BoC’s hikes by 25 basis points, hinting that more hikes are to come

In yesterday’s American session the Bank of Canada hiked by 25 basis points reaching 22-year highs. However, this did not come as a shock to traders, as analysts have anticipated a near equal probability between the bank hiking and remaining on hold. Furthermore, the comments made by the bank that “concerns have increased that CPI inflation could get stuck materially above the 2% target” appear to hint that there is a possibility that the bank may continue hiking interest rates in the future. During today’s Asian session, we highlight the release of the Japanese GDP rate for Q1, which came in higher than expected. The increase from 0.1% to 0.7%, may provide support for the Yen, yet may underscore an unwillingness to move await from the banks ultra loose monetary policy. Hence, it may weaken the Yen in the long run. The Federal Reserve of Cleveland yesterday released its expected CPI figures on a yoy level for May and June at 4.1% and 3.3% respectively. Potentially hinting that inflationary pressures are easing on the US economy and as such the need for further rate hikes may be lessened should these figures stand. In the US Equities markets, we note that Tesla (#TSLA) opened higher yesterday, as it was reported that the Model 3 sedans now qualify for full federal electric vehicle tax credits, thus spurred on by the potential of an increase in sales the stock moved higher to levels last seen in November 2022.Oil seemed to move higher yesterday, yet we note that the risks of a reduction in demand for oil still persist and as such, may weigh on the price of the liquid gold. The Turkish Lira continues setting new all-time highs on a daily basis, as the unorthodox economic policies set by President Erdogan appear to be here to stay for the foreseeable future.

#INTCH continued its upwards trajectory since yesterday, after failing to break below support at 29.80 (S1) and may be on track to test resistance at 31.90 (R1). We tend to maintain a bullish outlook for Intel (#INTCH), as long as the stock continues to validate our upwards moving trendline and supporting our case is the RSI indicator below our chart which bounced off the reading of 50 and is moving towards the 70 figure, indicative of a bullish sentiment in the market. For our Bullish outlook to continue, we would like to see a clear break above the 31.90 (R1) resistance level, with the next possible target for the bulls being the 33.00 (R2) resistance barrier. On the other hand, for a bearish outlook, we would like to see a clear break below support at 29.80 (S1) which would also coincide with the breaking below the prementioned upwards trendline, with the next potential target for the bears being the 28.50 (S2) support base.

XAU/USD appears to be moving in a downwards fashion, having broken below our upwards moving trendline, as such we maintain a bearish outlook for gold and supporting our case is the RSI figure below our chart, which broke below the reading of 50, implying a bearish sentiment in the market. For our bearish outlook to continue, we would like to see a clear break below support at 1940 (S1), with the next potential target for the bears being the 1905 (S2) support base. For a bullish outlook, we would like to see a clear break above resistance at 1975 (R1) with the next potential target for the bulls being the 2005 (R2) resistance level. Lastly, for a neutral outlook, we would like to see the precious remain between the 1940 (S1) and 1975 (R1) levels without breaking above or below the aforementioned support and resistance levels.

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In today’s European session, we note the release of the Czech Republic’s Unemployment rate for May, the Eurozones revised GDP yoy rate for Q1, Turkey’s Net FX reserves figure and during the American session we note the US weekly initial jobless claims figure followed by the release of the Federal Reserves report on the financial health of US Households for Q1 2023. Furthermore we note the start of Switzerland’s Economic forum.