Sentiment has been dominated in recent times by political turmoil in Italy, which took another twist at the weekend following the breakdown in the coalition between the Five Star Movement and the League.
Gold has managed to hold onto a significant chunk of its gains made yesterday despite the U.S. trading conciliatory messages with North Korea again, something which has boosted the global stock markets and the U.S. dollar. This comes after Donald Trump yesterday canceled the June 12 meeting with Kim Jong Un, which triggered a risk-off response in the markets.
On the daily chart of the U.S. dollar/Japanese yen (USD/JPY) currency pair we see price trading in a bigger, complex and slow corrective pattern, which is in Elliott wave theory known as a triangle. A triangle has five waves, and each of the five waves has three minor legs, however, one wave in a triangle can always become more complex.
As we head toward the weekend, oil prices have turned sharply negative after starting the week on the front foot. Barring an unexpected rally later on today, oil prices are set to end a six-week winning streak. This would halt a rally that began a few months ago when oil prices found support after signs emerged that the US would reinstate economic sanctions on Iran and as crude output from some OPEC members fell, most notably Venezuela.
Yesterday’s roller coaster ride in the S&P 500 ended very favorably for the bull camp. What began as a solid open at 2730 quickly became a retest to Wednesday’s session low of 2704.50 after the White House announced the cancellation of the North Korea Summit. For us, the key to being a buyer on that pullback was that Treasury prices barely budged.
Yesterday’s FOMC Minutes brought exactly the lightbulb moment we not only expected but discussed at length since their meeting earlier this month. The only problem, how poor Eurozone growth and sentiment data has been. Even though the Federal Reserve has telegraphed that they are willing to let inflation run past their 2% target without forcing a faster pace of rate hikes, the dollar remains elevated.
Crude oil prices are under pressures as the Organization of the Petroleum Exporting Countries (OPEC) and NON-OPEC start laying the groundwork for a production increase and traders take profits ahead of the long holiday weekend.