The U.S. dollar witnessed a smart recovery from the day’s low after data showed U.S. housing starts surged, while the Australian dollar fell after its latest central bank meeting minutes showed keeping interest rates unchanged had been under consideration.
The Dollar Index, which tracks the greenback against a basket of six other currencies, rebounded from its recent one-month low of 102.322 and traded at 102.5730 up 0.10%.
U.S. single-family housing starts jumped 21.7% in May from the prior month, its highest in more than a year, and permits issued for future construction also climbed, indicating that the housing market may be turning a corner.
Gold prices extended their fall for a second consecutive day yesterday, following the strong economic data from the U.S. Prices dropped by 0.59% and settled at 58809. Silver prices plunged by 2.84%, the biggest single-day fall since 11 May 2023, after hitting a day’s low 70181 settled at 70387.00.
Today, Gold futures having immediate support is seen at 58550-58250 and resistance is at 58890-59550.
Silver Future has resistance at 70580-71500 and support at 70000-68550.00
Base metals gave up some earlier week gains yesterday. Prices retreated from the day’s high after U.S. housing data stoked worries about interest rates.
However, downside moves were limited and supported by China is widely expected to cut its benchmark loan rates on Tuesday after a similar reduction in medium-term policy loans last week to shore up a shaky economic recovery.
The People’s Bank of China cut its key lending benchmarks on Tuesday, in the latest sign that the country’s authorities are concerned that the post-pandemic recovery in the world’s second-largest economy is losing momentum.
The one-year loan prime rate was lowered by 10 basis points to 3.55%, while the five-year LPR was cut by the same margin to 4.20% – the first such reduction in 10 months.
The PBOC also lowered short- and medium-term policy rates last week.
Copper futures settled at 730.80, retreating from the day’s high of 733.30 up 0.20%. Zinc prices were down by 1.89% at 215.10. Aluminium prices were down by 0.369% and Lead closed at 183.50, down by 0.30%.
Technical Levels – Copper prices have immediate resistance at 733.80-738.50-742.00. On the downside, support will be 728.00-722.50.
Crude dropped drastically yesterday. Forecasts for slower growth of oil demand in China, the world’s second-biggest oil consumer, and disappointment with the size of cuts in China’s key lending rates. MCX Crude settled at 5821, down by 0.75%.
An expert at China National Petroleum’s (CNPC) research arm said China’s crude demand will grow less than previously expected as a strong interest in electric vehicles weighs on gasoline use.
China’s fuel oil imports dipped in May after hitting a decade high in April, while exports of low-sulphur marine fuels rose, General Administration of Customs data showed.
Technical Levels – Crude oil has immediate support at 5730 below it 5640-5560. On the upside, resistance is seen at 5925-6035.00.
Economic data and events to watch
Japan
At 10.00 am – Revised Industrial Production m/m to release. Data foresaw a contraction of 0.4%, unchanged from the previous.
Above data could have a negative impact on Yen.
The U.K.
At 11.30 am – Consumer Price Index (CPI) inflation data will be released. The forecast is to drop by 8.4% from 8.7% YoY in April. The inflation report could throw fresh light on the BoE policy outlook.
Core CPI y/y is expected to come unchanged at 6.8%.
Public Sector Net Borrowing will expect to reduce by 19.9B from the previous 24.7 B.
At 2.00 pm – HPI y/y data is to be released. Data is foreseen at 2.6% lower from the previous 4.1%.
At 3.30 pm – CBI Industrial Order Expectations. Data is forecast to have a contraction by 18 from a contraction of 17.00
All the above data could have a negative impact on the GBP.
Eurozone
At 7.15pmGerman Buba President Nagel Speaks
The speech could have a volatile impact on the Euro.
Canada
At 6.00 pm – Core Retail Sales m/m will be released. Data is expected to expand by 0.3% against a contraction of 0.3%.
Retail Sales m/m. Data is forecast to have expanded by 0.3% against a contraction of 1.4%.
Above data could have a positive impact on the Canadian dollar.
U.S.
At 7.30 pm – Fed Chair Powell Testifies, and FOMC Member Cook and FOMC Member Jefferson Speak.
At 9.10pm – FOMC Member Goolsbee Speaks.
All the above speeches will have a volatile impact on the dollar.