The USD Is lower to kickstart the North American session today. The EURUSD (up 0.34%) and the GBPUSD (+0.49%) are leading the way. The USDJPY is down modestly at -0.02%. The markets are reacting to modestly lower yields, lower oil and higher stocks as the formula for a lower greenback. Less tension in the middle east is a catalyst. In the video above, I talk about the move and put you in touch with the key levels in play technically. What is the short term bias and why, where are the targets and the risks for your trading. Be aware. Be prepared as the news headlines require you to know where the bias shifts either to more bullish or more bearish for your trading pair.
As mentioned, U.S. Treasury yields are starting the day modestly lower as traders unwind some of the energy-driven inflation fears. Crude oil is down $1.60 to $89.70, slipping back below the key $90 level, which is helping ease concerns about a renewed inflation surge and reducing some of the pressure on fixed-income markets ahead of tomorrow’s CPI report.
- 2-year yield: 4.141%, down 1.7 basis points
- 5-year yield: 4.273%, down 0.8 basis points
- 10-year yield: 4.548%, down 1.2 basis points
- 30-year yield: 5.029%, up 0.5 basis points
The move lower in yields is relatively modest, suggesting traders are reluctant to make large bets ahead of Wednesday’s CPI release. While lower oil prices are providing some relief, the market remains focused on whether inflation data will validate the recent shift toward pricing in a more hawkish Federal Reserve outlook.
US stocks are higher on relief and hopes for a moon mission when the SpaceX IPO will take off:
- Dow +90 points
- S&P up 28 points
- Nasdaq up 214 points
Outside of the Treasury and stock market, price action is showing
- Gold: $4,340.01, up $10.29 or 0.24%. The precious metal is recovering modestly as lower yields provide some support, although gains remain restrained ahead of tomorrow’s CPI report. The price of gold broke below its 200 day MA on Friday and remains below that MA level at $4412.14. The price will need to extend back above that MA to give the buyers more control.
- Silver: $68.54, up $0.41 or 0.60%. Silver is modestly outperforming gold, extending higher after breaking and failing on a move below its 200 day MA yesterday at $67.149. The low price today has found willing buyers against that area keeping the buyers hopes in place (the low was at $67.46)
- Bitcoin: $62,597, down $465 or 0.74%. The cryptocurrency is trading lower in early dealings, giving back a portion of recent gains as traders remain cautious ahead of key U.S. inflation data and the implications for Federal Reserve policy.
On the economic calendar today, traders will focus on U.S. trade data for April and existing home sales for May ahead of this week’s key inflation report.
The U.S. trade deficit is expected to narrow to -$56.0 billion from -$60.3 billion in March, while existing home sales are forecast to edge higher to 4.07 million annualized units from 4.02 million previously. Final Wholesale inventories will also be released with the expectations of 0.5% (same as prelim) vs 1.5% last month.
However, the main event remains Wednesday’s Consumer Price Index report due at 8:30 AM ET. Economists expect headline CPI to rise 0.5% month-over-month, lifting the annual rate to 4.2% from 3.8%, while core CPI is also expected to increase 0.3% on the month, pushing the year-over-year rate to 2.9% from 2.8%. The inflation data will be closely scrutinized for signs that higher energy costs and a resilient labor market are beginning to generate renewed price pressures outside of energy. With markets increasingly pricing the possibility of at least one additional Fed rate hike this year, the report could play a pivotal role in shaping interest rate expectations and broader market sentiment.
NOTE; The BOC rate decision on Wednesday too and the ECB decision and US PPI on Thursday is a look ahead.
Another key event this week is the highly anticipated SpaceX IPO, which is expected to price on June 11 and begin trading on the Nasdaq on June 12 under the ticker SPCX. The offering is targeting a record $75 billion capital raise at a valuation of roughly $1.75 trillion, which would make it the largest IPO in history and immediately place SpaceX among the ten most valuable publicly traded companies in the world.
Investor demand has been exceptionally strong, driven by SpaceX’s dominance in commercial space launches, the rapid growth of its Starlink satellite internet business, and enthusiasm surrounding its AI and data infrastructure ambitions
