News Commentary
US
Investors have been watching the May jobs report closely on Friday for any clues on future monetary policy as maximum employment is one of the Federal Reserve’s key objectives.
All data came positive as Non-Farm Employment Change released with 223K, higher than the expected 189K, and Unemployment Rate decreased by 3.8%. ISM Manufacturing PMI came in at 58.7, better than the forecasted 58.3.
The news has featured that the U.S.-North Korea summit is back on track. North Korea and the US are starting the preparations for the June 12 summit between Kim Jong-un and Donald Trump.
Separately, Trump contacted the Japanese prime minister, Shinzo Abe. He “affirmed the shared imperative of achieving the complete and permanent dismantlement of North Korea’s nuclear, chemical, and biological weapons and ballistic missile programs,” The White House claimed. And they would meet before the Kim-Trump summit.
China warned the United States on Sunday that any agreements reached on trade and business between the two countries will be void if Washington implements tariffs and other trade measures, as the two ended their latest round of talks in Beijing.
That came after U.S. Commerce Secretary Wilbur Ross met Chinese Vice Premier Liu He in Beijing over the weekend.
The world’s two largest economies have threatened each other with tens of billions of dollars’ worth of tariffs in recent months, leading to worries that Washington and Beijing may engage in a full-scale trade war that could damage global growth and oil markets.
EUR
The Euro gained on Thursday as Italian parties renewed attempts to form a government, to calm down the concerns about the wider impact of a political crisis in Europe’s third-largest economy.
The two anti-establishment parties have made many efforts to form a coalition government, rather than force Italy into holding elections for the second time this year in September.
The CPI flash estimate enhanced the regains of the Euro after a reading of 1.9%, which was more than the forecast of 1.6%, along with the core reading of 1.1 %, which was more than the forecast of 1.0%.
Besides, economists have concluded that the ECB will begin hiking rates in the middle of next year.
All eyes will be on the Draghi speech on Tuesday to note any views for the economy and the growth.
CAD
The Bank of Canada Governor, Stephen Poloz, left rates on hold for a third straight decision on Wednesday at 1.25%, but gave a hawkish statement for the economy and removed some cautious language.
The central bank also clarified that recent economic data bolsters its April outlook for a 2% growth in the first half of 2018.
GDP rose to 0.3%, which was higher than the expected 0.2%. That would reinforce the optimism bias for the BOC.
Canada is waiting for some big data this week. Firstly with the trade balance on Wednesday, the last reading was -4.1B, and the unemployment rate on Friday, the last release was 5.8%.
AUD
Australia reported worse than expected Capex data. Private capital expenditures rose only 0.4% in the first quarter against 1.0% estimated and 0.2% from the fourth quarter of last year.
The Australian dollar is also waiting for many events this week. Retail sales on Monday, GDP on Wednesday, and trade balance on Thursday to give an outlook to the economic growth.
All eyes will be on the RBA statement rate on Tuesday, which the RBA is expected to keep rates stable at 1.5%
Chart Analysis
US INDEX
On the daily chart, the price had successfully broken the ascending trend from the high of 2017, along with the resistance level to eventually reach the key resistance 95.15 to bounce back from there.
The price shaped a reversal pattern (wedge) which closed with a break beneath it.
With forming divergence in RSI, the price is expected to have a correction to the key support at 92.6 which is located the broken trend too.
NZD/USD
On the daily chart, as we expected before, the pair had bounced from the ascending trend with an engulfing candle, along with breaking a descending one, to reach our target at the resistance zone at 0.697-0.702.
According to the Bat-shaped harmonic pattern, the price is expected to reach the B point at the next resistance zone 0.7155-0.7185.
The price may face a little retracement before going up to the mentioned targets.
USD/CAD
On the daily chart, as we expected the price had made its way into the resistance zone of 1.289-1.298, almost reaching the key resistance at 1.309, with an approach from the descending trend line starting from the high of 2015, and the upper edge of the horn pattern.
The price has already bounced beneath the key resistance and the resistance zone and got back again above it, but it couldn’t go much further to form a pinbar, to take the price firstly to the support level at 1.274.
AUD/USD
On the daily chart, the price had a false break beneath the support zone 0.75-0.7535 with a pin bar.
That enhances the AB=CD harmonic pattern, with breaking a descending channel.
The pair rose with an engulfing candle from the support zone.
Along with divergence in RSI, the price is ready for the next move up to 0.774 which is a level with a combination of the lower trend line from the high of 2018 and the broken uptrend.
On the daily chart, as we expected, the price reached the resistance zone at 84-84.35.
The price couldn’t break through this area to bounce back.
It reached the support levels at 81.25-80.5 (as we expected) to pull back up again boosted by the ascending trend from the low of March.
As the pair is currently moving sideways. The price is expected to retest the resistance zone again.
On the daily chart, as we expected before, the price had made its way up to targets at the resistance zone 1.0815-1.0865, boosted by a BAT harmonic pattern.
The price is going to have a little retracement at these levels to continue its bullish movement up to the 1.1045 level.
