In May, business inventories in the United States experienced no growth, aligning with forecasts of a 0% change. The data suggests stability in inventory levels without any increase or decline.

The AUD/USD currency pair faces strong resistance near 0.6600, falling to the 0.6450 region influenced by a strong US Dollar and weak Australian labour market data. Meanwhile, EUR/USD saw losses, retreating to multi-week lows around 1.1550 due to positive sentiment towards the US Dollar.

Precious Metals and Digital Assets

Gold traded near $3,340 per troy ounce, pressured by a strengthening dollar and rising US yields, while Ripple’s (XRP) price approached a record high at $3.25, recovering robustly from a previous low of $2.80. China’s GDP growth in the second quarter reached 5.2% year-on-year, driven by trade and industrial production, though drops in fixed-asset investment and retail sales raised concerns.

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Given the strength of the US dollar, we believe traders should anticipate continued pressure on major currency pairs. The Dollar Index (DXY) recently pushed above 105.5, its highest level in over a month, fueled by Federal Reserve signals that interest rates will remain elevated to combat persistent inflation. This environment suggests that bearish positions on the Australian and European currencies could remain profitable.

Impact of Economic Indicators

The weak Australian labour data, coupled with concerning figures from its largest trading partner, supports a cautious approach to the Aussie dollar. China’s recent Producer Price Index (PPI) has shown consistent year-over-year declines, signaling weak factory-gate demand and reducing the outlook for Australian commodity exports. We see these factors keeping the AUD/USD pair under the 0.6650 resistance level in the near term.

For precious metals, the inverse relationship with the dollar and yields is critical. With the 10-year US Treasury yield holding firm above 4.25%, the opportunity cost of holding non-yielding gold is high, pressuring its price below the key $2,300 per ounce level. Historically, periods of sustained high real yields have often preceded significant corrections in gold, a risk we are monitoring closely.

The digital asset mentioned is navigating a different set of catalysts, largely detached from macroeconomic trends. Its price has been consolidating below $0.50, with volatility heavily tied to ongoing legal proceedings with the U.S. Securities and Exchange Commission. We expect sharp price movements around any significant judicial rulings, creating potential opportunities for options traders using strategies like straddles to play the resulting volatility.

The flat business inventories in the United States confirm a broader theme of corporate caution. The latest data from the Census Bureau shows this trend continuing, as companies avoid building up stock in anticipation of softening consumer demand. This defensive posturing aligns with our view that upside economic surprises may be limited, favouring strategies that benefit from range-bound or declining markets.

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