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Forex News

News source: FXStreet
Jun 02, 03:08 HKT
Gold slides amid fragile US-Iran ceasefire that jolts US Dollar, Oil
  • Ceasefire collapse fears push WTI higher and support the US Dollar.
  • Strong ISM Manufacturing data reinforces US economic resilience narrative.
  • Markets price higher Fed hike odds before NFP release.

Gold price retreats by more than 1% on Monday as the market mood shifts to neutral amid developments in the Middle East that threaten to end the ceasefire between the US and Iran. The XAU/USD trades at $4,490 after reaching a daily high of $4,546.

XAU/USD falls as Oil spike revives inflation and Fed fears

Geopolitics continued to drive price action in the precious metal segment. US-Iran negotiations appear to have stalled after Iran stopped exchanging messages with the US in protest over what Tasnim described as Israeli crimes. Meanwhile, Iranian state television reported that the ceasefire could collapse if Israel does not end its attack on Lebanon.

Odds for Fed rate hike, increase

Oil prices spiked $6, with WTI peaking at around $94.78 per barrel, before trimming some of its gains. But the front-month contract is still up 4.50% at $91.79 at the time of writing. The positive correlation between the Greenback and WTI propelled the US Dollar Index (DXY) higher by 0.22% to 99.17.

The US economic data release began with the ISM Manufacturing PMI hitting its highest level since 2022, as companies accelerated orders to avoid rising prices. The index rose to 54.0 in May, up from 52.7 in April, while the Prices Paid sub-component decreased from 84.6 to 82.1.

The data showed the economy’s resilience, but also that input costs remained high, fueling speculation that major central banks would need to hold interest rates higher for longer. Data from Prime Terminal revealed that money markets had priced in a nearly 68% chance of a Federal Reserve (Fed) rate hike toward the end of 2026.

Source: Prime Terminal

Ahead this week, market players will eye a series of US jobs data releases, ahead of Friday’s Nonfarm Payrolls report and alongside remarks by Fed officials. Also, the release of the Beige Book could be of interest as the new Fed Chair, Kevin Warsh, is expected to lead the US central bank's first meeting on June 16-17.

XAU/USD technical analysis: Gold price clears $4,500, eyes on 20-day SMA

Price action shows Gold resumed its downtrend after testing the 20-day Simple Moving Average (SMA) at $4,580, but buyers were unable to hold above $4,500, which opened the door to a two-day low at $4,447.

The Relative Strength Index (RSI) shows that momentum is bearish, aiming downwards, an invitation for sellers to drive Gold prices lower.

A breach of $4,450 opens the door to test the 200-day SMA at $4,411, ahead of the $4,400 figure. Once hurdled, the next stop would be the March 23 daily low of $4,098.

Above, the first key resistance is $4,500, followed by the 20-day SMA. Once those levels are cleared, the 50-day SMA emerges as the next resistance at $4,628.

Gold daily chart

Gold FAQs

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

Jun 02, 03:07 HKT
China: Cross-asset inflows and policy shifts – BNY

BNY’s Bob Savage highlights China as the only emerging market currently seeing net buying across equities, bonds and currency, even as domestic data remain mixed. He notes that fixed income inflows are supported by lower policy rates, while authorities tighten outbound investment rules and retain scope to allow the renminbi to appreciate in a controlled, export-sensitive manner.

Cross-asset inflows and tighter controls

"Meanwhile, there is one emerging market where all assets are now being net-bought: China."

"Given input price risks and a large legacy surplus, there is capacity and a solid policy rationale to let the renminbi appreciate despite domestic pressures."

"However, the pace will be controlled and subject to export/economic performance, and the cautious inflows also seem to reflect such a policy stance."

"China has announced new outbound investment regulations effective July 1 that significantly strengthen government oversight of overseas transactions involving Chinese investors, technology, data and national security."

"The regulations form part of a wider effort to strengthen export controls, protect strategic technologies, reinforce supply chain security and increase China’s ability to respond to Western sanctions and investment restrictions."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Jun 02, 02:57 HKT
Türkiye: Policy discipline offsets political noise – HSBC

HSBC Asset Management notes that political uncertainty and higher Oil prices have added volatility to Turkish assets and pressured reserves. Yet the MSCI Türkiye Index has held up, supported by healthy reserves and a managed Lira float. The central bank’s orthodox stance since 2023, focused on high rates to tame inflation, is seen as a key anchor for market resilience.

Lira support and orthodoxy aid resilience

"Recent domestic political uncertainty in Türkiye has injected some volatility into the country’s asset markets. Meanwhile, conflict in the Middle East and the associated rise in oil prices have pressured reserves, given that Türkiye is a big net oil importer. However, the MSCI Türkiye Index has been performing well."

"This is a good example of how EM economies are proving increasingly resilient. In the case of Türkiye, this reflects two main factors."

"First, helped by the surge in gold prices in recent years, international reserves remain sufficiently healthy to keep the managed float of the lira alive. This limits the lira’s depreciation."

"Second, policymakers have been disciplined. Following a pivot to economic orthodoxy in May 2023, Türkiye’s central bank (CBRT) has pursued policies focused on taming inflation through high interest rates, unperturbed by domestic political developments."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Jun 02, 02:34 HKT
Brazilian Real: Upside bias after Brazil data – Societe Generale

Societe Generale analysts highlight that Brazil’s 1Q Gross Domestic Product (GDP) rebounded to 1.1% qoq, supported by fiscal stimulus and mining, but at the cost of higher inflation and a worsening deficit. With inflation expectations deteriorating and the Banco Central do Brasil (BCB) warning on its 3% target, the bank notes USD/BRL is consolidating below 5.05, with the next resistance hurdle at 5.08 and an upside bias.

Consolidation below 5.05 with upside bias

"In Latam, 1Q GDP growth in Brazil rebounded to 1.1% qoq from an upwardly revised 0.3% in 4Q, supported by government stimulus and strong mining activity."

"Fiscal stimulus to insulate the economy from the war and boost consumption ahead of the October election lifted growth but are adding worsening the trade off with inflation and the public deficit. Headline inflation accelerated to 4.64% in early May and inflation expectations are deteriorating."

"BCB monetary policy director Nilton David sounded the alarm on rising inflation expectations and said that the BCB has an obligation to deliver on the 3% target. Will the BCB opt to pause in June after two straight cuts? "

"USD/BRL for now is consolidating below 5.05 (50dma) but bias for the pair remains for upside with next hurdle eyed at 5.08."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Jun 02, 02:09 HKT
Canadian Dollar falls against the US Dollar as markets remain cautious over Iran tensions
  • USD/CAD climbs as Iran suspends negotiations with Washington over tensions in Lebanon.
  • Canada’s manufacturing activity slows in May as recession concerns linger.
  • Traders now await US and Canadian labor market data due later this week.

The Canadian Dollar (CAD) trades on the back foot against the US Dollar (USD) on Monday as renewed tensions in the Middle East lift the Greenback. At the time of writing, USD/CAD trades around 1.3834, up nearly 0.27% on the day.

Iran’s semi-official Tasnim News Agency reported that Tehran has suspended negotiations with Washington over Israel’s continued military operations in Lebanon against Hezbollah. The report also said Iran has vowed to fully block the Strait of Hormuz.

Earlier on Monday, Iran’s Foreign Ministry spokesperson Esmaeil Baghaei said “a ceasefire in Lebanon is an integral part of any agreement to end the war with the United States.”

Meanwhile, US President Donald Trump attempted to calm markets, saying on Truth Social that he had a “very good call” with Hezbollah representatives and that “all shooting will stop.”

Following Trump’s comments, the US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trims part of its intraday gains and trades around 99.16 after hitting a daily high near 99.39. The index remains up nearly 0.25% on the day.

Meanwhile, the Canadian Dollar is also weighed down by weak Gross Domestic Product (GDP) data released last week. Bank of Canada (BoC) Senior Deputy Governor Carolyn Rogers said “two quarters of annualized GDP decline meets one recession definition,” while noting that “I think we need to be careful not to put too much weight on any one indicator,” she told a parliamentary committee.

Slowing economic growth could ease pressure on the BoC to raise interest rates even as the inflation outlook deteriorates amid rising Oil prices.

At the same time, inflation in the United States remains well above the Federal Reserve’s (Fed) 2% target, while economic activity continues to hold up, reinforcing expectations that the Fed could keep interest rates higher for longer or even consider raising rates again if inflation pressures intensify.

On the data front, the ISM Manufacturing Purchasing Managers Index (PMI) climbed to 54 in May from 52.7 in the previous month, marking its highest reading since May 2022. However, Canada’s S&P Global Manufacturing PMI eased to 52.9 in May from 53.3 in April.

Looking ahead, attention now turns to labor market data from both the US and Canada due on Friday for fresh clues on the interest-rate outlook.

Fed FAQs

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.


Jun 02, 01:59 HKT
"I don't care if negotiations with Iran are over": US President Trump claims indifference to rising Oil price

United States (US) President Donald Trump stated on Monday that he is unconcerned about the future of negotiations with Iran, saying, "I don't care if negotiations with Iran are over," during an interview with CNBC. Trump also claimed that talks are continuing, at a rapid pace, with the Islamic Republic of Iran on his Truth Social account.

Key takeaways:

I don't care if negotiations with Iran are over.

I'm not worried about Oil prices if Iran blocks the Strait of Hormuz.

I had a very productive call with Prime Minister Bibi Netanyahu.

There will be no troops going to Beirut, and any troops that are on their way have already been turned back.

Through highly placed representatives, I had a very good call with Hezbollah, and they agreed that all shooting will stop.

WTI Oil FAQs

WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.

Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.

The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.

OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.

Jun 02, 01:53 HKT
Australian Dollar falls as strong US manufacturing data boosts Greenback
  • US ISM Manufacturing PMI rose to 54 in May, beating expectations and supporting the US Dollar.
  • Renewed tensions in the Middle East pressured risk sentiment, weighing on the Australian Dollar.
  • Friday's US Nonfarm Payrolls report will be the focus for clues on the Fed's next policy moves.

The AUD/USD pair trades near the 0.7160 region on Monday as the United States Dollar (USD) strengthens following upbeat manufacturing data, while renewed geopolitical tensions and cautious market sentiment weigh on the Australian Dollar (AUD).

The latest Institute for Supply Management (ISM) Manufacturing PMI rose to 54 in May from 52.7 in April, surpassing market expectations of 53 and signaling accelerating growth in the US manufacturing sector.

Meanwhile, risk-sensitive currencies such as the Australian Dollar came under pressure after Iran reportedly halted message exchanges with the US following attacks on Lebanon. The development revived concerns about broader tensions in the Middle East, boosting demand for the US Dollar and other defensive assets.

Chart Analysis AUD/USD


Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.7161. The pair maintains a neutral-to-mildly-constructive tone, trading above the 20-period Simple Moving Average (SMA) at 0.7156 but remains capped by the 100-period SMA at 0.7175. This configuration suggests consolidation within a tight range, with short-term buyers defending the recent recovery while the broader upturn remains unconfirmed. The Relative Strength Index (RSI) hovers at 50.0, hinting at balanced momentum after the latest bounce.

On the topside, initial resistance emerges at 0.7163, the nearby horizontal barrier, followed by the 100-period SMA at 0.7175, where a sustained break would be needed to open a more decisive bullish phase. On the downside, immediate support is provided by the 20-period SMA at 0.7156, with further cushions at 0.7152 and 0.7148, ahead of a more significant floor around 0.7135. A clear move outside this 0.7135–0.7175 band would likely define the next directional leg.

(The technical analysis of this story was written with the help of an AI tool.)

Jun 02, 01:52 HKT
Polish Zloty: NBP pause keeps Zloty in tight range – BBH

Brown Brothers Harriman’s (BBH) Elias Haddad expects the National Bank of Poland (NBP) to keep its policy rate at 3.75% and sees its easing cycle as effectively over. Despite inflation running above projections, softer Gross Domestic Product (GDP) growth and a recent downside surprise in Consumer Price Index (CPI) argue against imminent hikes. Haddad anticipates USD/PLN will continue to trade within a narrow 3.6000–3.7000 band.

NBP on hold, rangebound Zloty

"National Bank of Poland (NBP) is widely expected to keep the policy rate at 3.75% for a third straight meeting. NBP signaled that its easing cycle, which saw it deliver 200bps of cuts in the past year, is over."

"However, it’s too soon to bet on rate hikes even though headline and core inflation in Poland are tracking above the NBP’s Q2 projection of 2.4% and 2.6%, respectively."

"First, headline CPI unexpectedly dropped -0.1ppt to 3.1% y/y in May (consensus: 3.6%) suggesting limited passthrough from the energy shock. Second, real GDP grew less than expected in Q1 (0.5% q/q, consensus: 0.7%) and slowed at an annual pace of 3.4% (NBP forecast: 4.0%) vs. 4.1% in Q4."

"We expect USD/PLN to continue trading within a narrow 3.6000-3.7000 range."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Jun 02, 01:11 HKT
Japanese Yen: Stabilisation expected as BoJ tightens – BNP Paribas

BNP Paribas sees Japan’s Gross Domestic Product (GDP) growth slowing to 0.5% in 2026 from 1.1% in 2025 as the energy shock weighs on activity. Inflation is expected to stay above the 2% target through at least 2028. The Bank of Japan (BoJ) is projected to continue its gradual normalisation, with a 25 bp hike in Q2 2026 and a terminal rate of 2.0% by end-2027, while USD/JPY stabilises around 160.

Energy shock but steady policy normalisation

"The energy shock is set to impact the strong momentum of the Japanese economy negatively."

"We expect annual GDP growth to stand at 0.5% in 2026, down from 1.1% in 2025."

"Inflation has generally overshot the 2% y/y target since 2022 and is expected to stay there through at least 2028."

"Accordingly, the Bank of Japan initiated a process of “adjustment in the degree of monetary accommodation” in 2024, lifting the policy rate to 0.75% so far (previously negative)."

"We expect the process to extend, including one hike (25pb) in Q2 2026, until a 2.0% terminal rate in end-2027."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Jun 02, 00:45 HKT
Dow Jones Industrial Average slips as Iran severs talks and Oil surges
  • The Dow eased back from last week's record highs after Iran suspended talks with the US and threatened to close both the Strait of Hormuz and the Bab-el-Mandeb Strait.
  • Oil jumped close to 5% on the escalation, yet a firm bid across AI and chip names kept the broader tape from buckling.
  • A heavy data week looms, headlined by Friday's monthly jobs report, with a hot manufacturing survey already on the board.

The Dow Jones Industrial Average traded around 0.4% lower Monday, shedding roughly 200 points to sit near 50,800 after pulling back from the record-area highs above 51,100 set last week. The S&P 500 was only marginally lower and the Nasdaq Composite hovered close to flat, a split that tells the day's real story: a serious geopolitical escalation met a market that mostly refused to flinch. Iran tearing up the diplomatic track and pointing at the world's two most important Oil chokepoints sent crude sharply higher, but with AI and semiconductor names doing the heavy lifting, equities are once again treating Middle East risk as background noise.

Iran tears up the script

Iran's state-linked Tasnim outlet said Monday that Tehran has stopped passing messages to the US through intermediaries and intends to fully close the Strait of Hormuz while activating the Bab-el-Mandeb Strait, demanding Israel halt operations in Lebanon and Gaza first. The threat lands after Iran reportedly fired ballistic missiles at US forces in Kuwait overnight, a reminder that the fragile ceasefire is fraying rather than firming. Roughly a fifth of global Oil moved through Hormuz before the war, and both routes are central to energy and trade flows, so the market response was immediate as crude surged close to 5%. For an index sitting at record highs, the muted equity reaction looks less like calm and more like complacency, exactly the kind of setup JPMorgan's Jamie Dimon flagged last week when he warned that risk is being underpriced.

Tech does the heavy lifting

Nvidia (NVDA) climbed around 4% to 5% after unveiling a new AI laptop chip at the Computex conference in Taipei, reigniting the same AI trade that has carried Wall Street to records through the entire Iran conflict. Microsoft (MSFT) added more than 2%, while IBM (IBM) and Micron (MU) each rose more than 5%. That strength is why the Nasdaq barely moved and the S&P 500 held up despite energy-driven selling elsewhere, and it is the main reason the Dow's loss stayed shallow. The pattern is familiar by now: every time geopolitics threatens to break the rally, the AI bid shows up to absorb the blow.

Berkshire goes shopping

The day's standout corporate story came from Berkshire Hathaway (BRK.B), which agreed to buy homebuilder Taylor Morrison (TMHC) in an all-cash deal worth about $6.8 billion, a premium of roughly 24% to Friday's close. Taylor Morrison jumped more than 20% on the news. It is the largest acquisition since Greg Abel took over as chief executive, and a clear signal that Berkshire sees value in US housing even with borrowing costs elevated and the Federal Reserve (Fed) leaning the wrong way for rate-sensitive sectors.

The Dollar and bonds say what stocks won't

The cleaner read on risk came from outside equities. The US Dollar firmed around 0.3% as money moved toward safety, and Treasury yields pushed higher as the Oil spike revived inflation worries. That combination matters because markets are now pricing the Fed to raise rates rather than cut them, a sharp reversal from the cuts traders expected at the start of the year, with new Chair Kevin Warsh inheriting an inflation problem the Iran war keeps feeding. Higher yields and a stronger Dollar dragged on metals, with Gold and Silver both lower, while Bitcoin slid toward $70K on a tenth straight day of exchange-traded fund outflows. Risk-off in everything except the stock index people watch most.

A loaded data week

Even before Friday, the calendar is stacked. The Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) for May printed at 54 at 14:00 GMT, beating the 53 consensus and accelerating from April, a sign factory activity is firming rather than fading. Prices paid cooled to 82.1, below both the prior month and forecasts, but stayed elevated enough to keep the inflation narrative alive. From here the docket only gets heavier: Job Openings and Labor Turnover Survey (JOLTS) data Tuesday, ADP payrolls and ISM Services Wednesday, jobless claims Thursday, and the main event, Nonfarm Payrolls (NFP), on Friday at 12:30 GMT. Consensus looks for just 85K jobs, a sharp step down from the prior 115K, alongside average hourly earnings that will be read closely for wage pressure. With geopolitics boiling and the Fed leaning hawkish, a market this close to record highs is walking into the data with very little margin for error.

Dow Jones 5-minute chart

Dow Jones FAQs

The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.

Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.

Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.

There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.

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