Groundhog Day on US Interest Rate Markets

Groundhog day on US interest rate markets. At the end of April, US money markets were positioned for a first Fed rate cut at the December. It made them vulnerable to soft patches in eco figures. By mid-May, the pendulum swung to a first rate cut in September with follow-up action in December. At this stage, investors picked-up the more hawkish/inflationary details again.

Swiss Franc Edges Higher as Inflation Holds at 1.4%

The Swiss franc is in positive territory on Tuesday. USD/CHF is trading at 0.8935 in the European session, down 0.24% on the day. The Swissie has posted its strongest rally of the year, with gains of 2% since May 29th and is trading at its highest level since March 21st.

Ethereum's Bull Pennant Needs Confirmation

Ethereum may be forming a Bull Pennant (a triangle forming after a rapid rise). As a rule, such a consolidation is followed by a breakout of the upper boundary and subsequent growth. However, this scenario needs confirmation. A sustained advancement above $3900 will indicate a full-fledged realisation of growth in ETHUSD. A bearish scenario cannot be ruled out when a failure under the support at $3700 will trigger a steady decline.

Oil Probably Setting Up for a Repeat of 2020 or 2014

In the middle of last week, WTI crude bounced off resistance in the form of the 200-day moving average and moved closer towards the lower end of the May trading range. Oil is also trading below its 50-day average, which is pointing downwards. All of this is evidence of an intensifying bearish medium and long-term trend.

Crypto Goes Up After a Rest

Active buyers came to Bitcoin, raising the price by 4.4%. The price of the first cryptocurrency again exceeded $71K, returning to the area of last month’s highs and the pivotal area of the last three months. Technically, Bitcoin has already broken the resistance of the descending channel and is testing horizontal resistance. The ability to go above $71K opens the way for a renewal of historical highs, which could happen very quickly.

AUD Shrugs as Australian GDP Misses Estimate

After starting the week with sharp swings, the Australian dollar is showing little movement on Wednesday. AUD/USD is trading at 0.6644 in the European session, down 0.06% on the day.

USDCAD: Influence of Linear Regression Channel and BoC

The BoC has maintained its official interest rate at 5.0% since July 2023, and markets expect it to cut its overnight rate by 25 basis points (bps) to 4.75% due to signs of cooling inflation in Canada. This decision will highlight the monetary policy divergence between the BoC and the Fed, potentially boosting the USD.

Sunset Market Commentary

The Bank of Canada’s first policy rate cut this cycle (4.75% from 5%) triggered a second test of US support levels. BoC governor Macklem said that it is reasonable to expect further cuts if inflation eases. The BoC is seen as a frontrunner in the monetary policy cycle.

Could Stronger US Data Force a Fed Rate Cut?

The key question in the market participants’ minds is when the Fed is going to start easing its monetary policy stance. The year started with the market pricing in at least five rate cuts by the Fed in 2024, but with inflation remaining above 3% since July 2023, expectations have tanked. 

Dream Bigger Than the Price

The data from the US yesterday was mixed: a softer-than-expected ADP read and a stronger-than-expected ISM services data marked the session. According to the data, the US economy added 152K new private jobs in May – much lower than 175K penciled in by analysts and the weakest number since the start of the year, meanwhile services expanded by the strongest pace in the past nine months during the same month.