The early Asian trading session today saw the release of the first quarter employment report. New Zealand’s unemployment rate fell slightly to 4.2% as forecast from 4.3% previously.
The quarterly employment change fell 0.2% missing forecasts. Elsewhere, Canada’s monthly GDP report on Tuesday showed a 0.1% decline following a 0.3% increase in January. Most of the Asian and European markets are closed today on account of labor day bank holiday.
Euro Gains As GDP Advances
The common currency outshone the USD as the preliminary GDP reports were positive. Flash GDP estimates for the first quarter rose 0.4%, beating estimates of 0.3% and up from a 0.2% increase previously. The USD remained on the back foot despite some upbeat data. The Conference Board’s consumer confidence report saw the index rising to 129.2 while pending home sales gained 3.8%.
Can the EURUSD Break-Out from the Resistance?
The euro currency is holding steady as it advanced to 1.1226. Establishing resistance here could see the common currency drifting sideways. The lower support is formed at 1.1140. Within this range, the EURUSD could potentially extend the declines lower for another retest of the support. To the upside, in the event that the euro breaks higher, 1.1280 will be the next main resistance level of interest.
Oil Prices Muted due to Venezuela Coup Attempt
Oil prices remained muted amid reports of an attempted coup to overthrow President Maduro. Many world leaders also joined in, voicing support for the opposition leader. While oil prices briefly spiked, they settled lower on the day. The API’s crude oil inventory report showed a build of 6.81 million barrels keeping a lid on the gains.
Crude Oil to Maintain the Sideways Range
Crude oil briefly tested the resistance area of 64.65 on Tuesday before giving up the gains promptly. Price action remains trading sideways within 64.65 resistance and 62.85 support. A breakout from this support is required for oil prices to continue the correction. A close below 62.85 will lead to further declines toward 60.33 level. However, we expect to see another retest to 64.65 resistance ahead of the declines.
Gold Steady Ahead of Fed Meeting
Gold continued to trade within last Friday’s range as price remained largely muted. The FOMC will be concluding its two-day Fed meeting today. We expect no changes to the interest rates but the markets are pricing for at least one rate cut this year. President Trump tweeted for the Fed to cut rates by 1% as the FOMC meeting was underway.
XAUUSD Remains Range Bound for the Moment
Price action in gold suggests that the sideways range established in the medium term is likely to hold. The resistance level is at 1285 while support is established at 1273. A breakout from this range is essential for gold to further establish the direction. The long term trend remains to the downside. A close below 1273 is required to push gold prices lower. To the upside, above 1285, the 1296 level comes into the picture.