USDJPY: The Japanese currency keeps going down
A week earlier the trading instrument USDJPY found itself under pressure, reaching the threshold of 134.37, but soon began to recover its losses.
"The Japanese" was under the influence of negative factors after the meeting of officials of the Japanese regulator. Despite many investors' expectations that the change of the leadership would give the agency a new impetus to revise its current passive control over consumer prices through cancellation of monitoring of government bond yield curve and step-by-step adjustment of borrowing costs, the officials continue to hold on to their previous vector of soft monetary policy. Moreover, as it follows from the final minutes of the meeting, most of the summit participants noted the uncertain mood regarding the economic outlook and the risks of decisive steps to increase the interest rate. Analyzing the situation in the agency, experts do not expect to see the "hawkish" rhetoric in the short-term, which will leave the Japanese economy vulnerable to the challenges of inflation in the future.
- Resistance levels: 135.93, 137.50.
- Support levels: 134.37, 132.81, 131.25.
USDCHF: The Swiss Franc is supported by economic publications
During morning trading the currency pair USDCHF is retreating from the peak threshold, updated the day before, but continues to hold on a positive note. At the time of writing the asset is testing 0.8923.
A block of macroeconomic data provides active support for the positive sentiment, which indicates the reduction of inflation risks against the background of the National Bank of Switzerland keeping the interest rate at 1.50%. Thus, April inflation remained unchanged, contrary to analysts' estimates of a 0.5% acceleration, while the annual rate fell to 2.6% from 2.9%, with a preliminary forecast of 2.8%. Department officials expect the consumer price index could reach the 2.0% target threshold by the end of 2023 amid downward adjustments in the cost of fruits and vegetables and fuel oil, which could offset the rising cost of airfare and leisure travel in general.
- Resistance levels: 0.8950 and 0.9100.
- Support levels: 0.8840 and 0.8700.
Gold Prices
The precious metal is quoted with a moderate decline.
The general trend for gold remains negative against the background of the release of positive statistics of the American labor market in April. Investors remain concerned that the U.S. Federal Reserve System will decide to take tougher monetary measures in order to reinforce its earlier steps and resume a significant interest rate correction. If that happens, the American currency will strengthen its position against its competitors in the global currency basket, including the metal segment.
- Resistance levels: 2130.00, 2176.75.
- Support levels: 1898.60, 1927.15.
Oil market review
The price of "black gold" of the benchmark grade Brent has been rising since Friday, May 5, and has already reached the level of 77.15.
"Bulls" hold the initiative against a number of factors: firstly, OPEC + limited production capacity came into effect, and secondly, positive statistics on the US labor market in April. The day before cartel participants reached an agreement on voluntary reduction of hydrocarbon production at the level of 1.16 million barrels per day, which came into effect as of May. The strong strengthening of the U.S. labor force and the correction of the unemployment rate allow investors to note the stability of the U.S. economy and rule out a near-term recession, which would keep demand stable in the near term.
- Resistance levels: 80.40, 84.38, 87.50.
- Support levels: 75.00, 71.88, 68.75.