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Daily Pivots: (S1) 0.8983; (P) 0.9012; (R1) 0.9031; More…

Intraday bias in USD/CHF remains neutral first as consolidation from 0.9049 is extending. Further rise is mildly in favor as long as 0.8956 support holds. Above 0.9049 will affirm the case that corrective fall from 0.9223 has completed at 0.8825. Further rally would then be seen to 0.9157 resistance next. However, firm break of 0.8956 will bring retest of 0.8825 support instead.

In the bigger picture, focus remains is now on 0.9223/9243 resistance zone. Decisive break there would complete a head and shoulder bottom pattern (ls: 0.8551; h: 0.8332; rs: 0.8825). That would indicate larger bullish trend reversal. Nevertheless, rejection by 0.9223/43 will keep medium term outlook neutral at best, for more range trading between 0.8332/9243 first.

Daily Pivots: (S1) 1.2744; (P) 1.2756; (R1) 1.2772; More...

Intraday bias in GBP/USD remains on the upside for the moment. Rise from 1.2612 is in progress for retesting 1.2859 high. Firm break there will resume whole rally from 1.2298. On the downside, though, below 1.2733 minor support will dampen the immediate bullish case, and turn intraday bias neutral again first.

In the bigger picture, price actions from 1.3141 medium term top are seen as a corrective pattern that is still in progress. Break of 1.2445 support will confirm that another falling leg has started and target 1.2036 cluster support again (38.2% retracement of 1.0351 (2022 low) to 1.3141 at 1.2075. Nevertheless, break of 1.2892 resistance will argue that larger up trend from 1.0351 is ready to resume through 1.3141.

Daily Pivots: (S1) 1.0791; (P) 1.0804; (R1) 1.0825; More....

Intraday bias in EUR/USD remains on the upside for the moment. Rise from 1.0665 is in progress to 1.0915 resistance first. Firm break there will resume whole rebound from 1.0601. Nevertheless, on the downside, below 1.0775 minor support will turn intraday bias neutral first.

In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern that's still in progress. Break of 1.0601 will target 1.0447 support and possibly below. On the upside, firm break of 1.0915 resistance will start another rising leg back to 1.1138 resistance instead.

Dollar weakened broadly after the release of the US Non-Farm Payroll report, though the initial selloff was far from decisive. June's employment data showcased a robust labor market with near-average job and solid earnings growth , coupled with just a slight uptick in unemployment rate. However, significant downward revisions to April and May's job growth numbers (-111k) suggest the labor market may not be as robust as initially reported. These mixed signals add some weight to the argument for a Fed rate cut in September, but they are not conclusive enough to cement such expectations.

At the same time, Canadian Dollar faced pressure after weak employment data for June revealed contraction in jobs and a spike in the unemployment rate. Meanwhile, Sterling continues to ride high, maintaining broad firmness as political uncertainties clear up following the UK general elections, with Labour's landslide victory injected a sense of stability. Yen is attempting a recovery but lacks consistent buying momentum. Euro is mixed as traders look forward to French election runoff on Sunday.

In Europe, at the time of writing, FTSE is up 0.01%. DAX is up 0.82%. CAC is up 0.37%. UK 10-year yield is down -0.039 at 4.164. Germany 10-year yield is down -0.010 at 2.578. Earlier in Asia, Nikkei fell -0.00%. Hong Kong HSI fell -1.27%. China Shanghai SSE fell -0.26%. Japan 10-year JGB yield fell -0.0126 to 1.070.

US NFP rises 206k in Jun, but May and Apr revised sharply lower

US Non-Farm Payroll employment increased by 206k in June, above expectation of 180k. Growth was slightly lower than average monthly gain of 220k over the prior 12 months.

However, prior month's growth was revised sharply lower from 272k to 218k. April's figure was also revised sharply lower by -57k to 165k. That is, April and May's combined downward revision was -111k.

Unemployment rate ticked up from 4.0% to 4.1%, above expectation of holding steady at 4.0%. Unemployment rate also rose slightly from 62.5% to 62.6%.

Average hourly earnings rose 0.3% mom, matched expectations. Annual hourly earnings growth slowed from 4.0% yoy to 3.9% yoy.

Canada's employment falls -1.4k in Jun, unemployment rate rises further to 6.4%

Canada's employment contracted -1.4k in June, much worse than expectation of 25.0k growth.

Unemployment rate rose from 6.2% to 6.4%, above expectation of 6.3%. It has now risen 1.3% since April 2023. Employment rate fell -0.2% to 61.1%.

Total hours worked were down -0.4% mom, up 1.1% yoy. Average hourly wages rose 5.4% yoy, up from May's 5.1% yoy.

Eurozone retail sales rises 0.1% mom in May, EU up 0.1% mom too

Eurozone retail sales volume rose 0.1% mom in May, below expectation of 0.2% mom. Sales volume, increased by 0.7% mom for food, drinks, tobacco, and by 0.4% mom for automotive fuel in specialized stores. Sales volume fell -0.2% mom for non-food products (except automotive fuel).

EU retail sales also rose 0.1% mom. Among Member States for which data are available, the highest monthly increases in the total retail trade volume were recorded in Denmark (+2.3%), Lithuania (+1.8%) and Luxembourg (+1.7%). The largest decreases were observed in Slovakia (-1.0%), Ireland (-0.9%), Bulgaria and Malta (both -0.8%).

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0791; (P) 1.0804; (R1) 1.0825; More....

Intraday bias in EUR/USD remains on the upside for the moment. Rise from 1.0665 is in progress to 1.0915 resistance first. Firm break there will resume whole rebound from 1.0601. Nevertheless, on the downside, below 1.0775 minor support will turn intraday bias neutral first.

In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern that's still in progress. Break of 1.0601 will target 1.0447 support and possibly below. On the upside, firm break of 1.0915 resistance will start another rising leg back to 1.1138 resistance instead.

Economic Indicators Update

Canada's employment contracted -1.4k in June, much worse than expectation of 25.0k growth.

Unemployment rate rose from 6.2% to 6.4%, above expectation of 6.3%. It has now risen 1.3% since April 2023. Employment rate fell -0.2% to 61.1%.

Total hours worked were down -0.4% mom, up 1.1% yoy. Average hourly wages rose 5.4% yoy, up from May's 5.1% yoy.

Full Canada employment release here.

US Non-Farm Payroll employment increased by 206k in June, above expectation of 180k. Growth was slightly lower than average monthly gain of 220k over the prior 12 months.

However, prior month's growth was revised sharply lower from 272k to 218k. April's figure was also revised sharply lower by -57k to 165k. That is, April and May's combined downward revision was -111k.

Unemployment rate ticked up from 4.0% to 4.1%, above expectation of holding steady at 4.0%. Unemployment rate also rose slightly from 62.5% to 62.6%.

Average hourly earnings rose 0.3% mom, matched expectations. Annual hourly earnings growth slowed from 4.0% yoy to 3.9% yoy.

Full US NFP release here.

The UK national election on Thursday propelled the Labour Party to a sweeping victory and Labour leader Keir Starmer will become the next Prime Minister. In the six-week election campaign of the election, Labour had a massive lead in the polls and there was no doubt it would win a huge majority in parliament. The latest update indicates that Labour has won 412 seats and the Conservatives had plunged to 121 seats. This gives Labour a massive 160-seat majority in the House of Commons.

The Labour victory ends fourteen years of Conservative rule and with power comes the responsibility to revive the weak UK economy, which fell into a recession in the second half of 2023. Productivity and wages have been stagnant and the national debt is now larger than the size of the economy. Inflation has finally dropped to the 2% target but the Bank of England hasn’t lowered interest rates and that has taken a toll on businesses and households.

How will the financial markets react?

Traditionally, the Conservatives have been more business-friendly than Labour. The latter have favoured raising taxes on the highest earners and large corporations in order to fund public services and reduce inequality. Labour has, however, shifted more to the centre and Labour leader Keir Starmer has pledged to show fiscal restraint in order to lower the UK’s massive debt levels. If as Prime Minister Starmer delivers on this promise, it would preclude higher taxes or raising government spending.

The financial markets will be watching carefully but investors didn’t shown any jitters ahead of the Labour landslide. The FTSE 100, the benchmark UK stock market index, is up 0.68% this week and the British pound has climbed 1.1% against the US dollar this week. With a huge majority in parliament, Starmer will have an easier time pushing through legislation, which means that political uncertainty should not be a factor that the markets have to worry about.

2024 has every chance of being the biggest election year, with well over half of the world’s population going to the polls. The next chapter in this saga is today, with the announcement of the results of the UK general elections.

The results were generally in line with expectations without causing significant market volatility on the publication of the first results. However, Labour coming to power after 14 years of Conservative dominance will shift priorities somewhat. It could be good news for the Pound and the outperformance of the FTSE250 over the FTSE100 due to a greater bias towards the local market.

The Tories’ main slogan, especially in the early years after the financial crisis, was austerity. Labour should be more focused on reducing income stratification through incentives for the poor and higher taxes for the rich.

Such an environment poses pro-inflation risks, which should force the Bank of England to hold the rate at a higher level than previously thought.

This is bullish for the Pound, which has lost over half of its value against the Dollar from its peak in 2007 to a bottom in September 2022. GBPUSD has been testing the resistance of this long-term descending channel in recent months. Changes in Britain’s domestic politics may well be a factor in favour of the bulls in this battle.

Technically, the GBPUSD bullish bias will be confirmed with consolidation above 1.2850 – the area of this year’s and last year’s highs. The pound will also have a chance to recoup most of its losses to the euro after Brexit, as a break of EURGBP support at 0.833 (1.20 on GBPEUR) could trigger a repositioning of the exchange rate to the 0.71 (1.40) area.

While the expensive pound could challenge the valuations of large global companies in the FTSE100, pro-inflationary sentiment and the expected benefits to the economy from rising expenses promise to improve the position of the FTSE250, dominated by local companies. Separate market hopes are pinned on a housing recovery with the arrival of Labour. Accelerating house price growth and a revival in sales often correlate strongly with consumer spending trends, helping to accelerate the wider economy.

Gold price rose further on Friday morning and pressuring important technical barriers ahead of release of key US NFP report.

The metal rose around 1.7% for the week so far, benefiting from weaker dollar on soft US macroeconomic data, which point to a slowing US economy and boost bets for possible Fed rate cut in September.

Economists expect that the US economy have added 191Knew jobs in June, compared to 272K increase previous month, with weaker than expected June NFP figure to add to recent signals and further lift metal’s price.
Conversely, above consensus June numbers would signal resilience of the labor market and fade expectations for rate cut which would make the yellow metal less attractive.

Technical studies remain overall bullish on daily chart, but strong obstacles at $2368/71 (50% retracement of $2450/$2286 / daily cloud top) need to be cleared to signal continuation of recovery from the higher base at $2290 zone and expose targets at $2387/$2400 (Fibo 61.8% / psychological).

Initial support lays at $2349 (broken Fibo 38.2%) followed by $2337/30 pivots (converging daily Kijun/ Tenkan-sen), loss of which will be bearish.

Res: 2371; 2378; 2387; 2400.
Sup: 2329; 2337; 2330; 2319.

Gold prices have continued their ascent, with a troy ounce of the precious metal reaching USD 2363. This rise is primarily fuelled by anticipated US employment data for June, which could significantly influence the Federal Reserve's rate decisions.

Recent US economic indicators, including a contraction in the service sector and weaker-than-expected private sector employment figures from ADP, have painted a dovish picture regarding the Fed's upcoming monetary policy moves. These factors contribute to the prevailing sentiment that the Fed might lower interest rates, with market probabilities favouring a cut by September currently standing at 73%.

Furthermore, ongoing political uncertainties in Europe, especially in France and the UK, affect the EUR exchange rate, thereby impacting the USD and indirectly influencing gold prices. Additionally, persistent geopolitical tensions in the Middle East continue to drive demand for safe-haven assets like gold.

Technical analysis of XAU/USD

Gold is currently undergoing a correction that is anticipated to conclude at the level of 2370.70. Post-correction, the market might experience a decline towards 2295.00. A break below this could extend losses to 2222.22, setting a local target. This bearish potential is supported by the MACD indicator, which, although above zero, shows signs of peaking.

On the hourly chart, gold formed a tight consolidation around 2345.70 and breached the 2366.26 level upward, setting a local high. A corrective move down to 2345.70 is likely, followed by a potential rise to 2370.70, completing the current correction phase. Subsequently, the market might prepare for a new downtrend. The Stochastic oscillator, currently above 80, suggests an impending downturn, reinforcing the likelihood of a corrective decline.

Investors and traders will closely monitor the release of the US jobs report, given its potential to significantly sway Federal Reserve policy and, by extension, gold prices.