COMMODITIES: Recent Weakness in Gold Results in Breach of Support at 50-Day EMA

• Alongside the noted dollar slippage on Monday, buoyant equity benchmarks are prompting AUD and NZD to outperform as cautious optimism surrounding the US/China talks provide tailwinds to the higher beta ccys.
• Kiwi leads the charge in G10, and NZDUSD has broken back above an important zone of resistance between 0.6025/40. Spot continues to threaten a daily close above the US election related highs, signalling scope for a more protracted recovery towards 0.6168, the 76.4% retracement of the Sep ’24 – Apr ’25 selloff. Initial resistance is seen at 0.6080, last week’s high print.
• For AUDUSD, last Thursday’s close above 0.6500 was the highest in 6 months, and Monday’s resumption of strength keeps trend signals bullish. The pair’s recent clearance of 0.6515 (May 7 high) confirmed a resumption of the uptrend and signals scope for an initial climb to 0.6550, a Fibonacci retracement and the Nov 25 high. It is worth noting that US election related highs remain the medium-term target at 0.6688.
• In Australia this week, consumer and business confidence data is due, as well as consumer inflation expectations. New Zealand BusinessNZ Manufacturing PMI figures will be released.

Of note:

EURUSD 3bn at 1.1400/1.1425 (could act as magnet).

EURUSD 2.05bn at 1.1400 (wed).

EURUSD 5.13bn at 1.1400/1.1450 (thu).

EURUSD 1.37bn at 1.1400 (fri).

USDJPY 1.19bn at 144.00 (fri).

• EURUSD: 1.1350 (1.52bn), 1.1375 (722mln), 1.1400 (1.04bn), 1.1425 (2bn), 1.1500 (776mln).
• EURGBP: 0.8440 (275mln), 0.8450 (391mln).
• USDJPY: 144.00 (660mln).
• AUDUSD: 0.6500 (628mln).

• The brief spell of dollar strength following the US employment data on Friday has dissipated, with the dollar index now lower compared to pre-NFP levels. This morning’s 0.25% advance for EURUSD is seeing the pair test above the post-NFP highs around the 1.1430 mark.
• Price action underpins the underlying bullish trend, and immediate topside levels of note are 1.1457 and 1.1495, last Friday’s high and the ECB peak respectively. Further out, the cycle high of 1.1573 remains the key bull trigger. Initial support is at 1.1334, the 20-day EMA.
• Goldman Sachs believe the most recent dollar consolidation is more the “end of the beginning” rather than the “beginning of the end” of the Dollar’s shift lower. Given the confirmation of a slowdown in US activity and a shift in global investor appetite, GS are rolling their EURUSD forecasts to 1.17, 1.20 and 1.25 in 3, 6 and 12 months (from 1.12, 1.15 and 1.20).
• Following the hawkish reaction to the ECB's June decision and the stronger-than-forecast Q1 compensation per employee reading, staff's forward looking wage tracker on Wednesday will be watched for confirmation that the downward trajectory of pay pressures is intact. US CPI provides the highlight on the US calendar.