Adidas: Q1 2021 Earnings Preview

This Friday (7^th May 2021), Adidas AG (#adidas) – the largest sportswear manufacturer in Europe and the second largest in the world –  will release its earnings report for the first quarter in 2021.

Following the launch of its “Creating the New” strategy  in March 2015 , in the period from March 2015 to before the pandemic Adidas saw massive gains in sales from both North America and China, to approximately €7 billion, while net income grew by nearly €1.2 billion, which then boosted the company share price  more than three-fold and created attractive returns for its stakeholders.

Recently, Adidas has announced its short-term projection for the next five years (2021 – 2025) with a new strategy called “Own the Game”, which according to CEO Kasper Rorsted,  is focused on “increasing credibility of the Adidas brand, elevating the experience for consumers worldwide and pushing the boundaries in sustainability”, eventually improving sales and net income each year by 8%-10% and 16%-18%, respectively. (Source: Adidas Press Release)

For the upcoming earnings announcement, consensus median estimates for sales are €5.01 billion, up 14% from the previous year. Net income and earnings per share (EPS) from continuing operations are expected to record €0.432 billion and €2.25 respectively, both doubling the recorded figure in 2020.

On the other hand, while postponement of the European championships and Tokyo Olympics may serve as  downside risks to the sportswear manufacturer, it has proved to be unlikely. Losses incurred are fairly limited and only made up  approximately 0.3% of the company’s total revenue in 2019.

Nevertheless, a more significant risk to be considered is the ripple effect of the ‘Xinjiang’ event, which could lead to the company gradually losing its market share in China.

Recent comments from US Treasury Secretary Yellen that “rates may have to rise somewhat” (although she has since quickly clarified and denied),  have sparked speculation for a stronger Dollar to come in the near term. A strong Dollar may not be beneficial to Adidas as the company manufactures most of its products in Asia, but pays its bills in dollars. In other words, the company runs the risk of higher purchasing costs as a result of a divergent Euro-Dollar relationship, thus lowering its profit margin.

In regards to monetary policy, the ECB’s policy decision is largely dependent on how successful European countries are in curbing the spread of the virus through their vaccination programmes. If the situation goes well and the members start discussing  tapering, Adidas stock will not be spared from  being affected negatively.

Technical Analysis:

The weekly chart shows that following the second failure of the #adidas share price to break through the session high at €306.60, it continues to weaken, leaving behind a rounding top pattern. It is currently trading below resistance level €271.55 (the same as 23.6% Fibonacci retracement level which extended from the lows in March 2020 to recent highs). Stochastics and RSI are both pressured below 50, while the fast line of the former is approaching the oversold zone.

The Daily chart shows that the share price has fallen below the support of the short-term channel trend line support. However, as of yesterday’s close, #adidas has managed to rebound from €250.00 (the same as 38.2% FR/psychological level), and closed up 2.7% during the day. Stochastics and RSI are turning upward at the lows, indicating the possibility of a technical rebound in share price in the near future. Resistance levels: 271.55 and 285.00; Support levels: 250.00 and 230.00.

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Larince Zhang

Market Analyst 

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Live market analysis: BoE No Change but with a dissenter

Join us below for a live commentary on the BoE rate decision and monetary policy report as warnings that inflation pressures may not be transitory are getting louder.

The BoE left the repo rate unchanged at 0.10% and the QE total unaltered, as had been widely anticipated. The repo rate decision was by unanimous vote at the nine member Monetary Policy Committee, while the vote on the QE was by 8-1. The dissenting voter was Haldane, who is leaving the MPC, and who wanted to lower the size of the quantitative easing program.

The BoE still affirmed that the rate of QE purchases would slow down, as previously signalled, which the Bank stressed was purely an operational decision that “should not be interpreted as a change in the stance of monetary policy.” In the quarterly Monetary Policy Review, the BoE raised both growth and inflation projections.

GDP is now expected at 7.25% in 2021 before moderating to 5.75% growth in 2022. CPI is now forecast rising to a y/y rate of 2.31% at the one-year horizon, up from the 2.07% y/y rate that was forecast in the February MPR.

 

 

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Canadian dollar seen consolidating gains as drumbeat builds for Fed taper: Reuters poll

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Market Spotlight: GBPJPY Playbook Into BOE

To Taper or Not To Taper? Today’s BOE meeting is attracting a lot of attention given the recent build up in BOE tightening expectations. With the UK’s vaccination effort delivering tangible success according to the latest data and with the current reopening progressing well, optimism is rising. With this, the market is today looking for confirmation from the BOE which is expected to announced tapering of monthly asset purchases. If such a move is announced, with a signal that the BOE intends to move further along the path to normalising policy, this should lift GBP firmly. However, if the BOE hold off today, or announces a taper but signals no intention to adjust policy further in the coming months, this could send GBP lower.Where to trade the BOE GBPJPYFollowing the breakdown beneath the rising channel in GBPJPY, the pair failed to break below the last swing low in the uptrend, held up by support at the 149.55 level. The pair is now caught in a range between support at the 149.55 level and resistance at the 152.78 level. With this in mind, there are clear two-way risks into today’s BOE meeting. Given the better risk backdrop recently, there is room for GBP to advance against JPY should the BOE meeting take a hawkish tone today. A break above the 152.78 level should encourage fresh momentum towards the 156.39 level. On the other hand, if the BOE meeting today disappoints bulls, GBPJPY could quickly retreat lower. A break of the 149.55 level should open the way for a move back down to the 146.78 level next.

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Dual Event Risk For GBP Today

Today holds the potential to create a lot of volatility for GBP with both the April Bank of England monetary policy meeting and the Scottish elections being held. With the UK currency having settled into a range against the Dollar over recent months GBP traders will be welcoming the chance to make a decisive break one way or the other.BOE Tapering in Focus Today Looking at the BOE meeting first off, there are plenty of upside risks today. The market is broadly expecting the BOE to upgrade its economic forecasts in light of the vaccination progress and the ongoing reopening of the economy. However, the bigger focus at today’s meeting is on whether the bank announces tapering. BOE tightening expectations have been on rise over recent weeks given the success of reopening and the government’s vaccination effort. With this in mind, the announcement of tapering today would likely lift GBP encouraging bulls that they are on the right track, taking GBP higher. Any decision to delay tapering, however, would likely see Pound come under pressure.However, even if the BOE does taper today, given the level of expectations, the greater focus will be on the forward guidance and whether such tapering is likely to be part of a signal that BOE monetary policy is taking a more hawkish shift, pointing to the earlier removal of stimulus and tightening of policy. If the tapering, however, is seen as more of an isolated manoeuvre, this again could see some disappointment selling in GBP.Downside GBP Risks into Scottish Elections Looking at the Scottish elections next, the key focus today, there is also potential for a significant FX impact. Given the increased conversation recently around a fresh Scottish independence referendum, the prospect of a win for the SNP today holds the power to weigh heavily on GBP. Recent polls have reflected a widening majority for the SNP which could see them achieving an outright majority in parliament, in which case a referendum looks like a done deal. Even if the SNP doesn’t achieve an outright majority, it seems more likely that it would end up in a coalition government with other pro-independence parties, again keeping the focus on a referendum, increasing political uncertainty in the UK and creating downside risks for GBP.Technical Views GBPUSDThe recent rally off the 1.3676 level in GBPUSD saw price testing the underside of the broken bull channel and the 1.3997 level which has held as resistance for now, keeping price within the range between those two prices. For now, the focus is on further upside until the 1.3676 level has broken. Below there, focus shifts to the 1.3461 level next.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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Big Tech on steroids: why the 2020s will be the “decade of the DAO”

• SEE MORE Cryptocurrency ether has hit an all-time high. Why? And will the bull market last?
• SEE MORE A beginner’s guide to bitcoin: how to buy bitcoin

When it comes to taxes, the tech giants – Amazon, Google, Facebook and Apple et al – have for over a decade now made Western governments look like fools. Heck, even Starbucks has. Their globalised business models, with IP here, trademarks there, profits somewhere else, have meant that they can pretty much pay as little or as much tax as they see fit, and there is not a lot governments have been able to do about it.

Tax systems, bound by national borders and designed around the physical economy, have been exposed for the antiquated megaliths they are. Local individuals and companies have been burdened with heavy taxes so that governments can subsidize their out-of-control spending. The globalised digital behemoths on the other hand have got away almost scot free.

Well, if you thought governments were unprepared for the disruption brought to their revenue models by the tech giants of the 2000s and 2010s, wait till you see how unprepared they are for “decentralised autonomous organisations”, aka DAOs. I’ll bet you less than 5% of government ministers even know what a DAO is. Nevertheless, the 2020s will be the decade of the DAO.

What is a DAO?

When “Satoshi Nakamoto” designed bitcoin, one of his key aims was to create a money system that had no central point of failure. Previous alternative money systems, he argued, such as Digicash and Digigold, had failed because there was a central company, a central office that could be shut down. Once this central point was shut down, the system came tumbling down with it.

So, intrinsic to bitcoin’s design, was that the system functioned on a distributed network – on multiple computers in multiple jurisdictions around the world. You might be able to take out one or more computers or nodes on the network, but you couldn’t take them all down. And it is the combined power of all the machines operating on the network that makes bitcoin so formidable. A government can make bitcoin illegal, but the computer power required to take down the network is so immense that it is almost impossible. This was Nakamoto’s blockchain.

Now organisations are following the same model. With DAOs, like bitcoin, there is no central body to close down or tax. These organisations operate on distributed blockchain networks with no company HQ, no formal organisation at the centre, no base in any jurisdiction and no central point of failure. Their currencies are their own issued tokens; digital, existing outside fiat economies.  Their platforms and businesses will be automated by code, often written on an open-source basis. 

Governments are trying to impose taxes, censorship and other rules on the likes of Facebook, Twitter, YouTube, Uber and AirBnB. How will they do that to the social network, the video-, ride- or flat-sharing platform is decentralised? Many of the often highly libertarian developers in the blockchain space have even stated that their intention with DAOs is to replace the state altogether. If they deprive it of essential tax revenue, they’ll go a long way to doing that.

There are many reasons tech stocks have been able to grow at the phenomenal rate they have since the late 1990s. One has been the incredible product or service they have been able to offer – Google’s search engine, Apple’s phones and computers, Amazon’s shopping and delivery. Another has  been the sheer scalability of digital tech – Google can make a change to its search engine and billions benefit; a brilliant app need only be uploaded once, but it can be downloaded billions of times. 

But also, with valuations based as much on users as on profits, tech companies have not been held back by the heavy taxes imposed on the physical economy. Not having to leak capital to the tax man, means they can reinvest in their own companies, develop quicker and better products and then offer them to customers cheaper. Well, these same three factors all apply to DAOs, only on steroids. DAOs are going to be huge.

How to invest in DAOs

Picking out individual opportunities is a lottery. If this were the dotcom boom, we would be in about 1997. We haven’t even had the first proper hype cycle yet. Google and Facebook haven’t even been invented, and Amazon is still only selling books. The tech is still highly experimental and we just don’t know who the winners will be. I couldn’t begin to start singling them out, though I do know they are there. 

There isn’t a Nasdaq exchange where they all list – they won’t even list on an exchange – nor is there an exchange-traded fund that tracks them. But the future multi-national, trillion-dollar behemoths are all lurking somewhere in the cryptoverse. 

There are products that track baskets of coins and products, but even singling these out is a minefield. Familiarizing yourself with the decentralised exchanges, where these products are traded will take several days of learning. 

But make no mistake – decentralised tech is the opportunity of the next decade. If you’re a youngster setting out on a career, go and look for opportunities there. You could make a lot of money in just a few years.

And if you’re an oldster, researching investment opportunities, you know where to look. But remember it’s the Wild West. There will be huge winners, but most projects will go the way of dotcom.

Perhaps one vehicle is to look at the coins on which many of these platforms will be built – the likes of ethereum, cardano, polkadot. I have a fondness for a little known coin by the name of decred (short for decentralised credits), which you can buy at crypto exchanges such as Binance, Poloniex and Bittrex. 

Why do I like decred? It’s under-hyped and the dev team is superb. There are perhaps thirty or forty exceptional developers in the space. Six of seven of them work on bitcoin. A good three or four of them are in decred. When you have no idea which horse is going to win, betting on the stable, trainer or jockey is often not such a bad strategy.

Daylight Robbery – How Tax Shaped The Past And Will Change The Future is now out in paperback at Amazon and all good bookstores with the audiobook, read by Dominic, on Audible and elsewhere.

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May 6, 2021 Fidelity, Moderna and Regeneron Report

Fidelity “FIS” is a global financial services technology company and a leader in providing technology solutions to merchants, banks and capital market firms worldwide. The company is dedicated to upgrade the way the globe and banks pay and invest by applying their benchmarks, deep expertise, and data-driven insights.  On April 30, 2021, it announced a regular quarterly dividend of $0.39 per common share. The dividend is payable on June 25, 2021 to shareholders of record, effective from the end of business on June 11, 2021. Meanwhile, based on Zacks estimates, the company is expected to report weak revenue-growth performance for the Q1, with the overall revenue consensus at $3.16 billion, while EPS is seen at $1.25 per share declining by -2.3%s a year-over-year change.

Fidelity Technical Analysis:

The technical analysis shows the stock price movement of Fidelity above the the Ichimoku Cloud; We find that the price crossed and surpassed the cloud higher on February 19, 2021, at 132.28. The price also tested the cloud on March 31 at 140.78. The cloud currently acts as support as the price trades steadily above it.

The following chart shows the exponential moving average “EMA” of Fidelity, where the share price is moving in an upward channel on the 4-hour timeframe above the 25- and 50- Exponential Moving Average since the February 22, 2021; The price also retested the 50- Exponential Moving Average on March 31, 2021 and then bounces back up quickly. The price is currently trading above the 25- and 50-Exponential Moving Average, and both of them act as support lines for the price.

And in the last part of Fidelity’s analysis on a 4-hour timeframe, the chart shows support and resistance lines, as the price rose to 158.30 on February 14, 2020, and then fell sharply on the 18th of the following month to 89.70, to move in a sideways channel posting a double bottom formation, at 118.97-120.98. After the reversal form double bottom the asset held below the resistance at 158.30. In the meantime, the RSI is at 70 (overbought), with the indicator posting two highs above the 70 barrier, at the times where the asset retested the 158 area.

Moderna Corporation is an American pharmaceutical and biotechnology company which focuses on drug discovery, drug development, and mRNA-based vaccine technologies. Moderna is set to generate an estimated $ 9.3 billion in net income in 2021 as it supplies millions of doses of the COVID-19 vaccine according to Moderna announcement. Such profit growth brings the company in a really good financial position after it continuously losing money the past three years. As the big biotech companies are now busy ramping up production to meet the massive demand for Covid-19 vaccine, Moderna recently announced the expansion of its technology center in Massachusetts, in order to achieve an increase of its production by 50%. Overall the outlook for biotech companies looks positive, as pandemic turned beneficiary for them.

The company expected to reveal massive improvements in both earnings and revenue in Q1, with EPS at $2.30 from -0.35 in Q1 2020, while revenue is expected at $2,006.9 millions implying to a rise of around 23,822.7% compared to the year-ago quarter. This will be Moderna’s first quarterly EPS in at least three years.

Moderna Key Stats
	Estimate for Q1 2021 (FY)	Q1 2020 (FY)	Q1 2019 (FY)
Earnings Per Share ($)	2.30	-0.35	-0.40
Revenue ($M)	2,006.9	8.4	16.0

Whats key for the release ahead is any remarks from the company regarding how our modernity will expand production of its vaccine to meet the growing demand. In a press release issued on April 29, the company announced that it is investing in manufacturing facilities to reach a global production capacity of 3 billion doses by 2022. The company has also raised its supply forecast for 2021 to between 800 million and 1 billion doses.

Moderna Technical Analysis:

On a 4-hour timeframe Moderna’s share price during the first quarter of this year rebounded from 102.68 on January 4, 2021, to reach its peak on February 8 at 189.22, failing to break that resistance line. The share finds support within 117-119 area. Currently the momentum indicators are neutral with RSI rejecting the 70 barrier as it sustains above 50.

Nonetheless, another pharmaceutical and biotechnology company reports today, Regeneron Inc. Just a quick briefing that Regeneron is originally focused on neurological factors and regenerative capabilities, it branched out into the study of both cytokine and tyrosine kinase receptors. Today, May 6, 2021, Regeneron is expected to announce its earnings before the market opens as well. The report will be for the fiscal quarter ending March 2021. According to Zacks Investment Research, the overall earnings per share forecast for the quarter is $7.78. Earning per share for the same quarter of last year was $5.87.

Regeneron Technical Analysis:

Over the last 4 years, the Regeneron stock price char presents a key level at 440 which was a key Resistance for 2019-2020 and now considers to be an immediate Support level for the asset.

Intraday as shown below the asset is currently moving in a descending channel above Ichimoku cloud that acts as support..

.

Click here to access our Economic Calendar

Eslam Salman

Regional Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

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The Crude Chronicles - Episode 88

Crude Traders Cut Longs The latest CFTC COT institutional positioning report showed that crude traders reduced their net long positions in oil by 10,272 contracts last week, taking the total position back own to 489711. With this latest reduction, net long exposure in crude has fallen to a six-month low. Despite the reduction in upside positioning, however, price action has continued to drift higher with crude this week breaking out to its highest levels since early February, just off the yearly highs around 67.90.Weaker US Dollar Helping Oil The rally in crude over recent weeks has largely been a function of the weakness in the US Dollar which has seen a more than 3% decline against its major trading counterparties. Despite a tentative recovery this week, a softer greenback has been good news for commodities prices, including oil. The Fed’s continued insistence that any peak in inflation over the coming months will be transitory has helped calm the Dollar following a rally over Q1. With the Fed sticking to its view that it will not be scaling out of easing this year, it will take a significant uptick in data to see the Dollar surpass those Q1 highs.Risk Sentiment Remains Firm Crude has also been lifted by the broader risk backdrop this week with global equities remaining largely well supported as traders stay focused on the vaccination drive and re-opening effort. With vaccination numbers now starting to gain better traction in Europe, there is hope that the tourism sector will be able to return this summer, which would create a large demand boost for oil via the resurgence of the aviation sector.EIA Reports Large Crude DrawThe latest update from the Energy Information Administration this week has also helped lift crude prices. The EIA reported an 8 million barrel drop in crude stockpiles, far surpassing the 2.3 million-barrel decline the market was looking for, reflecting the uptick in demand as reopening continues in the US. Looking ahead, expectations of a record-breaking summer driving season in the US are helping lift the demand outlook for oil which should keep prices supported going forward.Technical Views WTIThe rally in crude this week has seen the market breaking back above the 65.52 level with price now just short of testing the 2021 highs around 67.50. Key resistance sits above at the 69.53 level which bulls will need to clear to encourage fresh momentum in the move. Some caution warranted around current levels given the bearish divergence in momentum studies though any correction should find support into the rising channel low and the 57.24 area.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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US Data Disappoints, Laying the Groundwork for Weaker NFP Expectations

Brentprice failed to break above the $70 level on Wednesday, as buyers' appetite isstill constrained by some demand risks. Concerns about demand in India as wellas expectations that OPEC will soon begin to lift output restrictions weigh onprices. Recovery of Iranian supply also makes growth more cautious. Although itnow seems that the market will be able to absorb new supply, there are risksthat the outlook for demand will become less optimistic, which will lead to a morefragile balance in the market.SaudiArabia has announced its June OSP prices and, given OPEC's concerns aboutdemand and upcoming production increases, prices for Asia have been cut anadditional 10 cents. The Saudis have also lowered prices for other regions, forexample for Europe the over-benchmark premium has been reduced in all grades.However, US prices have been raised. The multidirectional movement of pricediscounts for different regions suggests that OPEC evaluates the prospects fora recovery in demand in different ways, and also takes into account differentlevels of risks.TheEIA report showed that oil stockpiles in the United States fell by 7.99 millionbarrels in the reporting week, which significantly exceeded the forecast of -2million barrels. This strong decline was driven by several factors, inparticular increased capacity utilization rates of refineries. Now it is at itshighest level since March last year. Oil exports increased by 1.58 mln bpd to4.12 mln bpd. Only four times in history US oil exports topped 4 million bpdwhat looks like an indication of a really strong near-term oil demand picture,especially for US supply.Technically,the corrective rally in oil after breakout of the key trend line took place ina narrowing channel, which indicates a keen buying pressure. The priceapproached the March high however potential breakout of the main resistanceline is likely to be short-lived (false breakout), since risks in the newsbackground are shifted towards neutral and negative events (growth in Iranian output,US shale oil recovery, planned increase in production OPEC, etc.). Most of thepositive on the demand side has already been priced in by the market in one wayor another:Yesterdaydata on ADP and ISM in the US were not as strong as expected which became amajor disappointment. The growth of jobs according to ADP was 742K (forecast800K), the ISM index did not live up to expectations:Withthis data in mind, optimism about Friday's NFP declined. This eased pressure onlong-term yields and the dollar. The yield on 10-year US Treasuries retreatedas less strong labor market growth would mean less acceleration in inflation –the biggest threat of real bond returns currently:It isclear that the risk of a weaker NFP report has risen, so the markets couldstart to brace for a negative surprise on Friday. If the report does turn outto be so, the bearish trend in the dollar is likely to resume, as moreinconsistencies will appear in the story with higher inflation in the US.Disclaimer: Thematerial provided is for information purposes only and should not be consideredas investment advice. The views, information, or opinions expressed in the textbelong solely to the author, and not to the author’s employer, organization,committee or other group or individual or company.High RiskWarning: CFDs are complex instruments and come with a high risk oflosing money rapidly due to leverage. 73% and 65% of retail investor accountslose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltdrespectively. You should consider whether you understand how CFDs work andwhether you can afford to take the high risk of losing your money.

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Investment Bank Outlook 06-05-2021

Citi The market in Asia was briefly rattled on headlines around a further escalation in Australia-China tensions. This saw AUD knee jerk lower towards the 0.7700 handle, with this having a knock-on effect on NZD, select EM pairs and Chinese equities too. However, the market has begun to fade headlines here as they do not so far represent a significant shift in crucial iron ore import/export patterns between the two countries as we argued here.Headline risk in the day ahead is unlikely to diminish though, with USD jobless claims, elections and the BoE in GBP, and a NOK rate decision due too (holds). EUR also looks to Germany factory orders, Eurozone retail sales and snippets of ECB speak (including Lagarde). In EM, we await three rate decisions across MYR, TRY and CZK (holds).– BoE: CitiFX Strategy sees the BoE as less exciting today. Adam Pickett writes that we see a reasonable chance that the BoE do message a technical QE taper, in line with the base case of our colleagues in Citi Economics. We also see plenty of reasons to wait. We think FX is only going to care if the nature of the ‘taper or no taper’ debate at the April meeting bears much relevance to the overall direction of monetary policy, especially on the risk of earlier rate hikes. We expect the BoE to lean on the stock of purchases being more important than the flow, which makes a taper almost entirely operational in nature.Natixis Dollar near two-week high as U.S. jobs data eyed for Fed clues Blockbuster payrolls report Friday may further buoy greenback Loonie near three-year high, helped by oil price gains Australia's dollar slips amid worsening China relations. Ether near record high after rallying almost 800% this month.The dollar hovered near a two-week high on Thursday, consolidating ahead of a key U.S. jobs report that may provide clues on when the Federal Reserve will dial back monetary stimulus.The greenback has rebounded from a one-month low over the past week, swung by U.S. economic data that has largely supported the case for a rapid recovery from the pandemic, with traders weighing whether a lift in inflation may force the Fed's hand earlier than policymakers have so far suggested.The Canadian dollar traded near a three-year high, buoyed by oil price gains, while the Aussie slipped amid a deterioration in Australia's relationship with China.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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Dollar Consolidates Near Two-Week High; Bank of England to Meet

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Daily Market Outlook, May 06, 2021

Daily Market Outlook, May 06, 2021 .Asian equity markets are mixed this morning, as China formally suspended the strategic economic dialogue with Australia, in what seems to be a symbolic move. Elsewhere, Japanese stocks are higher as markets reopen after public holidays. In Europe, German factory orders beat expectations, rising 3.0% in March.The Bank of England (BoE) policy decision at midday takes centre stage for sterling markets, but there will also be attention on Scottish, Welsh and English local elections. No changes in monetary policy are expected, with both Bank Rate and the target level for total asset purchases maintained at 0.10% and £895bn, respectively. However, the meeting is one of the occasions when economic forecasts are updated in the quarterly Monetary Policy Report. Governor Bailey will give a lunchtime press conference.Since its last forecast in February, developments have been unequivocally positive. The fall in Q1 GDP is likely to be less than the previously projected 4.2% drop, while vaccinations have continued apace and there will also be a boost from measures announced in the March Budget including an extension to the furlough scheme. Overall, the BoE is likely to upgrade its expectations for near-term economic activity and lower its assumed peak for the unemployment rate. Expect it to revise up its growth forecast for this year from 5% predicted in February and to now say that the level of activity will return to its pre-crisis level by the end of this year, but it is likely to be more cautious over medium-term forecasts. Markets will also see whether the current £4.4bn weekly pace of asset purchases is scaled back, although that is less significant from an economic standpoint as the total amount of QE to be deployed this year is not affected.The Scottish parliament election will probably be the most keenly watched by financial markets, although the full results may not be known until the weekend. There seems to be more or less evens market odds on whether the SNP, who favour another independence referendum, will win a majority. In England, we may get the results of the Hartlepool by-election tomorrow morning, a formerly solid Labour seat which the Conservatives hope to win.Norway’s central bank is also expected to leave interest rates on hold today (at 0.0%), although it could start to raise them in the second half of the year. Data wise, look for a potential upward revision to UK April services PMI to 60.3 from 60.1. Eurozone retail sales for March are also due this morning, while tomorrow morning’s early releases include China Caixin services PMI and German industrial output.G10 FX Options Expiries for 10AM New York Cut(Hedging effect can often draw spot toward strikes pre expiry if nearby)EUR/USD: 1.1950-60 (566M), 1.2000 (1.3BLN), 1.2015-25 (1.4BLN), 1.2035 (385M), 1.2050-55 (738M), 1.2075 (250M), 1.2100 (1BLN)AUD/USD: 0.7715-20 (500M)GBP/USD: 1.3800-10 (347M), 1.3860-70 (486M), 1.4000 (827M)EUR/GBP: 0.8565 (300M), 0.8650 (636M), 0.8765-85 (300M)USDJPY: 109.00-05 (1.1BLN), 109.30 (470M), 109.60-70 (560M), 109.75-85 (834M)EUR/JPY: 129.95-130.00 (455M), 130.20 (223M)AUD/JPY: 84.60 (366M)EUR/NOK: 10.10 (476M)USD/NOK: 8.4000 (750M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.2120 bullish aboveEURUSD From a technical and trading perspective, the close sub 1.2080 warns of deeper corrective cycle to test support at 1.1990/60 failure here opens 1.1850Flow reports suggest topside congestion through to the 1.2160 level from the highs and then while there maybe some weak stops just beyond stronger offers are likely through the level to the 1.2200 area with weak stops again appearing but very limited and the 1.2250 again seeing the stronger offers through to the 1.2300 level with the market then having the ability to test this year’s highs, downside bids light through to the 1.2000 area and then weak stops on a move through the 1.1920 level opening the market to the 1.1850 area where stronger congestion appearsGBPUSD Bias: Bullish above 1.39 bearish belowGBPUSD From a technical and trading perspective, as 1.3960 contains upside attempts look for a test of range support towards 1.37.Flow reports suggest topside offers through to the 1.3940 area where offers are likely to be a little stronger with further offers likely to be into the 1.4000 area with stops likely through the 1.4020 area and opening a stronger move higher, downside bids strong into the 1.3800 with congestion likely to continue through the level and while there may be some stops that congestion is likely to continue through to the 1.3750 level, light bids through the level but increasing again into the 1.3700 level with congestion then continuing through the level.USDJPY Bias: Bullish above 108 targeting 112USDJPY From a technical and trading perspective, as 107.50 acts as support there is potential for a test of the pivotal 108.50, through here will open another look at 110.Flow reports suggest downside bids into the 107.80 however, a break through the level is likely to see weak stops and breakout stops appearing and the market free to quickly test 107.50 and an old trendline then nothing until closer to the 107.00 area where stronger bids start to appear but the downside opening to Feb levels, topside offers through to the 110.00 level with light congestion through the figure level and weak stops possibly limited and stronger offers likely increasing on a move higher towards the 111.00.AUDUSD Bias: Bearish below .7700 bullish aboveAUDUSD From a technical and trading perspective, the closing breach of .7730 has relieved downside pressure opening a move to test offers towards .7820Flow reports suggest topside offers continue through the 0.7800 area with a break through the 0.7820 area likely to see weak stops and a test towards the sentimental 0.7850 area however, while there maybe some offers in the area the market looks to be fairly open through to the 79 cents level and ultimately ranges from the end of Feb, downside bids light through the 0.7700 level with weak stops likely on a move through the 0.7680 before stronger bids around the 0.7650 area and continuing through to the 0.7600 likely increasing in size, any further moves are likely to see strong support into the 0.7550 to calm the situation.Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 65% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/daily-market-outlook-may-06-2021"
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Market Update – May 6 – GBP in focus ahead of BoE & Elections

Market News Today – USD consolidates, (USDIndex holds PP at 91.25), Equities closed mixed (new ATH for USA30, USA100 down 0.37% as rotation away from tech continues). The AUD fell over 0.5% as China said it will “indefinitely suspend” all activities under the China-Australia Strategic Economic Dialogue. 10-yr Yields held at 1.59%. Commodities tear continues – Copper nudging 10- yr highs. German Factory orders much better than expected. Japan, China and South Korea back to work. Biden agrees to IP waiver for Covid vaccines.

EUR – down to test 1.2000 zone (again), JPY holds over 109.00 at 109.30, Cable rotates around 1.3900 ahead of BOE & Elections. AUD held support at 0.7700, back to 0.7745 now and CAD still rotates through 1.2300

USOIL peaked at $66.65 yesterday tested $65.00 post inventories – back to $65.70 now Gold – $1794 following a test of 200hr support at $1775). Commodities remain robust. BTC back to test $58,000 yesterday at $57,000 now.  Dogecoin – https://www.bloomberg.com/news/articles/2021-05-05/the-dogecoin-joke-is-turning-serious-in-latest-crypto-binge?sref=uHY27eog

European Open – The June 10-year Bund future is up 11 ticks, U.S. futures are little changed, while in cash markets the 10-year Bund yield is up 1.1 bp at 1.58%. DAX and FTSE 100 futures are currently up 0.01% and 0.13% respectively, U.S. futures are also posting fractional gains after a mixed session in Asia, where rising trade tensions between China and Australia weighed on local markets. Investors will be starting to look ahead to tomorrow’s U.S. jobs report, but today’s local calendar is also quite busy, with BoE and Norges Bank announcing policy, a key local election in the U.K. that could have bearing on Scotland’s relation with Westminister, and a number of data points.

Today – BoE & (Norges & CBRT) rate decisions, UK Services PMI, US Weekly Claims ECB’s de Guindos, Schnabel, BoE’s Bailey, Fed’s Williams, Kaplan, Mester. Earnings from Moderna, Rengeneron, ViacomCBS, Peloton, AB Inbev, Continental, ArcelorMittal, ING, Volkswagen, SocGen, UniCredit. Up to 48 million people to vote in UK local elections.

Biggest (FX) Mover @ (07:30 GMT) EURJPY (+0.18%) rallied from lows below 131.00  yesterday to test R1 at 131.35 today. Faster MAs remain aligned higher, RSI 55 & moving higher, MACD histogram testing 0 line & signal line aligned higher but under 0 line. Stochs risingto test OB zone. H1 ATR 0.0886, Daily ATR 0.6745.

 

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Stuart Cowell

Head Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

from HF Analysis /234734/
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Blinken says on Chinese investment in West: we have to be 'very careful'

from Forex News https://www.investing.com/news/forex-news/blinken-says-on-chinese-investment-in-west-we-have-to-be-very-careful-2497276
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