Analytics

The blockbusters KEYTRUDA and Gardasil were the main revenue items, their sales went up by 18% and 39% year-over-year, respectively. Moreover, the former is predicted to be the top-selling drug in terms of revenue - so far this position is occupied by Humira from AbbVie. KEYTRUDA is an anti-cancer drug that has already been approved for use together with, before and after chemotherapy for breast cancer. The tests of the drug were as successful as possible for the company, which ultimately gave it such a result. In May, the share price already surpassed the historical record of $92.2 from November 2000, reaching almost $95. After a slight correction, there is likely going to be a further upward movement to $100 . Without big turmoil in the stock market in a few days, Merck may first make new highs and then storm the round mark. A good support here is $90.5.

To continue the upward movement of the kiwi, it is necessary first to gain a foothold behind the first resistance in the area of 0.65, and then start the assault on 0.665. Moving averages are situated at the same points on the chart, which confirms the possibility of further upward movement, and the currency itself can stop moving for a week or two to get out of the overbought zone, and then start growing again. If the kiwi manages to rise to 0.68, then it will have a relatively easy road to 0.72 and 0.75 technically.

On May 3, the Australian Central Bank raised the refinancing rate immediately by 0.25% to 0.35%, although forecasts converged at 0.25%. After spending about a week to digest the new conditions, the market first reached the strongest support of June 2020 at 0.68, then reversed and approaches 0.72. The nearest resistance for this pair is around 0.725, then 0.727-0.7275. After overcoming this mark, a sharp exit to the highs of this year in the area of 0.75 is possible.

Brent crude jumped above $120 a barrel for the first time since early March before retreating marginally. Oil prices have been trending north for the fifth day in a row already, finishing this month with solid gains, adding around 15% since May 1. On the weekly timeframes, the technical picture looks positive as well, with the futures holding well above the ascending 20-week Sam, today at $105.30 a barrel.

Other drivers

The oil market is also driven higher by developments in China where authorities keep easing COVID restrictions while also taking measures to support the struggling economy after tight lockdowns in Beijing and Shanghai. Against this backdrop, the outlook for demand improves, adding to bullishness in the market. Furthermore, the start of peak US demand season and strong travel demand help prices as well.

Brent crude also derives some support from a weaker dollar as the greenback struggles to regain robust demand after rejection from long-term peaks registered around 105.00 earlier this month. Should the USD index extend the retreat, the 100.00 psychological level could be derailed in the near term. In this scenario, oil prices may receive extra impetus and advance to fresh local highs beyond $120 a barrel.

However, Brent is unlikely to challenge the March peak of $133 a barrel as sellers would reemerge earlier. At this stage, the next major barrier arrives at $123 a barrel, followed by the $124 mark that could deter bulls should the rally continue in the days to come. On the downside, the nearest support lies around $120 a barrel.

Dollar bulls were somehow disappointed by the minutes from the Federal Reserve's May meeting that contained no surprises while traders had expected the central bank to deliver a more hawkish message. Still, the Fed continues to believe that the economy is strong enough to withstand aggressive tightening while inflation risks persist.

On the weekly charts, the dollar index looks set to fall for the second consecutive week after strong gains in the past six weeks. As such, the buck extends the pullback from multi-year tops seen at 105.00 earlier in the month. As the downside pressure builds, the 100.00 mark comes back into the market focus for the first time in over a month. At this stage, the downside potential looks limited, but the greenback will have to face a deeper pullback if the US Treasury yields continue to decline in the coming days and weeks.

Too early to call a peak

Should the index fail to stay afloat in the immediate term, the prices may challenge the 101.00 figure that could attract fresh buying pressure, especially as the ECB keeps adopting a more hawkish tone, hinting at a rate hike in July. Also, tighter financial conditions in the United States are starting to impact economic growth amid the elevated inflation.

Still, it’s too early to call a long-term peak as the US currency could yet see a strong bounce across the market due to monetary policy divergence in combination with its safe-haven status. Global financial markets will likely stay on the defensive in the coming weeks and months due to persistent geopolitical and economic risks, with lockdowns in China adding to investors’ worries these days.

The BTCUSD pair failed to finish above $30,000 on Monday, looking directionless beyond this threshold today. It looks like the cryptocurrency space is witnessing a calm before the storm, as digital assets could see a major breakout/breakdown after a period of consolidation.

At this stage, bearish risks seem to be dominating the market, with momentum signals remaining negative while the uptrend appears to be limited. In other words, bitcoin could witness another sell-off before bouncing in a more decisive manner, suggesting a reversal is just around the corner.

Crypto-friendly Russia

In part, the market stays afloat these days as the Russian minister of industry and trade said last week that the legalization of bitcoin and other cryptocurrencies as a means of payment is only a matter of time. It’s a striking policy change, as earlier this year, Russia’s central bank proposed a blanket ban on the use and creation of all cryptocurrencies in the country. On the negative side, the effects of the Terra collapse continue to impact investors' sentiments in the crypto space.

Other cryptocurrencies also struggle these days, lacking the directional impetus. Ethereum, the second-largest digital currency, is back below the $2,000 mark after another failed attempt to overcome the $2,100 zone at the start of the week. Still, Ether so far refrains from challenging last week’s lows below $1,890.

Of note, the market derived just short-lived support from the news that French luxury fashion brand Balenciaga announced to accept crypto payments starting next month. As a reminder, earlier this month, Gucci announced that it would begin permitting crypto payments online and at several in-store locations.

The precious metal managed to stage a local bounce since then, but the recovery momentum was capped by the 200-DMA. On Thursday, the bullion is back on the offensive. However, the upside potential remains limited at this stage.

The safe-haven demand surrounding the US currency seems to have abated, as traders prefer to buy the Japanese yen and the Swiss franc today. As the buck retreats, gold bulls reemerged after the recent decline, with the XAUUSD pair trading in positive territory on the weekly timeframes. However, the precious metal needs to make a decisive break above the mentioned moving average (today at $1,837) in order to stage a more pronounced bounce from multi-month lows.

Rate hike bets hurt the bullion

In a wider picture, gold prices remain vulnerable to further losses as rate hike bets keep rising amid the stubbornly high inflation across the globe. Furthermore, consumer prices could continue to rise in the coming months, making more and more central banks tighten their policy aggressively.

Of note, Fed’s Powell reaffirmed investor expectations for a more rapid policy tightening earlier this week, which in turn should play into dollar’s hands amid elevated US Treasury bond yields. In particular, the Federal Reserve governor said that he will back interest rate increases “until consumer prices start falling back toward a healthy level.”

In other words, fresh bullish attempts in the gold market are likely to be limited and modest, while downside risks continue to persist both in the near and medium term. However, should US recession fears continue to rise in the coming months, the non-yielding yellow metal would capitalize on dollar’s potential weakness.

The additional selling pressure came from a stronger euro as the common currency derived support from a hawkish twist by the ECB. In particular, Klaas Knot said that a 25 bps rate hike in July is realistic. Furthermore, he noted that a 50 bps rate hike should not be excluded if data in next few months suggests that inflation is broadening. The fact that the central bank plans to start raising rates in July was not a surprise for markets, while the idea of a potential 50 bps hike is getting euro bulls excited at this stage.

Major shift or a trap?

However, one should take into account that Knot is one of the more hawkish ECB members. Also, the European central bank hasn't hiked rates in over ten years, so a sudden major shift in the bank’s tone looks unlikely, at least for the time being. In other words, the latest remarks from Knot could be a trap for the euro as other MPC members could emphasize a more cautious and measured approach towards tightening, especially as geopolitical tensions between Russia and Ukraine affect the European economy.

In a knee jerk reaction to a hawkish twist, EURUSD jumped above 1.0500 to notch local highs around 1.0530, followed by the descending 20-DMA, today at 1.0670. It looks like the rally could wane soon, with bearish risks persisting while below 1.1600. Furthermore, the common currency could come under renewed bearish pressure should the greenback shrug off the current weakness in the near term.

Risk sentiment could deteriorate again after a bounce as the fundamental picture remains negative both in economic and geopolitical terms. By the way, Russian Deputy Foreign Minister said earlier today that they were currently not holding talks "in any form" with Ukraine. Risk flows persisted despite these remarks, but the overall optimism among investors remains fragile.

Interestingly, the euro continues to bleed even as the ECB shows a more hawkish shift these days. In particular, Lagarde reiterated that the APP should be concluded early in the third quarter, followed by a rate hike that could come just a few weeks later. Echoing his colleagues, Kazimir mentioned in a tweet that he is ready to vote for a hike in July.

Divergence persists

The common currency struggles in a risk averse environment that continues to persist amid economic and geopolitical concerns, with energy crisis in Europe adding to a downbeat tone surrounding the euro. Also, traders realize that the Fed’s tightening path is very aggressive at the moment, so the ECB will continue to lag its US colleague even if the European monetary authorities start hiking in a couple of months. In other words, the euro stays pressured by policy divergence between the Federal Reserve and the ECB.

EURUSD now threatens the 1.0400 figure, followed by 2017 lows around 1.0340. Should this zone give up, the pair would target parity in the coming months or even weeks. On the upside, the potential is limited while below the 1.1550-1.1600 region where the 20- and 100-week SMAs converge.

As for the greenback itself, the USD index is likely to stay well supported both in the short and medium term as a strong bearish trend in the global stock markets persists. Further losses could lie ahead for riskier assets as recession worries keep growing while inflation stays elevated, suggesting the global economy could struggle in the quarters and years ahead.

The recovery in the cryptocurrency space is witnessed amid some improvement in risk sentiment as European stock markets opened higher on Tuesday while the safe-haven dollar came off twenty-year highs registered above 104.00 at the start of the week. Investors were encouraged by cheaper stocks following four bearish sessions in a row. As dip buyers returned, the Stoxx Europe 600 Index gained nearly 1% to bounce off two-month lows.

Downside risks persist

In the near term, bitcoin could get back to $35,000 if risky assets refrain from another sell-off. However, the BTCUSD pair would need to overcome the descending 20-DMA, today at $37,600, in order to shrug off some bearishness at this stage. Otherwise, the digital currency may get back below $30,000 in the coming days or weeks.

In a wider picture, downside risks surrounding cryptos would continue to persist as long as geopolitical uncertainty remains in the market focus. As tensions surrounding Ukraine stay elevated, threatening economic growth, risky assets along with cryptocurrencies will continue to stay vulnerable to even deeper losses both in the near and medium term.

At this stage, a daily close above $32,000 would be enough to ease some selling pressure. On the upside, the ascending 100-week SMA, today at $36,400, represents the key target for buyers. However, the coin is likely to stay below $35,000 for the time being, with the $30,000 mark being in the market focus. The fact that BTC derailed this psychological level for the first time since June 2021 adds to the current bearishness surrounding the cryptocurrency market.