US and European futures are trading higher while traders keep a close eye on the Manufacturing PMI readings released from the Eurozone and the US.
Today is also the first day of June which means today is the first day that we will see the Fed in the US begin reducing the size of its balance sheet. It is highly possible that most traders may sit on the sideline today as they would like to see the reaction of this activity and how market players react to this monetary policy decision.
Stock Market Today
One choppy quarter has ended, and another one is here. The reason for this is the Fed’s monetary policy and its influence on the US economy. The Fed is expected to remain on autopilot in this quarter and is expected to increase the interest rate by 50 basis points only. Market players are getting used to the Fed removing liquidity from the system, and they are watching the influence of this on quarterly earnings. The current quarterly earning period is almost coming to an end. We have heard from companies that are preparing themselves for higher costs and an environment where consumers may not want to dig deep into their pockets.
Economic Data
In terms of economic data, today, we will get to the US ISM Manufacturing PMI number, which is expected to be released at 14:00 GMT. The US ADP number is expected to be released tomorrow, and it usually sets the tone for the US NFP data (which is due on Friday).
The US NFP is the most important economic data set for this month. The US JOLTS Job opening number will arrive at 14:00 GMT. The forecast for the JOLTS is 11.29 M, and the forecast for the ISM Manufacturing number is 54.4.
In addition to this, we also have the Manufacturing PMI readings coming out of France, Spain and Germany today. The readings will influence the price action of the Euro as a red-hot data point is likely to push the ECB to adjust its monetary policy.
Gold
Gold has finished a disappointing month in terms of its price action. Traders are keeping a close eye on the dollar index as it was the strength in the dollar index that took the shine away from the gold price. As the Fed is expected to remain on autopilot in its monetary policy, traders aren’t hoping for any significant volatility. This means we could see a relief rally for the shiny metal this month.
In addition to this, geopolitical tensions will also matter a lot for the gold price. The fact that there is still a war in Ukraine and India is trying to become the part of Indo-Pacific group for the second time, which excludes China, will keep traders on edge.
Regarding the price action, if we see the price breaking above the 1,900 this month, that encourages more bulls to join the rally. On the other hand, if the price falls below the 1,800 and stays below this price mark, we may likely see an intense sell-off this month.
Oil
Oil prices continue to trade high on the EU embargo news on Russian oil. Supply is a primary concern, and the fact that the EU is prepared to move away from Russian oil, traders are concerned about how the supply and demand equation will come to a level under which we could see oil prices back below the $100 price level. It is very much clear that oil prices are likely to remain high for an extended period as OPEC is in no mood to pump extra oil supply.
Bitcoin
Bitcoin price has flirted with the 32K price level over the last 24 hours. This has given traders hope that the dark night of the crypto winter may be over. However, this bounce in the bitcoin price may be nothing more than a dead cat bounce unless the price respects the recent low formed by the BTC price.
Between now and the end of the week, the only thing that matters the most for the Bitcoin price is the US NFP data, as it only moves the dollar index. A strong US NFP reading may push the dollar index higher, which could damage the BTC price as a higher dollar tends to push the BTC price lower.
Regarding technical price levels, the next major resistance for the BTC price is at 34779, where the 50-day SMA is on the daily time frame. If we see the price breaking above this price level, we could see a continuation of the current trend.