EUR/USD: key sectors of the European economy are down
Published macroeconomic statistics, which reflected the downward trend development in the main economic indicators of the Eurozone, caused the EUR/USD pair to correct around 1.0696.
For instance, the consumer prices in Spain fell by 0.1% in May from the previous 0.6% growth, which had an impact on the annual figure, reducing it to 3.2%, or the minimum for August 2021. The cost of manufactured goods kept the negative trend to -4.8% from April's -1.5%. Weakening values of the central economies in the region lowered the European Alliance Business Activity Index from 0.51 points to 0.19 points. Taking into account the released inflation data of Germany and France, the current euro dynamics will continue in the medium term.
- Resistance levels: 1.0760, 1.0950.
- Support levels: 1.0610, 1.0400.
USD/CAD: the pair is going to test a new local maximum
USD/CAD is moving in active growth, being under the influence of the upward momentum formed earlier, when the pair updated the local low of May 24. The U.S. dollar strengthened due to technical reasons and the announced consideration of the bill to increase the national debt ceiling by the congressmen.
The agreement reached the day before by President Joe Biden and House Speaker Kevin McCarthy concluded last weekend, after which the Congress has only one week to approve the bill, without which the financial authorities will lose the ability to make payments on government bills since June 5. Meanwhile, the macroeconomic backdrop also drew investors' attention with the Dallas Fed's May manufacturing activity falling to -29.1 points from a previous estimate of -23.4 points at -19.6 points. A number of Fed officials are expected to speak on Wednesday, May 31. In turn, economists expect publication of the Chicago Business Sentiment Index in May and the monthly economic survey from the US Federal Reserve, the so-called "Exchange Book".
- Resistance levels: 1.3650, 1.3700, 1.3750 and 1.3800.
- Support levels: 1.3600, 1.3550, 1.3500, 1.3450.
USD/TRY: Turkish currency is making new record lows
In morning trading, USD/TRY showed strong bullish momentum and made a new record high at 20.7000.
On the threshold of the next election in Turkey, the conditions for the lira to go down were formed, amid the markets uncertainty about the predictability of the voting results. The announcement of the final election results at the beginning of the week, according to which the incumbent President Recep Erdogan won a clear victory, triggered another downward trend in the national currency, as economists expect the authorities to put pressure on the Turkish Central Bank in the future. Thus, the vector of "doves" in the issue of monetary parameters, most likely, will remain the same, which will serve to improve the investment climate of the Republic, strengthening of the labor market and supply of goods to foreign markets that can deprive the consumer prices of the prospects for further growth, which now hold the level of 43.68%, at the cost of borrowing at 8.5%. Meanwhile, experts raise fears that the prices of consumer goods and services in the short term may resume growing again due to the involvement of public resources in the election campaign, for example, citizens were given the opportunity to consume natural gas for free for a month. The sharp decline in the Turkish lira forces market participants to transfer their capital to savings accounts, where the lira is quoted against the U.S. dollar and the state compensates for the difference in exchange rates. Such measures have been in effect in Turkey since 2021.
- Resistance levels: 20.7000, 20.8680, 21.0000, 21.1500.
- Support levels: 20.4263, 20.2242, 20.0036, 19.8500.
Gold prices
The precious metal is developing a correction at the key multi-year level of 2000.0.
Physical gold demand level is steadily increasing, especially after the cancellation of Covid-19 epidemiological measures in the regions. The Central Bank of the People's Republic of China, for example, has been building up its own gold reserve six months in a row and, according to official statistics coming into publication after a three-year pause, the regulator added more than 100.0 tons of metal to reserves during the first quarter, raising the reserve target to 2076.0 tons.
- Resistance levels: 1980.0, 2030.0.
- Support levels: 1940.0, 1890.0.