The U.S. dollar extended its fall for the third consecutive day. It dropped below the 23 May 2023 low after the China central bank cut its short-term lending rate. Further, U.S. inflation reading on a yearly basis increased slightly in more than two years, cementing expectations that the Federal Reserve may pause interest rate hikes at its two-day meeting ending on Wednesday.
The U.S. consumer price index (CPI) edged up 0.1% last month as gasoline prices fell, after increasing 0.4% in April. After increasing by 4.9% in April, the CPI increased by 4.0% in the 12 months to May, which is the smallest year-over-year gain since March 2021.
So-called core CPI increased 0.4% in May, however, the same percentage rise for the third straight month.
Precious metals took a steep fall yesterday. Gold prices fell by 0.71% and settled at 59218. Silver plunged nearly1.50% at 72094.00.
Today, Gold futures breached their immediate support of 59225 yesterday. Now prices may test next support 58850-58750.00. On the upside, immediate resistance is seen at 59650-59980.00
Silver Future has support at 71750.00-70950.00 and resistance at 72820-73350.00
Base metals enjoyed after the Rate cut by the People’s Bank of China. It was a seven-day reverse repo rate by 10 basis points to 1.90% from 2.00%, its first such rate cut since the bank trimmed its Loan Prime Rate in August 2022.
Copper futures settled at 728.45, up 1.31%. Zinc prices are up by 1.54% at 214.90. Aluminum and Lead trade up by 0.25%.
Technical Levels – Copper prices now have immediate resistance at 731.50 above it 735.50-745.25. On the downside, support is seen at 725.50-718.50.
Crude oil witnessed more than 3.50% a speculative jump, recovering from steep losses the previous session after China’s central bank lowered a short-term lending rate for the first time in 10 months.
The rate drop, intended to boost the sluggish post-pandemic recovery in the second-largest economy in the world and the biggest consumer of petroleum, is anticipated to boost oil demand.
Brent Crude climbed 3.5%, to $74.50 a barrel. U.S. West Texas Intermediate (WTI) crude was up 3.4%, at $69.61 a barrel.MCX Crude settled at 5729, up 2.87%.
Technical Levels – Crude oil has immediate resistance 5825-5930.00. On the downside, crucial support is seen at 5600-5540.00.
Economic data and events to watch
U.K.
At 11.30am – GDP m/m. Data is foreseen at 0.2%, higher than the contraction of 0.3%.
Construction Output m/m. Data is foreseen at 0.0%, a decrease from the previous 0.2%.
Goods Trade Balance. Data is foreseen -16.5B against the previous -16.4B.
Industrial Production m/m. Data has foreseen a contraction of 0.1%, previous was at 0.7%.
Manufacturing Production m/m. Data is foreseen at the contraction of 0.1% against 0.7%.
All of the above data expect to have a negative impact on the pound.
Technical Levels –GBPINR has resistance at 103.85-104.15. Support is at 103.25-102.85.
Eurozone
Tentative – German WPI m/m to be released. Data expected to come at -0.1%, from the previous -0.4%.
At 2.30 pm – Industrial Production m/m. Expect to come at 0.8%, against a contraction of 4.1%.
The Euro may benefit from both of the aforementioned pieces of information.
Technical Levels – EURINR has immediate resistance at 89.10-89.55 and support at 88.75-88.55.
U.S.
At 6.00 pm – Core PPI m/m is to be released with a forecast to stay unchanged at 0.2% from the previous. Meanwhile, PPI m/m expects to reduce by -0.1% from the previous 0.2%.
At 6.00 pm – Core CPI m/m, data is foreseen at 0.4%, unchanged from the previous 0.4%.
At 8.00 pm – Crude Oil Inventories. Foreseen at the contraction of 0.8M against contraction of 0.5M.
At 11.30 pm – FOMC Economic Projections, FOMC Statement and Federal Funds Rate. The forecast is to remain unchanged at 5.25%.
All the above numbers will have a volatile impact on the dollar.
Technical Levels – The dollar index has crucial support at 102.95 below it will expect to extend losses and it could test 102.65-102.45. Upside resistance is located between 104.20 and 104.60. Yesterday, it remained above 103.047 levels.
INDIA
At 12.00 – WPI inflation numbers on a YoY basis. The forecast is to have a contraction of 2.35%, against the previous contraction of 0.92%.
Above data could have a negative impact on the Rupee.Technical Levels- USDINR has immediate support at 82.10 below it pair could drop towards 81.90-81.75 very soon. On the upside, resistance is seen at 82.45-82.76