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KCM Trade’s Tim Waterer: Financial Markets Taking a Breather

June 7, 2023

The financial markets are taking a chill pill this week. We're in this funky period where all that debt ceiling drama has come and gone, especially with the FOMC meeting happening only in the next week. So, the markets are just coasting along without any major vibes swinging them.

But hold up, the Aussie Dollar isn't just sitting idle, my friends. The AUD has found its groove again with the RBA raising the interest rates, pushing that benchmark rate above 4%. The AUDUSD rate's making moves toward that groovyUS$0.67 level and today it's consolidating recent gains, even though the Australian GDP isn't looking so hot. The technical vibes look pretty fly for the AUDUSD rate, especially if it can break through that resistance atUS$0.6680. And check it, RBA Governor Philip Lowe's dropping hints about more rate hikes on the horizon, attracting buyers who dig that sweet yield outlook for the currency.

Today's Chinese trade balance data put a bit of a damper on the market's mood. China's May exports were down 7.5% YoY (compared to an expected decrease of only 0.4%), and imports were down 4.5% (versus an expected decrease of 8%). The sluggish Chinese export scene got investors sweating, but the thought of some PBOC stimulus softened the blow.

Talking oil, the price took a dip after riding the wave of those new Saudi production cuts. The OPEC+ meeting gave the market some clarity on the supply side, but it's the demand side that's still got folks wondering. The lack of oomph in the Chinese economy is messing with the oil price, and traders are also weighing the impact of higher interest rates sticking round if the FOMC goes that route.

Gold on the other hand is keeping it steady. The USD's hype train from May seems to have hit a plateau, and the spot price is staying put below that resistance level 'round $1970. It's like a barrier to any more upsides for now.US treasury yields have cooled off, letting the gold price find some balance. But the demand for that safe-haven action has chilled out a bit, which isn't helping gold's upward ambitions.




All in all, traders are just biding their time before the next Fed meeting. So, while there's a laid-back vibe in the air right now, it won't belong before everyone's focused on those US interest rates and the FOMC meeting next week.

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