UK annual inflation declined below double digits for the first time since August 2022, falling from 10.1% in March to 8.7% in April. While the core inflation, which excludes food and energy, jumped to 6.8%, the highest since March 1992 and above well forecasts of 6.2%. Food inflation also remained strong, at 19.1% in April, compared to 19.2% the month before. On a monthly basis, CPI rose by 1.2% in April 2023.

The British pound initially bounced after the release of CPI data but erases all its early gains against other major currencies. The downside pressure was also driven by mixed remarks from the Bank of England (BOE) Governor Andrew Bailey. GBPUSD reversed from the intraday highs and retreated back to below 1.2400. Technically, 1.2370 remain the key support area to watch. A clear breakdown of this support could open space for further declines to 1.2330 and then 1.2260. On the flip side, 1.2480 remains the key resistance area to focus on.

EQUITIES

US stock futures remain under pressure ahead of the FED minutes. The Fed will release the minutes of its May meeting today. The minutes are expected to provide more details about how the FED policymakers view the inflation pressures and any hints about a possible pause in interest rate hikes. Investors should also close pay attention today to corporate earnings with some of the biggest companies reporting their earnings. Nvidia, XPeng and Snowflake are amongst those reporting the last quarter's financial results today.

OIL

Crude oil prices extend the weekly gains after the release of API crude inventory data, and the focus shifts to the release of EIA inventory data and FOMC meeting minutes. The API crude inventory data showed the US crude inventories declined by about 6.8 million barrels last week, defying forecasts for a 0.525 million increase.

CURRENCIES

In the currency market, the New Zealand dollar plunged against the US dollar and other currencies after the RBNZ decision. The Greenback, in terms of the US Dollar Index (DXY), remains steady against the Euro and British pound and the further direction will depend on FOMC meeting minutes which will release later today. In the short-term perceptive, the immediate bias will remain bullish for DXY as long as prices exceed 103.

GOLD

The precious metal trades flat, however, today could see increased volatility spikes after the release of the FED meeting minutes. As of this writing, the metal trades above $1975. The overall momentum still remains mixed, the traders should closely monitor the FED minutes today and PCE inflation data on Friday to get a clear picture of the metal's long-term direction.

Economic Outlook

On the data front, the Reserve Bank of New Zealand raised its overnight cash rate by 25 basis points to 5.5% level, its highest level in more than 14 years. The central bank forecasts that the official cash rate will peak at the current level of 5.5% but will need to remain contained until at least mid-2024 to ensure inflation returns to the 1-3% target band.

Moving ahead today, the important events to watch:

US – EIA crude inventories: GMT – 14:30

US – FOMC minutes: GMT – 18.00

Technical Outlook and Review

EURUSD: For today, the key support level is located at 1.0760. In case it breaks below this level, it will head towards the next support level which is located near 1.0710. On the upper side, If the currency pair regains strong upside momentum and presses back above 1.0840 then the key resistance area to watch is 1.0910.

The important levels to watch for today: Support- 1.0760 and 1.0730 Resistance- 1.0800 and 1.0840.

GOLD: The metal needs to stay above 1990; otherwise. 1950 and 1935 may be visible soon. On the upper side, 1990 is the key resistance zones to watch, if the metal breaks and close above this area then the next resistance area to watch is around 2005/08

The important levels to watch for today: Support- 1965 and 1950 Resistance- 1985 and 1993.

Quote of the day – “When you genuinely accept the risks, you will be at peace with any outcome.” – Mark Douglas.