Fed’s meeting minutes, Nvidia’s earnings report and UK CPI rates

The USD remained relatively unchanged against its counterparts yesterday as the market focuses on the release of the Fed’s last meeting minutes. The intentions of the bank have been a key driver over the past months, and with the cooling of inflation last month, market expectations for the bank to start cutting rates rather earlier than later, tend to grow. Should the document show that Fed policymakers are still uncertain on whether inflation has returned on a path towards the bank’s 2% inflation target, which would imply a delay of any rate cuts, we may see the USD gaining. On the contrary, should the bank sound ready to start cutting rates, we may see the USD weakening substantially. Please note that the release may have a wider effect beyond the FX market with US stockmarkets and gold’s price also being possibly affected.

On a technical level, we note that the USD edged a bit higher against the JPY yesterday, yet the overall big picture of a relative stabilisation of the pair just below the 156.55 (R1) resistance line, seems to be verified. The RSI indicator has risen above the reading of 50 implying some bullish predisposition of the market, yet still remains unconvincing for the bulls intentions. Hence we tend to maintain our bias for the sideways motion to continue for the time being. For a bullish outlook we would require USD/JPY to clearly break the 156.55 (R1) resistance line and start aiming for the 158.35 (R2) resistance level. On the flip side a bearish scenario seems to be remote, yet should be covered, thus for a bearish outlook we would require the pair to drop break the 153.80 (S1) support line and take actively aim if not breach the 151.90 (S2) support base.

On the other hand, Wall Street today may be expecting a blowout earnings report from Nvidia (#NVDA), with its stock price nearing record high levels once again, as investors look for clues pointing towards the AI chipmaker’s ability to maintain its explosive growth and stay ahead of rivals. Yet given that the rally of US stock markets relies heavily on the prospects of AI and microchips, the release of Nvidia’s earnings report, which by the way is due after the closing hours, is given a wider perspective with some analysts highlighting the possibility a renewal of the rally of US stock markets, should the figures reported by the company be substantially better than expected, generating optimism among market participants.

Across the pond, we note that the UK’s CPI rates for April slowed down yet less than expected. The release on the one hand, may have provided some support for the pound as the market was forced to reposition itself, yet we note that the slowdown despite being narrower than consensus is still substantial and may allow the BoE to start easing its monetary policy.

GBP/USD remained relatively unchanged yesterday, yet during the early European session today tended to move more decisively towards the 1.2760 (R1) resistance line. We tend to maintain our bullish outlook for the pair as long as the upward trendline guiding the pair since the 22 of April remains intact and given that the RSI indicator has neared the reading of 70, implying a strengthening bullish sentiment among market participants. Should the bulls maintain control over the pair we may see cable breaking the 1.2760 (R1) resistance line and take aim for the 1.2890 (R2) level. For a bearish outlook, the bar for GBP/USD is set pretty high as the pair has to drop break the prementioned upward trendline in a first signal of an interruption of the upward movement, yet also break the 1.2600 (S1) support line, taking aim of the 1.2480 (S2) barrier.

その他の注目材料

Today we get the US existing home sales for April and the weekly EIA crude oil inventories figure. On the monetary front, ECB President Lagarde, BoE Deputy Governor Breeden, Chicago Fed President Goolsbee, Riksbank Governor Thedeen and RBNZ Governor Andrian Orr are scheduled to speak. During tomorrow’s Asian session, we get New Zealand’s Volumes of retail sales for Q1, as well as Australia’s and Japan’s preliminary PMI figures for May.