Global markets made slim gains on Wednesday as investors waiting for U.S. inflation data that might influence the Federal Reserve’s decision on whether to act more aggressively. Economists predict an annual increase of 8.1 percent compared to the 8.5 percent rise recorded in March.
While China’s latest CPI data showed the annual inflation rate accelerated to 2.1% last month from 1.5% in March, above market forecasts of 1.8. On a monthly basis, consumer prices climbed 0.4 percent.
US futures trades steady on Wednesday supported by the positive comments from US president Joe Biden. Biden said the administration is discussing whether to drop the additional tariffs on Chinese imports imposed during the Trump administration. "We're discussing that right now. We're looking at what would have the most positive impact," Biden said.
Crude oil prices are struggling to find upside momentum pressured by coronavirus lockdowns in China and growing recession risks focus shifted to the EIA crude inventory data. Meanwhile, the API inventory data showed the US crude inventories increased by 1.618 million barrels in the week ended May 6th of 2022, following a 3.479 million barrels slump in the previous week.
In the currency market, the US dollar remains steady as Investors have been buying into the safe-haven currency as global market sentiment remains cautious. However, the future direction of the USD will depend on today’s Inflation report. On the other hand, the Australian dollar slightly recovered from a new 22-month low following the comments from US president Joe Biden.
The safe-haven metal rebounded back to near the key resistance area of $1850 ahead of the US CPI data. The metal regains upside momentum after China’s latest inflation rate showed prices are rising faster than expected.
On the data front, Inflation in Germany hit a new record high in April, pushed higher by food and energy prices. Annual inflation grew to 7.4% from 7.3% in March. On a monthly basis, consumer prices went up 0.8 percent, easing from a 2.5 percent gain in March, which was the highest reading since October 1951.
Moving ahead today, the important events to watch:
US – CPI: GMT – 12.30
US – EIA crude inventories: GMT – 14.30
Worldwide, more than 517 million people have been confirmed infected and more than 6.25 million have died. The United States has confirmed over 81 million cases and has had more than 997,000 deaths from COVID-19, the highest total in the world.
Technical Outlook and Review
EURUSD: The currency pair needs to stay above 1.0600; otherwise. 1.0500/1.0470 may be visible soon. On the upper side, 1.0640 is the key resistance zones to watch, if the pair breaks and close above this area then the next supply level to watch is around 1.0700/40.
The important levels to watch for today: Support- 1.0500 and 1.0470 Resistance- 1.0600 and 1.0650.
GOLD: The precious metal remains under pressure a clear breakdown of the support at $1830 could open space for further declines while only recovery to $1,855 would reverse the short-term negative trend.
The important levels to watch for today: Support- 1840 and 1826 Resistance- 1855 and 1865.
Quote of the day - "When I get together with other traders and they start exchanging war stories about different trades, I have nothing to say. To me, all our trades are the same." ― Larry Hite.