In May, business inventories in the United States remained unchanged, matching expectations for a 0% change. This indicates that inventory levels are stable, with no increases or decreases. The AUD/USD currency pair is facing strong resistance around 0.6600, dropping to the 0.6450 area due to a strong US Dollar and disappointing Australian labor market data. Meanwhile, the EUR/USD fell to multi-week lows near 1.1550, as sentiment towards the US Dollar improved.

Precious Metals and Digital Assets

Gold is trading close to $3,340 per troy ounce, under pressure from a strengthening dollar and rising US yields. On the other hand, Ripple (XRP) is nearing a record high of $3.25, bouncing back from a previous low of $2.80. China’s GDP growth in the second quarter was 5.2% year-on-year, driven by trade and industrial production. However, drops in fixed-asset investment and retail sales have raised concerns. For traders, finding the best brokers for trading EUR/USD is vital, with options available for both beginners and experienced Forex participants. Trading foreign exchange on margin carries significant risk and may not be suitable for everyone, as leverage can magnify both profits and losses. With the US dollar’s strength, we think traders should expect ongoing pressure on major currency pairs. The Dollar Index (DXY) recently rose above 105.5, reaching its highest level in over a month. This increase is driven by the Federal Reserve’s indication that interest rates will remain high to combat lasting inflation. Therefore, bearish positions on Australian and European currencies could remain profitable.

Impact of Economic Indicators

Weak Australian labor data, along with concerning figures from its largest trading partner, suggests a cautious outlook for the Aussie dollar. China’s recent Producer Price Index (PPI) has been consistently declining year-over-year, indicating weak demand from factories and lowering the outlook for Australian commodity exports. These factors may keep the AUD/USD pair below the 0.6650 resistance level for now. In terms of precious metals, the relationship with the dollar and yields is important. With the 10-year US Treasury yield staying above 4.25%, the cost of holding non-yielding gold is high, putting pressure on its price below the critical $2,300 per ounce mark. Historically, periods of persistently high real yields often lead to significant corrections in gold, a situation we are monitoring closely. The mentioned digital asset is influenced by different factors, mostly independent of macroeconomic trends. Its price has stabilized below $0.50, with volatility largely connected to ongoing legal issues with the U.S. Securities and Exchange Commission. We expect significant price movements around important legal decisions, creating potential opportunities for options traders using strategies like straddles to benefit from the resulting volatility. The unchanged business inventories in the United States reflect a broader trend of corporate caution. The latest data from the Census Bureau shows that companies are hesitant to increase stock levels, anticipating weaker consumer demand. This cautious stance aligns with our belief that positive economic surprises may be limited, favoring strategies that thrive in range-bound or declining markets. Create your live VT Markets account and start trading now.

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