Spreadex Market Update
Jobless Claims Spike and Inflation Concerns Shake Financial Markets
Weak Jobless Numbers Bolster British Pound
The latest weekly survey revealed an unexpected rise in initial jobless claims, reaching the highest level since October 2021, with 261K claims. However, continuing claims fell below expectations, indicating an improving labour market. These mixed results prompted speculations that the Federal Reserve might postpone a rate hike in the next meeting, leading to a 1% surge in the British pound against the US dollar. GBP/USD reached $1.2560, facing resistance at $1.2625, while $1.25 remained a solid support level.
Eurozone Officially Enters Recession
Following a revision of German Q1 GDP figures, the Eurozone confirmed its entry into a technical recession, with Q1 GDP revised down to -0.1%. Annual growth also experienced a downward revision from 1.3% to 1.0%. The euro strengthened against the US dollar, rising by 0.77% to $1.0782, primarily due to a weaker dollar. The next resistance for EUR/USD is anticipated above $1.08 at $1.0870, while $1.07 serves as a solid support level.
Swiss National Bank Urges Inflation Reduction
Thomas Jordan, the head of the Swiss National Bank, expressed concerns about inflation, highlighting its persistence and the potential for second and third-round effects, such as tighter monetary policy and a weaker labour market. Emphasizing the urgency of addressing inflation, Jordan's comments resulted in a significant drop of 1.20% in USD/CHF, falling to 0.8988. Further downside risks are expected, with 0.8945 serving as the next potential support level.
US-Iran Deal Rumours Impact WTI Oil Prices
During the trading session, oil prices experienced volatility due to rumours of a possible temporary deal between the US and Iran regarding uranium enrichment and oil exports. This speculation caused a brief dip in crude oil prices to $69 per barrel, but prices recovered after the White House refuted the rumours. The day concluded with oil prices closing near $71, slightly below the opening price of $72.50 per barrel. Breakout levels for oil prices include $74.70 and $68.60.
China's PPI Indicates Low Demand
China's Producer Price Index (PPI) for May reported a decline of 4.6% compared to the expected drop of 4.3%, marking the lowest reading since 2016. This decrease can be attributed to softer commodity prices and slowing manufacturing activity. Consequently, USDCNY started to climb higher after the release, with the pair remaining at risk of further declines if it trades below the high of 7.1567.
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