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Futures Commentary by Everbright Futures: Overnight, COMEX gold prices fluctuated and strengthened, but weakened somewhat after opening this morning. Market sentiment became cautious amid repeated battles between bullish and bearish factors. 1. Macroeconomic Overview: The preliminary US May composite PMI came in at 51.7, unchanged from April, indicating that overall business activity maintained a moderate expansion, but with significant structural divergence. The manufacturing PMI exceeded expectations, rising to 55.3, a 48-month high, demonstrating strong resilience in the manufacturing sector; however, the services PMI was only 50.9, teetering on the brink of stagnation, indicating weakening consumer demand. This divergence between manufacturing and services reflects the inherent contradictions in the economic structure under the impact of tariff policies, and to some extent deepens market concerns about a stagflationary path. 2. Local Events: The most anticipated event tonight Beijing time is Kevin Warshs official swearing-in as the 17th Chairman of the Federal Reserve at the White House. Trump will personally preside over the ceremony, a rare occurrence, and the market is highly focused on his first official speech. Previously, Warsh championed "reshaping the Fed," advocating for the Feds independence and quantitative tightening, displaying a slightly hawkish stance. Given the current persistent inflationary pressures, a hawkish initial statement from Warsh would further suppress market expectations for interest rate cuts, negatively impacting gold. Conversely, a more dovish tone could offer gold a short-term stabilization opportunity. The market may proceed cautiously, awaiting Warshs "debut." 3. In summary, the structural divergence in macroeconomic data, the uncertainty surrounding the new Fed chairmans policy stance, and the fluctuating progress of US-Iran negotiations all present ambiguous signals, making it difficult for the market to reach a clear consensus. Gold prices are likely to maintain a volatile pattern in the short term. Strategically, investors are advised to continue lowering their expectations for gold prices in the first half of the year, maintaining a buy-on-dips strategy, but avoiding overly heavy positions. Adjustments should be made after Warshs statement and the outcome of the US-Iran negotiations become clearer.May 22 – The APEC Trade Ministers Meeting opened in Suzhou on May 22. The two-day meeting will focus on the theme of “Building an Asia-Pacific Community for Common Prosperity,” discussing priority areas such as advancing regional economic integration, supporting the WTO, strengthening digital cooperation, and developing a green economy.The governor of the Central Bank of the Philippines said: "We are considering non-cyclical interest rate hikes. We raised rates ahead of schedule, but it doesnt seem enough."Philippine Central Bank Governor: The Federal Reserves actions have the biggest impact on us.On May 22, Wang Yi, member of the Political Bureau of the CPC Central Committee and Foreign Minister, held talks with Moldovan Deputy Prime Minister and Foreign Minister Popsoui in Beijing on May 21. Wang Yi stated that China advocates equality among all countries, regardless of size, and appreciates Moldovas adherence to the correct position on issues concerning Chinas core interests. He welcomed Moldovas deeper participation in the high-quality Belt and Road Initiative. Both sides should work together to implement the four major global initiatives and safeguard the legitimate rights and interests of developing countries. Popsoui stated that Moldova appreciates Chinas leading role in international affairs. Moldova adheres to the one-China principle and is willing to work with China to uphold multilateralism. The two sides also exchanged views on the Ukraine crisis. Wang Yi reiterated Chinas position of promoting peace talks.

EUR/USD Expects Fourth Weekly Gains Above 1.0900 Despite The US Dollar's Rebound Advance Ahead Of US NFP

Daniel Rogers

Apr 07, 2023 11:42

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Despite a recent retreat, the EUR/USD bulls maintain control around 1.0920. This reflects the typical Good Friday inactivity and apprehension ahead of the US Nonfarm Payrolls (NFP) report released early in the day. The major currency pair was volatile on Thursday as a result of the US Dollar's initial rebound on fears of a recession, but ended the day unchanged as disappointing US data contrasted with stronger Eurozone data.

 

Fears of a recession in the world's largest economy were prompted by consecutive lackluster US data and falling US Treasury bond yields, giving USD bears a reprieve on Thursday morning. As traders prepared for the all-important NFP, the dollar's subsequent gains were reversed by another disappointing US employment report.

 

Despite this, US Initial Jobless Claims for the week ending March 31 rose to 228K from 200K anticipated and an upwardly revised 246K the prior week. Notable is the increase in Challenger Job Cuts from 77,77K to 89,703K in the given month.

 

Notably, Reuters fanned fears of a recession by citing the most recent decline in the preferred bond market indicator of Federal Reserve (Fed) Chairman Jerome Powell. The most reliable bond market indicator of an imminent economic contraction, according to Federal Reserve research, is the "near-term forward spread" between the forward rate on Treasury bills 18 months from now and the current yield on three-month Treasury bills.

 

According to Reuters, International Monetary Fund (IMF) Managing Director Kristalina Georgieva stated in prepared remarks on Thursday that the global economy is projected to expand by less than 3% in 2023, a decrease from 3.4% in 2022.

 

In other news, Germany's Industrial Production (IP) increased 0.6% year-over-year in February, versus market predictions of -2.7% and previous readings of -1.7%. Additionally, the monthly figures exceeded expectations by 0.1%, coming in at 2.0% compared to 3.7% previously. On Wednesday, Germany Factory Orders for February improved to -5.7% YoY from -12.0% previously revised down and -10.5% market expectations, while MoM growth came in at 4.8% compared to 0.3% expected and 0.5% previous readings.

 

Wall Street and US Treasury bond yields have both reduced weekly losses as a result of these strategies, but investors remain skeptical.

 

In the context of less liquidity surrounding the March US employment report, sporadic activity on the major markets can keep the EUR/USD inactive and prone to abrupt price swings. Notable is the fact that recent dovish Fed forecasts and disappointing US data generate expectations for a positive surprise and enormous price volatility thereafter.


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