Dow tops out while GBP/USD, US natural gas futures look bid
Technical analysis of the Dow as it tops out while GBP/USD, US natural gas futures look bid.
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Macro Update
Oil rebounds above $100 a barrel: Brent crude rose above $100 after renewed US-Iran clashes threatened the fragile ceasefire and raised concerns over shipping disruption in the Strait of Hormuz, although both Brent and WTI were still on track for weekly declines of around 6%.
AI optimism supports Asian equities: Asian markets eased from record highs but remained set for strong weekly gains as AI infrastructure demand continued to support chipmakers, with South Korea’s KOSPI heading for its biggest weekly rise since 2008 and Taiwan’s benchmark up 7% this week.
Japanese stocks retreat from record highs: The Nikkei fell 0.3% after surging above 63,000 in the previous session, pressured by a 4.6% drop in SoftBank Group amid weakness in Arm Holdings and concerns over AI chip supply constraints.
Currency markets remain focused on Japan intervention risks: The yen traded near 157 per dollar following suspected Japanese intervention estimated at almost $70 billion since last week, while China’s yuan strengthened towards its highest level since 2023 and sterling held steady despite concerns over Labour’s local election setbacks.
Markets await US payrolls data: Investors are focused on Friday’s US non-farm payrolls report, with economists forecasting 62,000 jobs added in April, as traders assess the interest rate outlook against a backdrop of elevated oil prices and geopolitical tensions.
Bond yields rise on inflation concerns: Treasury yields remained elevated as higher crude prices reinforced inflation worries, with the US 10-year yield around 4.39% and Australia’s 10-year yield climbing to 4.99%, while Bitcoin moved towards a sixth consecutive weekly gain.
Dow Jones consolidates
The Dow Jones Industrial Average's rise to levels last traded in February is taking a breather as the index is seen coming off this week's 50,135 high. The steep March-to-May support line at 49,341 may well be revisited, as may the late April 49,381 high.
Were the rally to resume and Thursday's high at 50,135 to be exceeded, the February peak at 50,512 would be back in focus.
Short-term outlook: bearish while below the 7 May 50,135 high
Medium-term outlook: bullish while above the 29 April 48,708 low
Dow Jones daily candlestick chart
GBP/USD remains bid
GBP/USD is still gunning for its 20 February high at $1.3644 and the 17 February peak at $1.3664 which may act as interim resistance, as it did when last week's high was made at $1.3658. Further up lies the 11 February high at $1.3712.
Support below the April-to-May support line at $1.3548 may be found around the $1.3513 4 May low.
Short-term outlook: bullish while above $1.3513, the 4 May low
Medium-term outlook: bullish while the 23 April low at $1.3448 underpins
GBP/USD daily candlestick chart
US natural gas futures recover
US natural gas futures are trying to level out above Thursday's 253.1 low. While it holds, this week's high at 276.1 may be revisited.
Failure at 253.1 would likely provoke a sell-off to the late April 248.2 low.
Short-term outlook: bullish while above the 7 May low at 253.1
Medium-term outlook: neutral while below the 4 May high at 276.1 but above the 235.1 April low
US natural gas daily candlestick chart
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