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Weekly Market Updates in Trader Factor

Markets Event: U.S. CPI, Rates, PPI, Tesla Surge, and More

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Highlights

  • US inflation data, Fed’s interest rate decision and ECB’s monetary policy announcement are the focus this week
  • Euro is under pressure before Fed decision, but British Pound is showing strength against US Dollar
  • Australian Dollar is recovering and may see volatility due to Federal Reserve announcement
  • Gold prices are delicately poised while crude oil prices look to US for guidance
  • Tesla’s deal with GM has powered index into new bull market
  • US Dollar is turning its attention to inflation data and Federal Reserve decision
  • Password sharing ban causes surge in Netflix subscriptions

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Prepare for a big week in the markets with major currency pairs fluctuating within narrow ranges. 

The US economic sector has no high-impact releases today, but Tuesday will see the release of the Consumer Price Index (CPI) data for May. 

Keep an eye out for policy announcements from the Federal Reserve and the European Central Bank (ECB) on Wednesday and Thursday respectively.

The US stock index futures trade moderately higher, while the US Dollar Index remains sideways. 

EUR/USD has a calm start to the week, while GBP/USD comfortably sits above 1.2550. USD/JPY edges higher, and the Bank of Japan will unveil monetary policy decisions on Friday. 

Gold price moves up and down in a tight channel around $1,960, and USD/CAD remains on the back foot below 1.3350.

In the world of cryptocurrencies, Bitcoin and Ethereum both suffered heavy losses last week.  

Keep up-to-date with BTC/USD trading below $26,000 and ETH/USD hovering around $1,750. 

Don’t miss out on the UK’s Office for National Statistics job report on Tuesday.

Stay informed with TraderFactor’s Economic Calendar updates!

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EUR/USD Calm Ahead Of Anticipated ECB Rate Hike

The Euro remains stable as investors stay tuned for the central bank’s next announcement. Officials are warning that inflation is still an issue and that a strong approach is needed to combat it. 

Even Christine Lagarde has spoken out on this, suggesting we won’t see inflation peak anytime soon. This week’s hike is just the beginning, with another one expected in July. But beyond that, there’s uncertainty. 

Watch out for the market’s reaction as things progress. 1.0540 is a critical support level, and 1.0900 is the first obstacle to overcome.

Gold Prices Take a Hit as US Dollar Bounces Back

Uncertainty looms over the Federal Reserve’s decision on interest rates due to recent surprise rate hikes from the Reserve Bank of Australia and the Bank of Canada. 

The strong US job market and hawkish remarks from officials suggest at least one more hike, possibly in June or July. 

An upcoming June hike represents an upside risk for the US dollar and could negatively impact the price of gold. 

Analysts predict a potential drop in bullion prices and a possible correction to $1,850 with $2,000 as a significant hurdle.

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USD/JPY Climbs As BOJ Maintains Ultra-Accommodative Policy

Despite encouraging economic growth in Japan, the Bank of Japan is expected to keep interest rates low and stick to its current monetary policy. 

The central bank may make minor adjustments to its yield curve control, but Governor Ueda is likely to exercise caution and avoid premature changes that could hinder the country’s recovery. 

This contrasts with the US, where interest rates are rising and could give the dollar an advantage over the yen. 

Expect the next resistance level to be at 142.20 and a new support level at 137.50.

AUD/USD Reaches One-Month High Amid RBA’s Hawkish Outlook and Positive Risk Tone: What to Expect Next

The AUD/USD pair is on an upward trend for the third consecutive day, rising to a fresh one-month high. This significant move comes after the Reserve Bank of Australia’s (RBA) increase of 25 bps rate hike last week, resulting in a more hawkish policy statement. 

The equity markets’ generally positive tone is also contributing to the rise, acting as a headwind for the safe-haven USD and benefiting the risk-sensitive AUD.

However, the uncertainty caused by the looming Fed rate hike and the current economic woes could limit the pair’s upside. 

Additionally, traders might prefer to wait for the US CPI data release on Tuesday and the FOMC decision on Wednesday before placing any aggressive bets.

The AUD/USD pair might need to continue its sustained strength and acceptance above 0.6800 to position for any further appreciating move. In the meantime, the 0.6735 area and the 100-day SMA protect the immediate downside. 

The 200-day SMA also plays a crucial role in limiting the pair’s downside, currently around the 0.6680 region.

Bulls might aim to reclaim the 0.7000 psychological mark, providing some intermediate hurdles in the 0.6970-0.6975 area. 

On the other hand, failure to defend the support levels might prompt some technical selling, leading to a potential drop below the 0.6645 support.

The Australian Dollar continues to draw support, and with the highlighted fundamental backdrop, traders are keen to find out what’s next for AUD/USD pair.

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USD/CAD Continues With Its Downward Trend

The USD/CAD pair is down for the fifth day in a row due to renewed selling of the USD and bearish crude oil prices, which may hold back traders from placing fresh bearish bets around the major.

The uncertainty over the Federal Reserve’s rate hike path and worries about a global economic slowdown are also affecting the market. 

Traders are waiting on the sidelines ahead of the US CPI on Tuesday and the FOMC on Wednesday to determine the next direction for the USD/CAD pair.

Tesla Stocks Surge On GM Deal News

Tesla (TSLA) stock surges as General Motors announces that its electric vehicles can now use Tesla’s charging network, followed similar news from Ford two weeks before. Stock prices have risen by 5%, generating potential revenue of $2-3 billion per year for Tesla. 

Both companies’ EV drivers currently require adapters to charge on Tesla’s network, but plan to produce vehicles that enable direct charging. 

This development means Tesla’s proprietary charging network, previously restricted to Teslas, has opened up to other manufacturers, leading to improved infrastructure laws for EV chargers.

Say Goodbye to Password Sharing: Netflix Subscriptions Skyrocket as Users Sign Up for Personal Accounts

According to Antenna, following the implementation of password sharing warnings, Netflix witnessed a significant surge in new user registrations in the United States. On May 26 and 27 alone, over 100,000 new accounts were created, with a daily average of 73,000 sign-ups over the past two months – a staggering 102% increase compared to pre-warning figures seen three years ago during the pandemic.

While there was a slight uptick in cancellations – up 25.6% compared to the previous two months – Netflix has still emerged as the clear winner from its password sharing clampdown. However, it’s essential to note that the figures come from a third-party source and that other considerations may alter the stats.

Netflix has encouraged users to pay the nominal fee of an extra $7.99 per month to add a member to their account, avoiding the issues caused by sharing passwords. See below for further details.

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Author

  • Phyllis Wangui

    Phyllis Wangui is a Financial Analyst and News Editor with qualifications in accounting and economics. She has over 20 years of banking and accounting experience, during which she has gained extensive knowledge of the forex, stock news, stock market, forex analysis, cryptos and foreign exchange industries. Phyllis is an avid commentator on these topics and loves to share her insights with others through financial publications and social media platforms.