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Weekly Market Analysis: 30 May 2022


What happened in the market last week?

  • The RBNZ announced hike rates by 50bps to 2.00%. 
  • The RBNZ stated that there is a need to hike rates further, with plans to likely see rates near 4% by the end of the year. 
  • Although there were no changes in the latest meeting minutes of the Federal Reserve, Fed Chair Jerome Powell stated that the Fed is likely to continue to hike rates until inflation is under control. 
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Last Week Market Pair Changes

  • Great week for US Indices as NAS100, SP500, and DJ30 made huge gains. NAS100 increased 7.11% , SP500 increased 6.49%, and DJ30 increased 6.13%. Weaker economic data, coupled with early signs that inflation may have peaked, gave investors enough reason to roll back their expectations of how aggressively the US central bank will raise interest rates.
  • The USD Index (USDX) weakened by 1.34% due to poor preliminary GDP results, which dropped below forecast.
  • USOUSD (WTI) set another positive week, rising 3.71% as the European Union agreed to an embargo on Russian oil. This move has increased the demand for non-Russian oil, pushing oil prices further.
  • Gold produced a positive week after rising as much as 0.35% due to a slight moderation in market expectations of Fed monetary policy for next year and a weaker US dollar.
  • Several major currencies strengthened after being pushed by the weakening US Dollar. EURUSD was up 1.70%, AUDUSD was up 1.63%, and GBP was up against the USD by 1.23%.

(All data taken from MT4 VT Markets)

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What to focus on this week?

This week, investors will pay special attention to Friday’s release of US nonfarm payrolls data for May, with expected strong showings in the labour market.

Economists are forecasting the economy added 320,000 jobs in May, a decrease from April’s addition of 428,000 jobs — the weakest increase in employment in a year. As a result of labour shortage, it is anticipated that wage growth will continue to be robust, and unemployment rate will decline to 3.5%.

The Bank of Canada (BoC) is projected to follow an aggressive path to tame soaring inflation, which hit a 3-decade high of 6.8% in April, way above the central bank’s 1-3% range.

After April’s 50bps hike, its biggest single hike in more than 2 decades, BoC Governor Tiff Macklem said interest rates may need to go above the neutral range for some time to get inflation back on target. The BoC is likely to raise its overnight rate by another half a percentage point at its June 1 meeting, taking its official cash rate to 1.50%.

In view of worries regarding the impact of rising prices and supply chain challenges, ISM statistics on manufacturing and service sector activities will also be in the spotlight.

June kicks off with Australia’s Q1 GDP report on Wednesday.

Technical Analysis

USD Index

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The USD index (USDX) fell again last week and managed to break our immediate support at 102.46.

This week, we see the potential for USDX to continue weakening to pursue the 101.10 level before waiting for the results of the nonfarm data on Friday.

The support level in the next weekly timeframe is at the 99.78-100.26 range, while the resistance level is again at the 102.68-103.20 area, with the highest resistance at 104.65. 

Meanwhile, on the 4-hour timeframe, the closest support level is 101.50, and the resistance level is 102.35.

Resistance: 102.35, area 102.68-103.20

Support: 101.50, 101.10, area 99.78-100.26


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Last week, Gold was flat between $1831 and $1877, and failed to break through both levels.

This week, there is a possibility that Gold will try to rise again through $1877, likely dependent on Friday’s nonfarm data.

On the weekly timeframe, the closest resistance levels are at $1854 and $1877, with support levels at $1831 and $1782.

On the 4-hour timeframe, the closest support is at $1832-$1836, with resistance at $1858-$1861.

Resistance: area $1858-$1861, $1877

Support: area $1832-$1836, $1782