Market Analysis – June 6, 2025

 

📈 Gold Price Review

Gold surged to a session high of $3,393 yesterday, coming within striking distance of the $3,400 psychological level, before sharply retreating to below $3,340 — a $50 reversal. The market's reaction was primarily driven by headlines surrounding U.S.-China trade dialogue.

While investors initially interpreted the discussion between both leaders as a sign of easing tensions, the underlying tone remained confrontational. China maintained a firm stance, and U.S. conditions were viewed as unrealistic. President Trump’s criticism of China as being “difficult to negotiate with” appears more politically motivated than policy-driven, adding short-term noise but limited clarity.

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🔍 Fundamentals & Strategy Insights

Today’s note emphasis on the well-known "Eagle Wing EA." 

These have been consistently effective in volatile markets, provided they are followed with strict discipline. While some traders expressed skepticism, the real-world application has already yielded solid results. Notably, several participants using the framework parameter design reported returns exceeding 50% within 1–2 months — all while managing risk within a 20% threshold.

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🧠 Takeaway: Understanding the tools and applying them properly is more important than prediction.

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📊 Technical Analysis (Gold)

🧱 Key Support Levels:

3363 – Short-term support and a critical defensive level
3331 – Strong H4 structure support based on moving average confluence

📈 Key Resistance Level:

3404 – A decisive breakout here could open the path to new highs

🔍 H4 Chart Observation:
Structure shows that 3331 is heavily defended, and short-term downside appears limited under current momentum patterns.

 

📌 Strategy Recommendation

✅ Entry Idea: Consider staggered buying near 3363 on pullbacks
🔁 Add positions if 3404 is broken and sustained
⚠️ If 3331 support fails, re-evaluate the uptrend structure
 

Aussie Dollar Holds Firm Amid Weaker Greenback and China PMI Boost

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The Australian dollar remained steady around $0.649 on Thursday, holding onto recent gains despite a softer domestic trade balance. The currency was buoyed by continued weakness in the U.S. dollar and encouraging data out of China — Australia’s largest trading partner.

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Key Drivers Supporting the Aussie:
Weaker U.S. Dollar: Soft U.S. economic data continues to pressure the greenback, with markets awaiting upcoming trade and jobless claims figures for further direction.

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China PMI Surprise: The Caixin Services PMI for May rose to 51.1, up from 50.7 in April — indicating continued expansion in China’s service sector and improving sentiment for regional trade-linked currencies like the Aussie.

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Domestic Trade Data: Australia’s trade surplus narrowed to AUD 5.41 billion in April, missing expectations and falling from a revised AUD 6.89 billion in March. The drop was due to a 2.4% decline in exports and a 1.1% rise in imports, reflecting a slight softening in demand and terms of trade.

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Geopolitical Watch:
Trade tensions remain in focus after U.S. President Donald Trump described dealing with Chinese President Xi Jinping as “extremely hard,” while Beijing eyes a major Airbus deal — signaling a potential pivot toward closer EU economic ties.

Despite the mixed backdrop, the Aussie continues to find near-term stability, supported by improved external data and cautious optimism in Asia-Pacific trade dynamics.

Yen Firms as U.S. Data Disappoints, Spotlight on BOJ Policy Path

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The Japanese yen held steady around 142.9 per U.S. dollar on Thursday, after notching a near 1% gain in the previous session. The strength comes as the dollar slipped across the board following weaker-than-expected U.S. economic data, which cast fresh doubts on the health of the world’s largest economy.

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Recent figures revealed a sharp slowdown in private-sector hiring and an unexpected contraction in the U.S. services sector, raising concerns that ongoing trade policy uncertainty may now be weighing on overall economic activity.

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Domestic Headwinds Persist
On the home front, Japan’s real wages fell for a fourth straight month in April, as inflation continued to outpace nominal income growth. This deepens concerns about Japan’s consumption outlook and clouds the recovery narrative, especially amid rising global tensions linked to U.S. tariff hikes.

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Policy Outlook: BOJ Stays the Course
Despite these challenges, Bank of Japan Governor Kazuo Ueda reaffirmed earlier this week that the central bank remains ready to raise interest rates if economic and inflation targets are met. His comments helped reinforce expectations of a gradual policy normalization, although wage dynamics remain a key constraint.

With both U.S. and Japanese data adding complexity to the outlook, USD/JPY traders are likely to stay on high alert for further macro developments.

U.S. Dollar Edges Higher Against Canadian Loonie, Snaps 3-Day Losing Streak

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The U.S. dollar inched up by 0.04% to 1.3722 Canadian dollars on Tuesday, reversing a three-session slide amid shifting currency flows and moderate market optimism.

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This marks the largest one-day gain since May 28, breaking a short-term downtrend and offering a slight reprieve for greenback bulls. Despite today’s uptick, the dollar remains 5.59% below its 52-week high of 1.4535, recorded on January 31, and 2.16% above its 52-week low of 1.3432, hit on September 24, 2024.

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Key USD/CAD Performance Stats:

Current rate: 1.3722 CAD per USD

Change today: +0.04%

52-week high: 1.4535

52-week low: 1.3432

1-year change: +0.31%

Year-to-date change: –4.61%

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Today’s movement reflects a cautious return of dollar strength, driven partly by broader trade tensions and commodity price fluctuations—both key drivers for the Canadian dollar, which is heavily linked to energy exports.

The Japanese yen climbed to around 143.5 per U.S. dollar on Monday, marking its third straight day of gains. The move came as global markets responded to heightened trade tensions, fueling demand for traditional safe-haven currencies.

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The latest spark was U.S. President Donald Trump’s announcement late Friday that steel and aluminum tariffs would double to 50% starting June 4 — a move aimed at curbing reliance on Chinese imports. This policy shift rattled markets and placed pressure on Japanese steelmakers, with JFE Holdings and Kobe Steel facing fresh headwinds.

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In contrast, Nippon Steel appeared more insulated from the fallout, buoyed by Trump’s supportive comments regarding its proposed merger with U.S. Steel.

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Tensions escalated further after China rejected Trump’s claims that it violated a recent Geneva trade pact, stoking fears of a broader economic standoff between the world’s two largest economies.

Amid these external pressures, Japan’s domestic economic data provided a bright spot. First-quarter capital expenditure exceeded expectations, with both manufacturing and non-manufacturing sectors showing solid investment growth — signaling resilience despite a challenging global backdrop.

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The yen’s strength underscores investor caution and a flight to safety, as markets weigh the economic impact of deepening trade disputes.

The offshore yuan weakened to around 7.21 per U.S. dollar on Monday, marking its second consecutive session of losses amid renewed trade friction between Washington and Beijing.

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The decline followed President Trump’s announcement on Friday that the U.S. will double tariffs on steel and aluminum imports to 50%, starting June 4 — a move he framed as part of efforts to reduce American reliance on Chinese materials.

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In response, Beijing accused the U.S. of “seriously violating” the trade truce agreed in May and warned of “strong and resolute measures” to follow. The situation escalated further after Trump alleged that China had breached last month’s Geneva agreement.

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Despite the heated rhetoric, there may still be room for diplomacy. White House adviser Kevin Hassett hinted that a call between President Trump and Chinese President Xi could take place “as soon as this week,” although no firm schedule has been confirmed.

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On the economic front, China’s latest PMI data offered mixed signals. Official figures showed manufacturing activity inching up to 49.5 in May from 49.0 in April — still below the 50-mark that separates contraction from expansion. The composite index edged slightly higher to 50.4, while services slipped to a four-month low of 50.3, highlighting continued softness in domestic demand.

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The combination of geopolitical uncertainty and a fragile economic recovery is expected to keep pressure on the yuan in the near term.

The New Zealand dollar firmed to around $0.60 on Monday, staging a recovery from last session’s losses. The bounce was largely driven by renewed pressure on the U.S. dollar, following heightened trade tensions sparked by fresh tariff plans out of Washington.

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Last week, President Trump announced a sharp increase in steel tariffs — doubling them to 50% starting Wednesday — fueling fears of slowed global growth and rising inflation. As markets digest the implications, risk sentiment has shifted, putting a lid on further U.S. dollar strength.

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Domestically, the Reserve Bank of New Zealand (RBNZ) trimmed its official cash rate last week, a move that initially weighed on the kiwi. However, the market now views the May rate cut as a possible conclusion to the current easing cycle, following a cumulative 225 basis points of reductions since August.

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RBNZ Assistant Governor Karen Silk noted that interest rates are now within the neutral range of 2.5% to 3.5%, and any future policy moves will depend on evolving economic data. She added that the impact of previous cuts is still working its way through the economy, and a gradual recovery is expected.

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Despite global uncertainty, the kiwi’s rebound reflects growing investor confidence that New Zealand's monetary policy may be entering a more stable phase.

growing investor confidence that New Zealand's monetary policy may be entering a more stable phase.

Singapore Dollar Edges Higher as U.S. Tariff Hike Weighs on Greenback

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The Singapore dollar saw a modest gain against the U.S. dollar during Monday's Asian session, buoyed by fresh trade policy headlines from Washington.

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U.S. President Donald Trump announced plans to double tariffs on steel and aluminum imports to 50%, effective June 4 — a move that rattled currency markets and added pressure on the greenback.

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“Heightened risks from U.S. trade and fiscal policies have remained a drag on the U.S. dollar,” noted Lloyd Chan, senior currency analyst at MUFG Bank, in a research commentary. He added that, in the absence of new supportive macroeconomic developments, markets continue to price in a policy risk premium on the dollar.

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At last check, the USD/SGD pair was down 0.1% at 1.2894.

The slight strengthening of the Singapore dollar reflects cautious investor sentiment amid global policy uncertainty — a reminder that regional currencies can gain ground even in choppy macroeconomic waters.

Global financial markets are exhibiting a pronounced risk-on sentiment as investors anticipate key U.S. economic data releases. This shift is influenced by easing trade tensions and a resurgence in the U.S. dollar.

📈 Market Overview: Risk Appetite Intensifies

Investor confidence has been buoyed by recent developments, including the U.S. administration's decision to delay tariffs on European Union exports. This move has alleviated some trade-related uncertainties, contributing to a more favorable market outlook.
 

The U.S. dollar has regained strength, with the Dollar Index (DXY) climbing to approximately 99.35, rebounding from a monthly low of 98.70. This appreciation has exerted downward pressure on major currency pairs
 

* **EUR/USD**: The pair retreated to the low-1.1300s after failing to sustain levels above 1.1400, influenced by the dollar's resurgence .
 

* **GBP/USD**: Despite a recent peak near 1.3600, the pound corrected lower, trading slightly below 1.3550 .
 

* **USD/CAD**: The pair advanced to near 1.3760, driven by the strengthening U.S. dollar and ahead of Canada's upcoming GDP data .
 

* **AUD/USD**: The Australian dollar faced renewed selling pressure, slipping to the 0.6440-0.6430 range, testing its 200-day simple moving average .
 

🏦 Economic Indicators: Anticipation Builds

Market participants are closely monitoring upcoming U.S. economic indicators, including GDP figures and inflation data. These releases are expected to provide insights into the Federal Reserve's future monetary policy decisions.

Consumer confidence has shown signs of improvement, rebounding in May after five consecutive monthly declines. The Present Situation Index rose to 135.9, while the Expectations Index increased to 72.8, reflecting growing optimism among consumers .

🔍 Conclusion

The current market landscape is characterized by increased risk appetite, driven by easing trade tensions and positive economic indicators. As investors await further data releases, particularly from the U.S., market volatility may persist, offering both opportunities and challenges across various asset classes.

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🏦 Fed’s John Williams: Central Banks Must Act Boldly Against Inflation Deviations

At a recent conference hosted by the Bank of Japan in Tokyo, Federal Reserve Bank of New York President John Williams stressed the need for central banks to respond decisively when inflation strays from target levels.

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📊 The Risk of Persistent Inflation

Williams warned that if inflation remains elevated, it could become embedded in the economy, shifting public expectations in a harmful direction.

“We just have to be very aware that inflation expectations could shift in ways that would be detrimental,” he stated.

He emphasized the need for a “well-behaved” curve of inflation expectations, reflecting the Fed’s ongoing focus on long-term price stability.

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🔍 No Clear Signal on Interest Rates Yet

Despite the strong remarks on inflation vigilance, Williams offered no specific clues about upcoming interest rate decisions, leaving markets to look toward key economic data — especially inflation readings — for further direction.

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