Weak AUD, Bullish Price Action On Gold, Strong Equities

The new quarter started just like the previous one ended – with strong equity markets that encourage a risk-on movement across financial assets. However, the second quarter of the year may prove to be interesting because some divergences may form. 

As usual, at the start of each month, the Reserve Bank of Australia (RBA) reveals its monetary policy. It chose to do nothing this time, although it emphasized its accommodative stance despite a pick-up in global trade.

The American stock market indices remain elevated, with the Nasdaq100 recovering the lost ground and trading above 13,600 points, while the Dow Jones holds above 33,400 points. The bullish wave reached Europe, with the FTSE100 trading above 6,850 points and the German Dax index reaching a new all-time high literally every day.

Gold holds above $1,700 and appears to have formed a double bottom. Should we see more continuation and a break of the horizontal resistance, it may squeeze all the way back to $1,850 and more.

Oil found resistance above $60 and now trades in retreat. Should it clear $58 to the downside and more pressure is likely in short to medium term.

Daily Analysis

The day ahead marks the start of G20 meetings – always an important event for financial markets. In Europe, the Services PMIs will show the state of the services sector, if it improved or not in the last month.

Later in the trading day, the Ivey PMI in Canada is important for CAD traders, and the day will end with the FOMC Minutes. Out of all the events listed below, the FOMC Minutes will trigger some volatility, as these are the minutes that refer to the meeting where the most recent staff projections were announced.

Markets to Watch

Gold, AUDUSD, GBPUSD – markets in focus today.

Gold

Gold found important support in the $1,675 area and bounced twice from there. Effectively, the price action suggests a double bottom is in place, and the measured move points to $1,800 or even more. Currently, the price of gold faces stiff horizontal resistance at the horizontal neckline.

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Disclaimer: None of the content in this article should be viewed as investment advice or a recommendation to buy or sell. Past performance/statistics may not necessarily reflect future ...

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