US FUTURES RETREAT AS CHINESE ECONOMY DETERIORATES

US stock futures declined over investors’ concerns of the latest China economic data. Dow Jones futures declined by 50 points while the Nasdaq fell by more than 80 points. Data published by the country’s statistics agency showed that the country’s retail sales declined by 11.1% in April as the impact of the lockdowns became clearer. The drop was worse than the median estimate of -6.1%. Industrial production, declined by 2.9% after rising by 5.0%. Fixed asset investments rose by 6.8%, which was lower than the previous 9.3%. Therefore, investors believe that the weakness in China could spread to other countries.

The price of crude oil moved sideways as the German finance minister warned about a ban of Russian oil. In a statement, Annalena Baerbock urged caution because of the impact to the bloc’s economy. A move to ban Russian crude could have major impacts on the regions economy. That is because some members like Hungary and Czech Republic are fully dependent on Russian oil. The price also reacted to signs that China was focusing on easing lockdowns in Shanghai. In a note, analysts at Nomura said:

“With a planned ban by the EU on Russian oil and slow increase in OPEC output, oil prices are expected to stay close to the current levels near $110 a barrel.”

The Japanese yen was little changed against the US dollar after the latest producer price index (PPI) jumped to a record high. According to the statistics agency, the country’s producer price index rose by 10% on a year-on-year basis. This record increase was better than the median estimate of 9.4%. The agency blamed the rising PPI on the rising petroleum, coal, and natural gas prices. It also noted that the weak Japanese yen had contributed.

USDJPY

The USDJPY pair moved sideways after the latest PPI data from Japan. The pair is trading at 129.43, which is slightly above last week’s low of 127.50. This price was also notable since it was the highest level on April 17th. The pair is along the 25-day moving average while the Relative Strength Index (RSI) has moved above the oversold level while the momentum indicator has been rising. The pair will likely maintain its bullish trend.

EURUSD

The EURUSD pair moved sideways as the strength of the US dollar eased. The pair has formed a bearish flag pattern. It also moved to the middle line of the Bollinger Bands. It also moved slightly below the 25-day moving average while the Relative Strength Index moved above the neutral level. The pair will likely have a bearish breakout.

XAUUSD

The XAUUSD pair was under pressure ahead of the upcoming American retail sales data. The pair is trading at 1,805, which is slightly above the intraday low of 1,786. It moved between the lower and middle lines of the Bollinger Bands while the Stochastic Oscillator moved above the oversold level. The pair will likely continue falling as sellers target the key support at 1,780.