Tech shares remain in the reds

Global markets remained focused on the strength of the US dollar as expectations for a hawkish Federal Reserve continued to support the greenback.

The stronger USD weighed on commodities such as gold and oil, while risk sentiment remained fragile across equity markets. In the US, tech shares extended their decline, dragging major indices lower as investors adjusted to the prospect of higher interest rates for longer.

Meanwhile, traders monitored upcoming economic data and central bank commentary for further clues on the outlook for currencies, commodities and global stock markets.

USD remains strong in the FX market

The USD continued to gain in the FX market and we see the case for the market’s expectations for a hawkish Fed to continue to feed USD bulls. In Australia, the headline CPI rate for May unexpectedly slowed down, and the Aussie’s attention turns towards the release of May’s Employment data tomorrow.

Should tighter than expected conditions in the Australian employment market be reported, we may see AUD being supported. Meanwhile in Japan, BoJ policymakers are expected to sound hawkish today which may aid the Yen.

Tech sector sell off continued

US equities were on the defensive yesterday with the tech sector suffering heavier losses. The drop of Nasdaq and S&P 500 was characteristic.

The market’s expectations for the Fed to keep rates high seem to continue to weigh on market sentiment and particularly the highly leveraged tech firms. Should we see the market continue to expect the Fed to keep a hawkish stance, we may see further losses for US Equities.

Gold’s price continues to edge lower

Gold’s price continued to edge lower yesterday given the USD’s strengthening. We continue to view the inverted relationship of the USD with gold as being the primary factor behind the precious metal’s direction.

Also the non-interest bearing precious metal tends to be in a disadvantage position against US bonds. Hence, should we see the USD gaining further we may see gold’s price retreating and vice versa.

WTI’s price slides lower

Oil prices continued to slide lower as market expectations for wider flows of oil from the Straits of Hormuz are still present.

It should be noted that the market sentiment remained bearish despite the US and Iran being at odds about the inspection of the latter’s nuclear capabilities, Iran’s frozen assets and Israel’s ongoing war in Lebanon. Further easing of the market’s worries for the Middle East could weigh on oil prices.

Autres points forts pour aujourd'hui

In today’s European session we note the release of Germany’s Ifo indicators for June, while BoE Executive Director Chaplin, RBA Deputy Governor Hauser and BoJ Deputy Governor Himino speak.

In the American session, we get from the US the current account balance for Q1, New Home Sales figure for May, and the weekly EIA crude oil inventories figure, while BoE MPC member Dhingra speaks. In tomorrow’s Asian session we highlight Australia’s employment data for May and in Japan, BoJ Board Member Tamura speaks.

Charts to keep an eye out

AUD/USD

AUD/USD tumbled yesterday breaking the 0.6980 (R1) support line, now turned to resistance. We continue to view the pair bearishly and intend to maintain the bearish outlook as long as the downward trendline being intact.

Yet the RSI indicator has reached the reading of 30 and the pair’s price action is teasing the lower Bollinger band, both signaling that the pair may be at oversold levels and a correction higher being quite possible.

Should the bears remain in charge of the pair’s direction, AUD/USD may reach if not breach the 0.6830 (S1) support line. Should the bulls take over, we may see the pair reversing direction, breaking the prementioned downward trendline and continue to break also the 0.6980 (R1) resistance level.

Nasdaq

Nasdaq’s price action dropped yesterday breaking the 29675 (R1) support line, now turned to resistance.

We tend to be bearish for the index, yet have to note that RSI indicator despite dropping failed to break below the reading of 50, implying a lack of a bearish market sentiment for the index to support a continuation of its downward motion.

Should the bears remain in control, Nasdaq’s price may start aiming for the 28200 (S1) support line. Should the bulls take over, we may see the index’s price action reversing course, breaking the 29675 (R1) resistance line, paving the way for the 30770 (R2) resistance level.

AUD/USD Graphique H4

• Support: 0.6980 (S1), 0.6830 (S2), 0.6665 (S3)
• Resistance: 0.7085 (R1), 0.7280 (R2), 0.7455 (R3) 

US100 Cash Daily Chart

• Support: 28200 (S1), 26870 (S2), 25375 (S3)
• Resistance: 29675 (R1), 30770 (R2), 32500 (R3) 

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