Market News Summary:
On Thursday (June 13), due to the Federal Reserve's previous hawkish signals, the U.S. dollar index rebounded, ultimately closing up by 0.51%, at 105.22. The 10-year U.S. Treasury yield finally closed at 4.2490%. The 2-year U.S. Treasury yield, which is most sensitive to Federal Reserve policy rates, closed at 4.7050%.
Gold prices fell more than 1% on Thursday (June 13), with the lowest intraday price hitting $2295.49 per ounce, and closing at $2303.70 per ounce. Analysts attributed the decline in gold prices to profit-taking following lower-than-expected U.S. producer price data. Additionally, the sharp rise in the U.S. dollar index on Thursday, driven by the Federal Reserve's reduced expectations for rate cuts this year, also pressured gold prices.
International oil prices fell on Thursday (June 13) as OPEC's long-term forecast indicated that oil demand would not peak. WTI crude oil ultimately closed down by 0.51%, at $77.84 per barrel; Brent crude oil closed down by 0.42%, at $82.12 per barrel.
Previous Day's Data and News:
Data released by the U.S. Department of Labor on the 13th showed that the U.S. Producer Price Index (PPI) unexpectedly declined by 0.2% month-on-month in May, indicating that inflation pressures in the U.S. are easing.
Data released on the same day showed that compared to April's 0.5% month-on-month growth, May's PPI showed significant improvement and was better than the market's expected 0.1% growth. The index gained 2.2% year-on-year, the same increase as in April. Excluding food, energy, and trade services, the core PPI remained flat month-on-month, while the market had expected a 0.3% increase.
During the month, a sharp 0.8% decline in commodity prices suppressed the overall index, marking the largest month-on-month drop since October 2023. Among these, energy prices fell by 4.8% and food prices also dropped by 0.1%.
PPI tracks changes in production costs and is a key indicator of inflation. Analysts believe that the unexpected drop in PPI for May, along with the flat month-on-month Consumer Price Index (CPI) for April, both indicate a significant improvement in the U.S. inflation situation, which could provide new evidence for the Federal Reserve to consider cutting interest rates.
According to data tracked by the Chicago Mercantile Exchange, after the data release, the market now sees a 61.1% probability of the Federal Reserve cutting rates by 25 basis points at the September monetary policy meeting, with the possibility of two rate cuts within the year.
Data released by the U.S. Department of Labor on the 13th showed that for the week ending June 8, the number of initial claims for unemployment benefits increased by 13,000 to 242,000, reaching the highest level since August 2023.
The data also showed that the less volatile four-week moving average of initial claims rose by 4,750 to 227,000. Additionally, for the week ending June 1, the total number of people claiming unemployment benefits nationwide was 1.82 million, an increase of 30,000 week-on-week. The insured unemployment rate, which reflects the percentage of the insured population receiving unemployment benefits, remained flat at 1.2%.
Analysts believe that initial claims reaching a 10-month high shows that the cumulative and delayed effects of the Federal Reserve's significant rate hikes since 2022 are starting to have a broad impact on the U.S. economy, with the labor market gradually cooling.
On the 12th, the Federal Reserve concluded its June meeting by maintaining the federal funds rate target range between 5.25% and 5.5%. In their latest economic outlook, members of the Federal Open Market Committee predicted that the U.S. unemployment rate will be 4% in 2023 and 4.2% in 2024. Most members forecast at most one rate cut within the year.
In early Asian trading on Friday (June 14), spot gold fluctuated within a narrow range, currently trading around $2303.19 per ounce. Gold prices fell by more than 1% on Thursday, with the lowest intraday price hitting $2295.49 per ounce, and closed at $2303.70 per ounce. Analysts attributed the decline to profit-taking following lower-than-expected U.S. producer price data. Additionally, the sharp rise in the U.S. dollar index on Thursday, driven by the Federal Reserve's reduced rate cut expectations, also pressured gold prices.
The index rose by 0.49% at the end of trading on Thursday, closing at 105.22. On Tuesday, the U.S. dollar index reached a four-week high of 105.46. However, following the release of CPI data on Wednesday, the dollar index fell by 1%.
City Index market strategist Fiona Cincotta said, "After the CPI data was released, the market reaction was somewhat exaggerated. The situation wasn't worse, so it was almost a relief. That's what triggered such a strong knee-jerk response." Due to the contrast between the Federal Reserve's policy and the more dovish stance of other global central banks, the U.S. dollar may continue to be supported. "I don't think the dollar's rally has peaked yet," Chandler said. "The policy divergence may not have reached its maximum extent." The European Central Bank and Bank of Canada have already started cutting rates and may do so again before the Federal Reserve begins to ease policy. Uncertainty in European elections could also harm the euro against the dollar. Chandler added, "The political uncertainty in Europe is enough to sustain the dollar's buying interest." The far-right parties gained ground in Sunday's European Parliament elections, prompting French President Macron to call for early elections.
Analysts at J.P. Morgan Asset Management wrote in their mid-2024 investment outlook that the dollar should continue to benefit from the Federal Reserve's delay in rate cuts compared to other central banks, but may be topping out. "Looking ahead, the stabilization of interest rate differentials and narrowing growth gaps may curb the dollar, keeping it strong (but not stronger) for a longer duration."
Technical Analysis of the Dollar Index:
The dollar index met resistance below 105.30 on Thursday, with support above 104.60, indicating a potential downward trend after the short-term rise. If the index meets resistance below 105.45 today, the downward target will be between 104.75 and 104.40. Today's short-term resistance for the dollar index is between 105.40 and 105.45, with important short-term resistance between 105.65 and 105.70. Today's short-term support is between 104.75 and 104.80, with important short-term support between 104.40 and 104.45.
Technical Analysis of EUR/USD:
EUR/USD found support above 1.0730 on Thursday, with resistance below 1.0820, indicating a potential upward trend after the short-term decline. If EUR/USD stabilizes above 1.0705 today, the upward target will be between 1.0795 and 1.0845. Today's short-term resistance for EUR/USD is between 1.0790 and 1.0795, with important short-term resistance between 1.0840 and 1.0845. Today's short-term support is between 1.0705 and 1.0710, with important short-term support between 1.0680 and 1.0685.
Technical Analysis of Gold:
Gold found support above 2295.00 on Thursday, with resistance below 2327.00, indicating a potential downward trend after the short-term rise. If gold meets resistance below 2321.00 today, the downward target will be between 2290.00 and 2277.00. Today's short-term resistance for gold is between 2320.00 and 2321.00, with important short-term resistance between 2339.00 and 2340.00. Today's short-term support is between 2290.00 and 2291.00, with important short-term support between 2277.00 and 2278.00.
