[Market Morning] Dollar Rally Pauses, Non-US Currencies "Roll Over," Gold Recovers 1840 Mark!

Spot gold moved sharply higher on Thursday, opening a strong rally in the European session, hitting an intra-day high of $1849.08/oz, eventually closing up 1.44% at $1841.77/oz; spot silver moved the same way, eventually closing up 2.58% at $21.95/oz.

Comment: Gold prices rose more than 1.5% on Thursday, with spot gold hitting a high of $1,849.11/oz and closing at $1,841.76/oz. Weak U.S. jobs data heightened concerns about the economy, and the dollar and U.S. bond yields slipped, enhancing gold's safe-haven appeal. And U.S. gold futures rose 1.4% to $1,841.30. The dollar is falling, and yields are significantly lower, which is good news for gold.

Suggestion: Spot gold is long at 1842.00, target point 1858.60.

The dollar index lost 103 for the first time since May 5, finally closing down 0.991% at 102.89, the biggest one-day drop since November 2020. The U.S. 10-year Treasury yield set an intraday low of three weeks and finally closed at 2.837%.

Comment: The dollar fell across the board on Thursday, hitting an intraday low of nearly two weeks to 102.65 and closing at 102.87, down about 1%, extending a retreat from a 20-year high that has drawn buyers in after most major currencies have been hit hard this year by a strengthening dollar. The dollar dropped sharply against the yen and Swiss franc, two currencies, in order to attract traders in times of market stress or risk amid rising volatility in global financial markets. The dollar hit an intraday low of nearly three weeks against the yen at 127.02, and the dollar hit an intraday low of nearly three weeks against the Swiss franc at 0.9696.

Suggestion: USD/JPY is short at 127.795 position, target point 126.820.

In terms of international oil prices, the two oil companies stepped out of a V-shaped reversal. WTI crude oil fell sharply in the short-term before the U.S. market, hitting a minimum of $105.09/barrel, then quickly rebounded, recovering all the losses in the day, and finally closed up 2.32% at $111.63/barrel; Brent crude oil closed up 1.93% at $111.33/barrel bucket.

Comment: Oil prices rose in shaky trading on Thursday, rebounding from two consecutive days of losses, helped by a weaker dollar, and expect that a possible easing of sequestration measures in Asia would boost demand. The two major indicators of crude oil continued to fluctuate sharply, both rising nearly $5 per barrel in a matter of hours, recovering ground lost earlier in the week. The market is reacting to a wide variety of news on an hourly basis, with oil market volatility increasing by the day.

Suggestion: U.S. crude is long at 108.750 with a target point of 113.205.

The three major U.S. stock indexes are wide; the Dow closed down 0.75% at 31,253.13 points, continuing to hit a new low since March last year; S&P 500 index closed down 0.58% at 3,900.79 points; the Nasdaq closed down slightly at 0.26%, with an intraday amplitude of 2.19%, with Chinese stocks performing brightly, Jingdong, Azure closed up over 5%, New Oriental, Good Future closed up 11.5% and 13.1%.

Comment: U.S. stocks on Wall Street closed lower in shaky trading Thursday, with Cisco (Cisco Systems) plunging after giving gloomy earnings results and investors worried about inflation and rising interest rates. Cisco plunged 13.7% after the networking equipment maker cut its 2022 revenue growth forecast, hurt by its exit from Russia and a shortage of parts due to a new crown seal control in Asia.

Suggstion: The S&P 500 is short at 3913.500 with a target point of 3859.270.

Fed's George: Market turmoil will not change the Fed's tightening plans.

Kansas City Fed President George said the stock market's turbulent performance over the week was to be expected, reflecting to some extent, the impact of tightening monetary policy. Her support for a 50 basis point rate hike has not changed, and it is too early to determine how high rates need to rise.

Fed's Kashkari also said he didn't know how high rates would be needed to lower inflation and asserted that the Fed has credibility because bond and stock markets are adjusting.

U.S. initial jobless claims hit a nearly 4-month high last week.

U.S. initial jobless claims for the week to May 14 exceeded expectations and registered 218,000, a new high since the week of Jan. 22, 2022. The U.S. Philadelphia Fed manufacturing index recorded 2.6 in May, a new low since December 2020.

The dollar's share of global transactions increased to 41.8% in April.

The U.S. dollar increased its share of global transactions to 41.8% in April, a two-year high, according to the Society for Worldwide Interbank Financial Telecommunication (SWIFT). The euro, which has historically been in contention for the top spot in global payments, saw its share fall to 34.7% in April, down from March.