure for May and during the European session we note Germany’s, the Eurozone’s and the UK’s Manufacturing final PMIs all for the month of May, followed by the Eurozone’s HICP rate for May and Unemployment rate for April. During the American session, we note the weekly US Initial jobless claims figure followed by the ISM Manufacturing PMI figure for May. Lastly, the highlight of the week is expected to be the US-dominated Friday with the US employment report for May.