Eyes on Today’s PCE

*The market is lacking a catalyst; both the Dollar and Wall Street were calm in the recent session, and the market is eyeing todays PCE reading.

*Loonies stayed firm after Monday's snap election, and the Liberal Party remained the ruling party in Canada.

Market Summary

Global financial markets remained subdued at the start of the week as investors await pivotal inflation data from the U.S. The dollar index hovered near the 99.00 level, reflecting muted sentiment, while Wall Streets major benchmarks posted modest gains of less than 1%, signaling a loss of upward momentum.

Market focus now shifts to the release of the Feds preferred inflation gauge — the Core PCE Price Index — due later today. A softer-than-expected reading could reignite rate-cut expectations, potentially lifting risk assets while putting renewed pressure on the greenback. On top of that, Wall Street traders are also anticipating earnings reports from Microsoft and Meta Platform that could alter the direction of the indices, especially the tech-heavy Nasdaq.

In Canada, the loonie found support following a snap election on Monday, with the ruling Liberal Party securing a victory. The result is viewed as a step toward political continuity and may help anchor investor confidence in the Canadian dollar.

Meanwhile, commodity markets showed mixed performance. Gold prices remained range bound between $3,275 and $3,345 for five consecutive sessions, reflecting indecision amid cautious risk sentiment. In contrast, oil prices slumped nearly 3% in the previous session, approaching the $60.00 threshold

Current rate hike bets on 7th May Fed interest rate decision:

0 bps (92.3%) VS -25 bps (7.7%)

Source: CME Fedwatch Tool

Market Movements

DOLLAR_INDX, H4

The Dollar Index extended its losses after disappointing U.S. economic data. CB Consumer Confidence fell to 86.0 (vs. 87.7 expected), and JOLTs Job Openings declined to 7.192M (vs. 7.490M expected). The downbeat data has raised concerns over the U.S. economic outlook, with markets now focused on this weeks key releases: Q1 2025 GDP, Core PCE, and Nonfarm Payrolls. Weakening indicators have fueled speculation of potential Fed easing, putting further pressure on the dollar.

The Dollar Index is trading lower following the prior retracement from the resistance level. However, MACD has illustrated increasing bullish momentum, while RSI is at 37, suggesting the index might experience technical correction since the RSI rebounded from oversold territory.

Resistance level: 99.80, 101.95

Support level: 98.30, 96.35

XAU/USD, H4

Gold prices retreated as global risk appetite strengthened, reducing demand for safe-haven assets. Market sentiment improved after U.S. President Trump announced plans to ease 25% tariffs on automobiles and parts, offering temporary relief to automakers. Further optimism came from Commerce Secretary Howard Lutnick, who signaled that a major trade deal announcement is imminent, reinforcing expectations for a more stable trade environment.

Gold prices are trading lower following the prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 44, suggesting the commodity might extend its losses since the RSI stays below the midline.

Resistance level: 3355.00, 3440.00

Support level: 3270.00, 3200.00

Crude Oil, H4

Crude oil prices extended their losses, pressured by rising supply expectations and bearish inventory data. The American Petroleum Institute (API) reported a 3.76-million-barrel build in U.S. stockpiles — sharply above forecasts of 0.39 million. Adding to the pressure, OPEC+ confirmed that oil production accelerated for a second straight month in June. Meanwhile, ongoing progress in Iran-U.S. nuclear talks is raising the prospect of increased Iranian oil supply, further weighing on prices.

Oil prices are trading lower while currently testing the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 28, suggesting the commodity might experience technical correction since the RSI entered the oversold territory.

Resistance level: 61.50, 63.65

Support level: 59.65, 56.90