Key Highlights for today:
Talk of a possible 75 bps increase in the Fed Funds rate at Wednesday’s meeting, a robust USD and a slide in prices, prompted money managers to aggressively cut their net long gold exposure.
The ISM will release the US Manufacturing PMI today at 18.00 hours. A weaker-than-expected PMI reading is likely to force the greenback to stay under bearish pressure and help XAU/USD push higher. In case the headline PMI surprises to the upside, the dollar might have a tough time capitalizing on it ahead of Wednesday’s all-important FOMC meeting.
Given that high food and energy prices are here for a significant period of time and considering that inflation is well-rooted in the economy, it is very likely that the US central bank will continue to emit very hawkish policy signals for a while yet. This implies that any rallies, like the one over the last few days, may have a limited life span and long liquidations may be a fact of life well into the second half of the year.
Technical:
RT pattern
SR Pattern
Crucial Stops:
Today my POF will be Buying below S2, in case of reversal: selling above 1907/1926
Currency Strength
Fundamental:
A sudden UP rally is quite possible due to uncertainty + Russia-Ukraine related statements | NFP + HAWKISH FED will be the game changer, THIS WEEK
DXY and USDJPY at 103.20 zone
NOW in RT phase
Dramatic rallies are on the way, APRIL end + first week of MAY always have been volatile for GOLD traders considering Rate Hike policy, NFP and monetary policy related statements on the way.
A number of significant events will take place this week as markets anticipate several central bank meetings, including that of the US Federal Reserve, which is expected to raise interest rates by 50 basis points to contain inflation. This would indicate the bank’s commitment to a strong tightening policy in the months ahead.
The Reserve Bank of Australia’s meeting is also on the horizon, the outcome of which is predicted to hike interest rates from 0.10% to 0.25%. The Bank of England has not increased interest rates since 1997, but is expected to follow suit, potentially reaching 1.00% for the fourth time.
US employment data for April will also be on the agenda this week. Non-farm payrolls are forecast to reveal an increase of 380,000 jobs, and unemployment is expected to fall to 3.5%. It’s important to note that these figures follow an unexpectedly high import deficit in the US, which caused the economy to fall in the first quarter of 2022.
Bitcoin falls as fears over digital currencies rise
Bitcoin continues to face pressure as the European Union’s attitude on cryptocurrencies shifts. After the European Union proposed laws to prohibit anonymous transactions, coming dangerously close to outlawing proof of work (PoW), concerns have been raised that the world’s largest cryptocurrency trading bloc may be forgotten. Nonetheless, other governments, including Mexico, Argentina, and the UAE, continue to show their support for cryptocurrencies.
The attempts of major central banks to tighten monetary policy, combined with growing global concern over rising inflation and the Russo-Ukrainian war, have contributed to a spike in market fears. These cumulative concerns are partially responsible for cryptocurrency’s recent nosedive.
Earnings reports put Wall Street in the red
Since the start of the pandemic, the S&P 500 Index has suffered the most significant monthly losses. However, Nasdaq still holds the title for the worst monthly losses since the 2008 global financial crisis.
As earnings results from corporations started to trickle in during the final week of April, Wall Street remained on edge and faced disappointing figures. Amazon disclosed lower-than-expected earnings and sales predictions for the first quarter of 2022. And though Apple’s sales exceeded estimates, the company’s stock fell by 2.5% due to supply chain fears. Q2 earnings per share stood at $1.52.
These figures are a consequence of predictions that earnings reports would come in below projections, as well as concerns over the US Federal Reserve tightening monetary policy.
This week, markets are anticipating earnings reports from Pfizer, Starbucks, and Airbnb.
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