Summary of Market News:
On Monday (June 17), the US Dollar Index declined during the US trading session but remained near a one-month high, closing down 0.16% at 105.33. The yield on the 10-year US Treasury increased, closing at 4.286%. The yield on the 2-year US Treasury, which is most sensitive to Federal Reserve policy rates, ended at 4.774%.
Gold prices fell by 0.6% on Monday (June 17), closing at $2318.82 per ounce due to hawkish comments from Federal Reserve officials, boosting US Treasury yields. Investors are awaiting more US data and speeches from Federal Reserve officials this week for further clues about monetary policy. Traders are closely watching the upcoming speeches from New York Fed President Williams and Fed Governor Cook. The US retail sales data to be released on Tuesday, known as the "scary data," also warrants attention.
Driven by increasing optimism about demand prospects, international oil prices extended their gains on Monday (June 17), hitting a near one-month high. WTI crude briefly approached the $80 mark but did not sustain it, ultimately rising 2.39% to close at $79.91 per barrel. Brent crude rose 2.15% to close at $83.97 per barrel. The settlement prices for both US and Brent crude futures increased by about 2%, with WTI surpassing the $80 mark for the first time in a month.
Data and News Released the Previous Day:
Due to eased concerns about the French political situation and a revival in risk appetite, the US Dollar declined against a basket of currencies other than the Japanese Yen on the 17th. The Dollar Index consolidated narrowly overnight and in the morning before declining by midday, closing lower. The Dollar Index, which measures the USD against six major currencies, fell 0.22% on the day, finishing at 105.320.
Marine Le Pen, leader of France's far-right National Rally party, stated in a weekend interview that she does not seek the resignation of current President Emmanuel Macron and respects institutional governance. Le Pen's comments alleviated market concerns sparked by the far-right party's significant rise in support following EU parliamentary elections, leading to a rebound in the Euro.
Helen Given, a currency trader at Monex USA, mentioned that the Euro saw a slight rebound as the French market steadied since last week. However, the broader trend still favors the Dollar.
Given said that if the US retail data released on the 18th is weaker than expected, like most recent US economic data, the Dollar might undergo more substantial changes. However, the underlying dynamics of the Euro/USD rate are currently heavily influenced by geopolitical factors.
Philadelphia Fed President Patrick Harker said on the 17th that if his forecast for the US economy proves accurate, the Federal Reserve could lower rates once this year.
Given also noted that all fundamental factors currently favor the Dollar against the Yen. Although some volatility remains, the overall trend is more stable compared to March and April. If the USD/JPY rate nears 160:1, Japanese policymakers are expected to adopt a tougher stance, but further market intervention would require substantial resources and may not be feasible.
This week, multiple central banks globally are set to announce interest rate decisions: on June 18, the Reserve Bank of Australia will announce its rate decision; on June 20, the Bank of England will release its June rate decision and monetary policy meeting minutes, and the Swiss National Bank will also announce its latest rate decision the same day.
Among these, the market is most focused on whether the Bank of England will follow the European Central Bank's lead in cutting rates. Federal Reserve officials will also be speaking frequently this week about economic prospects. The market will closely monitor these for clues about the Federal Reserve's policy outlook.
In the early Asian trading session on Tuesday (June 18), spot gold fluctuated narrowly and is currently trading around $2319.85 per ounce. Gold prices fell by 0.6% on Monday, closing at $2318.82 per ounce due to hawkish comments from Federal Reserve officials boosting US Treasury yields. Investors await more US data and speeches from Federal Reserve officials this week for further clues about monetary policy.
Jim Wyckoff, a senior market analyst at Kitco Metals, stated: "There is currently a lack of significant new fundamental information, so the gold market is looking for direction from external markets. Gold prices are likely to consolidate between $2300 and $2400 until the next major fundamental catalyst, which may not come until sometime in July."
Independent trader and analyst Vladimir Zernov from Fxempire predicts that gold will face pressure as traders focus on rising US Treasury yields. From a broader perspective, gold needs additional positive catalysts to gain sustainable upward momentum. It is important to note that gold has strong support in the $2295-$2305 per ounce range, and it will take a significant catalyst for prices to break below $2295 per ounce.
The office of US Senate Finance Committee Chairman Sherrod Brown announced on Monday that Federal Reserve Chairman Jerome Powell will deliver his semi-annual testimony on monetary policy before the committee on July 9.
If tradition holds, Powell will provide the same testimony before the House Financial Services Committee the following day. A spokesperson for the committee did not immediately respond to a request for comment.
These hearing sessions typically last for several hours, during which bipartisan lawmakers will question Powell on a range of issues from interest rate policies to the condition of the banking system.
Last week, the Federal Reserve kept the policy rate target range unchanged at 5.25%-5.5% and indicated that it might only cut rates once this year.
Should this forecast hold true, the Federal Reserve may refrain from taking action before the November presidential election. The forecast assumes a gradual decline in inflation and no major disruptions in the labor market.
Brown and other Democrats have urged the Federal Reserve to lower rates to make housing more affordable. Republican presidential candidate Trump previously stated that a pre-election rate cut would benefit Democrat Joe Biden, suggesting that he believes the Federal Reserve might cut rates to influence the election.
US Dollar Index Technical Analysis:
The Dollar Index faced resistance below 105.65 on Monday and found support above 105.30, indicating the potential for a short-term upward trend after a brief decline. If the Dollar Index stabilizes above 105.15 today, the next target could be between 105.55 and 105.75. Today’s immediate resistance is between 105.50 and 105.55, with key resistance between 105.70 and 105.75. Immediate support is between 105.15 and 105.20, with key support between 105.05 and 105.10.
Euro/USD Technical Analysis:
The Euro/USD found support above 1.0685 on Monday and faced resistance below 1.0740, suggesting potential for an upward trend after a brief decline. If the pair stabilizes above 1.0700 today, the next target could be between 1.0755 and 1.0775. Today’s immediate resistance is between 1.0750 and 1.0755, with key resistance between 1.0770 and 1.0775. Immediate support is between 1.0700 and 1.0705, with key support between 1.0665 and 1.0670.
Gold Technical Analysis:
Gold found support above $2309.00 on Monday and faced resistance below $2333.00, indicating the potential for a short-term upward trend after a brief decline. If gold stabilizes above $2307.00 today, the next target could be between $2331.00 and $2343.00. Today’s immediate resistance is between $2330.00 and $2331.00, with key resistance between $2342.00 and $2343.00. Immediate support is between $2307.00 and $2308.00, with key support between $2297.00 and $2298.00.
