Market Update by Solidecn.com

[Solid ECN]

AUDUSD


The Australian dollar is one of the worst performing G10 currencies at the beginning of a new week. While there was no major news coming out from Australia over the weekend, there was some worrisome news relating to China - Australia's largest trading partner. A number of large financial institutions - including Goldman Sachs, UBS and Nomura - decided to cut their 2023 GDP growth forecasts for China. Goldman Sachs explained its decision saying that fiscal and monetary stimulus in China will not be enough to generate a strong growth impulse.


China, 2023 GDP growth forecasts


Goldman Sachs: 5.4% vs 6.0% previously
Nomura: 5.1% vs 5.5% previously
UBS: 5.2% vs 5.7% previously


RBA minutes are scheduled for release tomorrow at 2:30 am BST and will be a potential mover for AUD. RBA delivered an unexpected rate hike at its latest meeting and traders will look for a hints on whether this means that more rate hikes are coming. There is a feeling that recent upbeat data as well as the more hawkish stance of other central banks will encourage RBA to deliver another rate hike at July meeting as well.





Taking a look at AUDUSD at D1 interval, we can see that the pair halted an advance after reaching the 0.6885 resistance zone recently. Pair experienced a massive, almost-7% rally in the first half of June and given how steep those gains were, a correction or a period of profit taking cannot be ruled out. However, should the ongoing pullback deepen, the first support level to watch will be zone marked with 38.2% retracement of the upward impulse launched in October 2022.

[Solid ECN]

Oil


Brent (OIL) launched new week's trading with a bearish price gap as new on rising Iranian exports as well as cuts to Chinese growth forecasts created downward pressure on prices. OIL tested 200-period moving average at H4 interval this morning (purple line) but bulls managed to defend the area.

[Solid ECN]

US100


US100 index, currently trading at 15354 points, has shown strong bullish momentum by breaking a significant resistance level at 15220 points seamlessly. This upward movement also led to a break above the upward trending channel, indicating a potential continuation of the bullish trend. The next significant resistance level is around 15654 points. However, traders should be cautious as the recent rally may trigger profit-taking activities. In that case the index may decline to the last consolidation zone between 14500-14600 points.

[Solid ECN]

Bitcoin Below $25,000


The mood of the cryptocurrency market is weak today, with Bitcoin starting to fall after yesterday's Fed decision and slipping from the $26,000 level to $24,800. Unlike the Nasdaq, crypto was unable to make up for the sell-off during Jerome Powell's conference.


Industry portals also point out that Binance's exchange-traded security fund-the so-called SAFU-has suffered significant losses because Binancecoin (BNB) and Bitcoin were the main components of its reserves-that have recently fallen sharply (especially BNB). Since the beginning of June, the value of SAFU was said to have fallen from $950 million to $861 million. The fund is to be used only in extreme situations for the exchange according to WSJ sources the exchange makes sure that its value is at an all-time high. Binancecoin is also losing today and has not been able to stay above $240.







Investors continue to withdraw their funds from the Binance exchange due to regulatory uncertainty and concerns about systemic risk. Since the Fed announcement, nearly one-fifth of the reserves in stablecoins (cryptocurrencies tracking mainly USD, used for purchases) have disappeared from the exchange.





The Bitcoin sell-side risk index is near all-time lows now. The indicator calculates the market's unrealized gains and losses to the so-called realized asset size, i.e. the prices investors paid for the BTC they bought. Relative to the total realized value, the total value of gains and losses is $391 billion, which is historically very low. The low level of the ratio has historically occurred during periods of depleting supply pressure and total market abandonment. In addition, Glassnode reported that the indicator was supported by a low reading of the volume index - RVT.







BITCOIN, D1 interval. The price has fallen below $25,000 and if the level is not recovered relatively quickly a test of the 61.8 Fibonacci retracement, around $21,300, will not be ruled out - in the vicinity of these runs also the so-called Realized Price average, i.e. the average of purchases of all BTC since the beginning of the trading history - this average has served as an important trend indicator in many previous cycles.

[Solid ECN]

USDJPY


USDJPY is on the move today with Japanese yen being the worst performing G10 currency while US dollar is one of the top performers. USDJPY is up almost 1% on the day. USD strengthening is driven by yesterday's FOMC meeting, which in spite of a pause in rate hikes, turned out to be very hawkish. This is because the new dot-plot showed a median rate expectation at 5.6% for end-2023, an increase from 5.1% in March dot-plot. This also means that FOMC members see two more 25 basis point rate hikes this year while market expectations prior to the meeting were for one more hike yesterday or at the July meeting before ending the cycle. Hawkish message sent by Fed led to a major repricing in market expectations with swap market no longer pricing in Fed rate cuts this year.


This hawkish turn from Fed is not only supporting USD but also putting pressure on JPY. This is because it signals that divergence between Fed and BoJ policies will continue to grow. Bank of Japan will announce its next monetary policy decision on Friday but no change to the level of rates or other monetary policy settings is expected.





Taking a look at the USDJPY chart at D1 interval, we can see that the pair is trading in an upward channel. Pair broke above a local high from late-May 2023 and is now trading at the highest level since late-November 2022. USDJPY is approaching a mid-term resistance zone in the 142.00 area. Note that the upper limit of the channel can be found slightly above this resistance.

[Solid ECN]

Gold - Chart of the Day


Gold traded lower yesterday after the publication of CPI data, with its price falling to $1941 per ounce. Today, gold traded calmly as investors await the Fed's interest rate decision later today. While many expect the rates to remain unchanged, some anticipate a more hawkish stance given the high core CPI, prompting some to exit the gold market. This has added to the caution in the market, causing a slide in gold prices.





From a technical standpoint, gold is still viewed as being in a bullish uptrend channel, suggesting also a potential upward movement in the medium time frame. However, recent price action has been rejected several times from a short-term descending trend line, suggesting that gold might be at a crucial turning point. Support is around the 1920 - 1940 area, where the 100-day SMA currently lies. A break below these levels could unfold further bearish momentum. On the upside, if gold can manage to move above the 2000 level, it could suggest a resumption of bullish momentum.

[Solid ECN]

Ripple

Cryptocurrency RIPPLE gains 5% as fintech lawyers await to get access to internal SEC correspondence in court later today. Ripple has been fighting the SEC for nearly 2 years according to which the cryptocurrency is a security, and the company behind it has committed illegal sales. The cryptocurrency has proved surprisingly resilient to the crypto crisis of recent days.

• The dossier due to arrive in court today is expected to include messages exchanged by SEC members after former director Hinman's speech. The one contrary to Gensler's position indicated that cryptocurrencies could be commodities. Potentially inconsistent comments could undermine the SEC's authority and increase Ripple's chances of winning in court.
• The Federal Trade Commission (CFTC) has long been in dispute with the U.S. Securities and Exchange Commission (SEC) over whether cryptocurrencies should be considered commodities or securities. Over the years, there has still been no consistent position on the issue. This regulatory mess could be exploited by lawyers;

A look at the chart

In recent weeks, which have been very weak for crypto, the price of Ripple has managed to rise unexpectedly. The chart below shows the divergence between Binancecoin (yellow chart) testing the December minima, and Ripple - this one has been gaining since late May. In contrast to Bitcoin and most cryptocurrencies. The market is taking a positive view of the chances of winning in court, with the judge allowing evidence of the Commission's internal correspondences into the case despite the SEC's protest.





RIPPLE is climbing in the vicinity of 0.56 USD, and potentially breaking the psychological resistance of previous peaks at 0.57 USD may open the way to 0.68USD where the price may encounter the first significant resistance (past price action).

[Solid ECN]

GBPUSD - Chart of the Day


Economic outlook
The robust labor data suggest that the UK economy is doing better than predicted despite high inflation and rising central bank interest rates. The job report indicates that workers are demanding and receiving pay awards, which, coupled with businesses' higher pricing intentions, risk of a wage-price spiral. As such, the Bank of England may decide to continue raising interest rates to fight inflation.





Post-publication of the labor data, GBPUSD has seen a modest rise. The pair is currently hovering near the highs, although the jump only roughly halves the losses from the previous day. Given that markets have already priced in about 100 bps worth of future rate hikes, this report doesn't significantly change that. Therefore, the gains for the pound may be more limited if solely reacting to the labor data. Additionally, GBPUSD performance will be highly reactive to the upcoming US CPI inflation report and the tone set by the Federal Reserve. The possibility of a future rate hike in July by the Federal Reserve may support dollar and could put a downward pressure on GBPUSD currency pair.

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BTCUSD


Bitcoin is currently consolidating within a range of 25,300 to 26,000. The key support level is at 25,300, which has shown significant reactions in the past few months. If the bullish momentum fails to sustain this level, a potential further decline may be expected.

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Oil


Oil is taking a hit at the beginning of a new week. Brent (OIL) and WTI (OIL.WTI) are trading around 1.5% lower at press time. Recent OPEC actions and announcements provided only a short-term boost for prices and oil quickly resumed pullback. Brent dropped and reached the lowest level since the beginning of June today. There is no strong, clear reason behind the move lower today. However, some news surfaced recently that may support bears today.


Iranian authorities made some upbeat comments on possible agreement between Iran and the West that may lead to a lifting of sanctions on Iranian oil. However, it should be noted that negotiations have been going on for years now and similarly positive comments did not lead to any breakthrough earlier. Apart from that, Goldman Sachs slashed its December 2023 Brent price forecast from $95 to $86 per barrel, citing increased recessionary fears as well as higher output in Iran, Venezuela and Russia as reasons.





Taking a look at OIL chart at H4 interval, we can see that the price launched this week's trading with a bearish price gap and moved lower to test the $74 support zone. At first it looked like bulls may manage to halt sell-off there but selling resumed and OIL slumped below. Brent is quoted in the $73 per barrel area now and trades less than 1% higher month-to-date after gaining as much as 8% MTD earlier. The next support zone to watch can be found in the $72.50 area and is marked with local lows from mid-March, early-May and early-June 2023.