On Friday (June 28), the US dollar index fell to 105.88. Despite a slight decline, the Fed's hawkish officials were willing to support another rate hike, supporting buying before the release of the US PCE. Gold sounded the horn of counterattack at $2,327, but it is still necessary to be cautious of unexpected PCE explosions. Wall Street funds flowed back to the Bitcoin spot ETF, stimulating the price of the currency to rebound to $61,700.
China's Third Central Committee meeting to be held on July 15, two defense ministers expelled from the party
The Third Plenary Session of the 20th Central Committee of the Communist Party of China, which has been postponed for more than half a year, has finally been scheduled to be held in Beijing from July 15 to 18. According to the official media Xinhua News Agency, the Political Bureau of the CPC Central Committee yesterday listened to a report on the solicitation of opinions on the draft "Decision of the CPC Central Committee on Further Comprehensively Deepening Reforms and Promoting Chinese-style Modernization" within and outside the party, and decided to submit the draft document to the Third Plenary Session of the 20th Central Committee for deliberation after making revisions based on the opinions discussed at this meeting.
The theme of this meeting was set as "Further comprehensively deepening reform and advancing Chinese-style modernization." Prior to this, the Political Bureau of the CPC Central Committee held a meeting on June 27 to study the issues of deepening reform and modernization.
The meeting stressed that the overall goal of further deepening reform is to continue to improve and develop the socialist system with Chinese characteristics and promote the modernization of the national governance system and governance capacity. By 2035, a high-level socialist market economic system will be fully established, the socialist system with Chinese characteristics will be further improved, the modernization of the national governance system and governance capacity will be basically achieved, and socialist modernization will be basically achieved, laying a solid foundation for building a socialist modern power in an all-round way by the middle of this century.
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The BBC Chinese website pointed out that since the Third Plenary Session of the 19th CPC Central Committee has nothing to do with economic reform, this meeting may become the first plenary session in China in 10 years to focus on economic reform. At present, China is facing internal and external pressures, and whether the Third Plenary Session of the 20th CPC Central Committee will usher in a breakthrough reform meeting like the Third Plenary Session of the 11th CPC Central Committee 46 years ago has attracted much attention.
According to CCTV News on Thursday, the Political Bureau of the CPC Central Committee reviewed and passed the Central Military Commission's "Report on the Results of the Review and Handling Opinions on Wei Fenghe's Issues" and decided to expel Wei Fenghe from the party and terminate his qualifications as a delegate to the 20th National Congress of the Party.
On the same day, the Political Bureau of the CPC Central Committee reviewed and approved the Central Military Commission's "Report on the Results of the Review and Opinions on the Handling of the Li Shangfu Issue" and decided to expel Li Shangfu from the Party and terminate his qualifications as a delegate to the 20th National Congress of the Party.
There has been no official assessment of the fall of former Foreign Minister Qin Gang and former Defense Minister Lee Sang-bok. Whether this plenary session will revoke their status as Central Committee members and announce more details has always been the focus of attention from the outside world.
Hawkish Fed officials, GDP and initial jobless claims data coming
Federal Reserve Governor Michelle Bowman said on Thursday that while current Fed policy should be sufficient to bring inflation back to target, the Fed should not be reluctant to consider further rate cuts if inflation data is unsustainable.
“If inflation doesn’t ease, I’d still be open to another rate hike,” she said. “The Fed is not at a point where it can consider cutting rates. If inflation gets closer to 2%, it could end up cutting rates. The lack of new bank creation is going to create financial problems. The economy is strong but activity has slowed.”
She continued: "I am concerned about the decline in the number of banks in the United States. Upside risks to inflation remain. I expect only modest progress in reducing inflation this year. Loose financial conditions may push up inflation. I am cautious about future Fed interest rate changes."
The number of first-time unemployment claims in the United States was better than expected in the week ending June 21, with 233,000 new unemployment claims, lower than the forecast of 236,000 and slightly lower than the 238,000 in the previous week. The four-week average of first-time unemployment claims rose to 236,000, but still below the continuous average.
On Thursday, the U.S. gross domestic product (GDP) was in line with expectations, with a slight revision from the initial value of 1.3% to 1.4%. In addition, the core personal consumption expenditures (PCE) in the first quarter rose slightly to 3.7% month-on-month, lower than the expected 3.6%. After the close of Thursday, the upcoming presidential debate will attract much attention, and investors are looking forward to the policy hints that the candidates may give.
US Dollar Technical Analysis
FXStreet analyst Joshua Gibson said Thursday's limited losses kept the U.S. dollar index in a short-term bullish stance, with the dollar index trading just north of its 200-hour exponential moving average (EMA) at 105.58.
The dollar index hit a two-month high this week, breaking through 106.10, with the dollar basket moving higher along a rugged channel.
Gold Technical Analysis
Bruce Powers, an analyst at FXEmpire, said gold is sending mixed signals but is still in a downtrend correction. This week, gold triggered a weekly bearish reversal, breaking below last week's low of $2,307. In addition, a daily bearish flag was triggered yesterday, causing gold to close weak in the lower quarter of the day's trading range. However, there was no bearish follow-through today. Instead, gold rebounded above Wednesday's high of $2,324 and retested resistance near the 20-day moving average of $2,328 and the downtrend line.
Another trendline and the 50-day moving average mark higher potential resistance near $2,339. Still, gold could continue to pull back until it rebounds above the swing high of $2,369. This week’s high, along with the 50-day moving average, will provide lower price levels to the upside once the week ends. If gold can break above the swing high of $2,369, it will be able to continue to strengthen from there. The big picture remains bullish, and the current pullback should eventually resolve itself to the upside. Whether it will move lower first remains to be seen.
A clear decline below this week's low of $2,294 suggests that the retracement will continue. Support at the recent swing lows of $2,287 and $2,277 will be challenged. The first downside target is located at the 61.8% Fibonacci retracement level of $2,262. If this level breaks downward, we may see a quick decline in gold prices to the area around the 78.6% Fibonacci retracement level of $2,211. This level begins a potential support range that originates from the resistance area during the March rally. Note that the rising trendline that has indicated support in the past crosses the support zone.
Or, as the market sees it, gold breaks below a key level but continues to slowly fall. After breaking below support, gold sees a bullish reversal. The Relative Strength Index (RSI) momentum oscillator has a three-point trendline and a potential double bottom. Although this is a minor indicator, a break above this line and the double bottom provides evidence for improving demand for gold.
Bitcoin Technical Analysis
CoinTelegraph noted that Bitcoin’s resumption of gains coincides with the resumption of inflows into U.S. Bitcoin spot ETFs. As of June 26, these funds managed approximately $52.61 billion worth of Bitcoin, up from $47 billion at the beginning of May.
Data from Farside Investors shows that after these investment products experienced outflows for seven consecutive days, Bitcoin spot ETF fund flows turned positive in the past two days, recording net inflows of $31 million and $21.3 million on June 25 and 26, respectively.
Meanwhile, VanEck, one of the first Bitcoin spot ETF issuers in the United States, has applied to issue a new Solana ETF. VanEck also submitted its first Ethereum ETF application in 2021, which may be a sign of a broader trend, as the recently approved Bitcoin and Ethereum spot ETFs may pave the way for more crypto ETFs in the United States.
The development highlights the growing acceptance and adoption of Bitcoin and other cryptocurrencies in the traditional financial sector, contributing to rising valuations in the cryptocurrency market.
From a technical point of view, the current rise in the cryptocurrency market is part of a rebound that started at the confluence of support levels formed by the main support level of $2.172 trillion and the middle boundary of the descending parallel channel.
The crypto market, with a total market capitalization of $2.23 trillion, broke through the upper boundary of the channel during Thursday’s recovery, marking a breakout from the downtrend.
According to the rules of this technical formation, the cryptocurrency market may rise to the $2.56 trillion area, surrounded by the upper end of the descending channel. Before achieving this goal, the total market capitalization must overcome the supplier congestion between $2.30 trillion and $2.35 trillion, where all the major EMAs are located.
