Aussie Rises As RBA Cites Faster-Than-Expected Recovery

AUD Higher Following RBA Meeting The Australian Dollar is seeing renewed demand over the European morning on Tuesday, following the June RBA meeting overnight. The RBA kept rates on hold, as expected and maintained a generally positive tone. The bank cited the current global recovery, noting a strong growth outlook for this year and next, saying that global trade is picking up firmly and commodity prices are rising well. However, the bank reiterated its view that the recovery remains uneven, with some countries still struggling to contain the virus.Aussie Recovery Stronger Than Expected On the domestic front, the RBA noted that the recovery has been stronger than it expected and looks likely to continue at such a pace. The bank is now forecasting GDP of 4.75% this year and 3.5% next year. The RBA noted that this outlook is supported by the government’s fiscal measures and generally supportive financial conditions. The RBA noted that employment conditions have been recovering at a faster pace than expected though vacancies remain high, with labour shortages in some areas of the economy. Looking ahead, the RBA forecasts unemployment to fall from the current 5.5% to around 5% by year end.Uncertainty Remains Despite the broadly positive tone to the statement, however, there were still some words of caution. The RBA cited the remaining uncertainty around the pandemic and the threat of further outbreaks of the virus which could derail the recovery. Furthermore, while the economic recovery continues, inflation and wage growth are forecast to remain subdued with the bank sticking to its view that rates look likely to remain on hold until 2024. The RBA also said that it will be carefully monitoring housing borrowing trends to ensure lending standards are maintained, given the environment of surging house prices and low rates.Considerations on Watch in July Finally, the RBA noted that at the next meeting (July), it will consider whether the current April 24th bond maturity will be maintained as the target bond for the 3-year maturity or whether it will move to the next maturity, the November 2024 bond The RBA said it will also consider whether to make further asset purchases once the second $100 billion of purchases is completed in September.Technical Views AUDUSDAUDUSD continues to trade the range between the .7683 level and .7824 level. Following the recent break through the rising trend line from April lows, the pair found support into the .7683 level once again. With the MACD and RSI both roughly flat here, the market is struggling for conviction. To the topside, a break of .7824 should open the way for a move back up to the 80 level. To the downside, .7564 is the next support to note.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/aussie-rises-as-rba-cites-faster-than-expected-recovery"
via IFTTT

Oil Breakout Sets the Stage for the Rally Towards the $75 mark

Forex trading was calm and uninteresting on Monday as UK and US markets were closed due to holidays. On Tuesday, we saw a weak attempt by the greenback to recover after the currency tumbled against majors yesterday. In the economic calendar, reports on the US economy stand out, the closest of which is the ISM index in the US manufacturing. Markets will look for confirmation that supply bottlenecks continue and costs are on the rise, particularly labor costs. The latter effect could hamper job creation, so it could negatively affect expectations ahead of Non-Farm Payrolls release on Friday.However, if the data can influence the Fed's policy, it will likely do it in the way that it increases chances that there will be no premature tightening of credit conditions. For the dollar, this will have a negative effect, as other central banks are pursuing quite a hawkish policy, increasing interest in local assets. This leads to rebalancing of investment portfolios, causing USD outflows.The economic recovery is increasingly difficult to deny, so OPEC is thinking about a new increase in production quotas. The agency updated forecasts to even more bullish however there is still some uncertainty about production hike which markets used to stage breakout in prices. In addition, the rally was facilitated by the data that OPEC did not fully "use" the May increase in production while return of Iran to the market turned out to be more modest than expected.From the technical point of view, the sharp upward movement of oil on Tuesday looked like a breakout from the range, in which the quotes were held about a month:In order for the rally to gain traction, it is desirable to see a consolidation above $69.70 - $70 per barrel for Brent and, of course, lack of aggressive plans of OPEC to close output gap (i.e., increase production fast). A correction after the breakout will probably follow the decision of OPEC and the communique, however, given the latest demand forecasts, the market should be able to absorb this increase in supply. If OPEC decides not to rush to increase production, in July we can easily see a rally to $75 per barrel in Brent.Before the ECB meeting, it is important to know what is happening with inflation in the European economy and today's CPI report came in handy. Inflation in May turned out to be slightly better than forecasted, which supported the European currency, as there are expectations that the ECB may start cutting QE earlier, but for this there should be a signal in the data. Unemployment also dropped to a new low after the pandemic - 8%. The meeting of the European regulator will take place on June 10 and the foreign exchange market is now inclined price in positive data updates by gaining more exposure to the euro.Technically, EURUSD breakdown ended unsuccessfully last Friday, and the new week was marked by continuation of the rally:A short-term correction to the area of 1.22100 to the lower border of the ascending channel is possible before the movement towards the target 1.23 will resume.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/oil-breakout-sets-the-stage-for-the-rally-towards-the-usd75-mark"
via IFTTT

Market Spotlight: Copper Bull Flag

Copper on Watch Copper prices are at an interesting juncture here. The short-term bear channel which has framed the recent correction lower (bear flag), looks to be failing here suggesting a continuation of the longer-term bull channel, While prices holds above the 4.6515 level, the market looks poised for another move up to the 4.8965 level. MACD is yet to switch bullish, meaning there is plenty of buying room left to keep the market supported.Key Data to Watch Copper trades in a strong positive correlation with inflation expectations. Given the vaccination progress being made and the reopening underway in many key economies, copper looks primed for further gains here. This week, the key focus will be on the US labour reports on Friday. If the data comes in as expected, or stronger, this should help support copper. Pay particular attention to wage growth, if we see a jump here, this should feed into higher inflation expectations, lifting copper.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/market-spotlight-copper-bull-flag"
via IFTTT

The house price boom is looking dangerously like a bubble now

House prices in the UK rose by 10.9% in the year to May.

That's the most rapid growth seen in almost seven years, according to Nationwide.

The average house price hit a fresh record of £242,832 (precisely).

It looks as if an already expensive housing market is now moving uncomfortably close to "bubble" territory...

Here's why house prices keep going up

There are lots of reasons why housing market activity is going into overdrive in the UK right now. Monetary policy is loose, and more importantly, credit is flowing freely to the housing market as mortgage lenders compete for business.

People - especially in wealthier demographics – have saved some money during lockdown, so they have more money to bid up house prices (or spend on extensions and renovations and the rest of it).

And people are also moving around a bit more widely than they have before. You have a sizeable group of people moving from very expensive areas to areas where prices have historically been cheaper due to "the commuting discount". The commuting discount has shrunk now and meanwhile you have an influx of buyers who are psychologically anchored to much higher prices.

My hunch - and it is just a hunch - is that this leads to less price sensitivity. If you sell a flat in London for £750,000 and you see you can get a three-bedroom house by the sea for £400,000 in an area that you don't know that well, you're unlikely to bargain as hard or quibble as much as if you were just moving down the road to an equally expensive flat.

None of this is unique to the UK market. We're seeing similar booms in various markets around the world. (Indeed, the other day, CNBC commentator Kelly Evans made much the same point on the US market right now – "even people who are paying over asking price in Denver... may be pocketing gains if they're selling in California").

The one thing that is unique to the UK market is the stamp duty land tax holiday.

At the end of this month, the holiday becomes less generous – the threshold drops from £500k to £250k. Then, from the start of October, the threshold drops back to £125k. (That said, if you're a first-time buyer you'll still pay no stamp duty on up to £300k, and a reduced rate up to £500k).

(A quick side-rant while we're here: I've just been looking at the rules for stamp duty again. It's really quite extraordinary how successive governments have managed to make what was once a relatively simple tax – for anyone with bog-standard, day-to-day needs at least – into a complete morass of "ifs, buts and maybes". Governments spend lots of time complaining about loopholes, but it would help if they'd stop creating so many of them).

Some commentators believe (or hope) that the end of the stamp duty holiday will put an end to the pace of house price growth. I take the point. Previous stamp duty holidays have tended to bring forward purchases that otherwise would have been made later (or not at all).

However, I wouldn't bet on it.

The most likely thing to pop this bubble

It would be nice if the end of the stamp duty holiday injected some sobriety into the housing market. But when these things get going, they tend to take on a life of their own. And there are some strong signs – I mean, beyond the frantic levels of activity and the double-digit price gains – that we're getting into mania territory.

Affordability has been an issue in the UK for decades, but even by UK standards it's getting sticky. According to Nationwide figures (not the most conservative measure you could use, by any means) the UK house price-to-earnings ratio has a long-run average of just under 4.5.

Now – a caveat. That's going back to the early 1990s. Like most things – including the Shiller price/earnings ratio in stocks – the low interest rate environment appears to have driven up the sustainable long-term average. So it's also worth noting that the housing p/e ratio has not been below 4.5 since the early 2000s, and even at the bottom of the last crash (in about 2009), it barely touched the 5 level.

However, even if you're trying to be very forgiving, the figure really is creeping back up now. It's back above 6, and it's only ever been higher during the run-up to the last big bubble, in 2007 (when it reached just below 6.5).

Now you can certainly make the point that interest rates are a lot lower now than they were in 2007. As a result, a given level of earnings will enable you to fund a much larger mortgage than it did back then. And with competition hotting up between mortgage lenders, there's no reason to expect it to get harder for borrowers soon.

And let's not forget the good old government. House price booms might be increasingly politically problematic, but house price busts are rarely popular with anyone.

So I keep coming back to the same conclusion: the one thing that pops this – and most other asset bubbles across the globe - is inflation rising to the point where it becomes too difficult for central banks to ignore. And to be clear, by that I mean it reaches a point where they have to do something to contain it and get "ahead of the curve", rather than just gently raising interest rates to play catch up.

That would involve tightening credit to the point where it would hurt (which is why they won't do it until they have to).

That might take a while. In the meantime, if you're a homebuyer fighting off rising panic, my own view is that trying to time the housing market is even more pointless than trying to timing the stock market. On that front, if you're just buying a house to live in, here's what really matters.

from Moneyweek RSS Feed https://moneyweek.com/investments/property/house-prices/603329/the-house-price-boom-is-looking-dangerously-like-a-bubble
via IFTTT

The IndeX Files 01-06-2021

Global equities benchmarks have started the week in a broadly positive manner with most indices trading in the green today. US and UK traders return after the holidays there on Monday and the big focus this week is on the US employment reports at the top of the week. The market is looking for jobs growth to have jumped from 266k last time to around 645k this time with the unemployment rate forecast to fall from 6.1% to 5.9%. Given the reopening underway across the last month, the market is expecting a solid number this time around.There will also be a lot of focus placed on the average hourly earning figure for the month. Following the bumper reading seen last time (0.7% from -0.1% prior) the market is looking for a more modest 0.2% result. If the data prints in line with expectations this could create headwinds for equities markets, stoking inflation expectations once again and putting the focus back on the question of Fed tapering.Technical Views DAXThe DAX remains above the 15486.96 level for now, keeping the focus on further upside in the near term. MACD and RSI are both bullish, albeit rather flat, reflecting the lack of momentum here. To the topside, the channel top is the area to watch while any drop lower will turn the focus to 14791.27.S&P500The S&P is trading back up to high as price continues to climb back towards the 4236.50 level. While MACD and RSI are both bullish here, they are showing bearish divergence, warranting caution. Should we see any correction below 4182.50, 4116. Is the next support zone to note.FTSEThe FTSE has started the week on a solid note with price breaking higher today as the recovery off the 6895.6 level continues. MACD is still bearish for now, though turning higher, with the RSI mobbing higher also keeping the focus on further upside here. Above 7137, bulls will be looking to challenge the 7241 level next.NIKKEIThe NIKKEI has started the week on a softer note here, with price stalling just ahead of a test of the bear channel top and a retest of the broken bullish trend line. However, with both MACD and RSI bullish here, the focus is on further upside while price holds above 28356.6. Below there, 26932.1 is the next support to note.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/the-index-files-01-06-2021"
via IFTTT

An investment trust with plenty of potential at a bargain price

Winston Churchill described Russia as “a riddle, wrapped in a mystery, inside an enigma”. The same could be said of the £370m Hansa Trust, listed and managed in London but registered in Bermuda, which has been connected to the Salomon family since the 1950s.

To most professional investors, Hansa is opaque, distrusted and unpredictable. One third of the 120 million shares are voting shares (LSE: HAN) and two thirds (LSE: HANA) are non-voting. A little over half the voting shares are connected to the Salomon family, of which half are attributed to William Salomon, a director of Hansa and managing partner of its fund manager. He also owns nearly 5% of the non-voting shares and has been buying recently.

Both the voting and non-voting shares are trading at a discount to net asset value (NAV) of more than 30% and expectations of the sort of corporate change that would reduce this are low. Shorter term that is probably correct, but not so longer term. 

Struggling in Brazil

About 21% of Hansa’s NAV is attributable to its 26% holding in Ocean Wilsons, a listed holding company (Salomon family interests hold another 25% of Ocean Wilsons directly). Half of Ocean Wilsons’ valuation is due to its portfolio of investment funds and half to its 58% holding in Wilson Sons, a logistics and marine services business operating and listed in Brazil.

Alec Letchfield, investment manager of Hansa since 2014, describes Wilson Sons as “a really good company in a very difficult market”. Brazil – famously “the country of tomorrow and always will be” – has been in turmoil since 2008. Wilson Sons has struggled on, but it has accounted for a falling proportion of Hansa’s assets. 

In better times, Wilson Sons will prosper, its valuation will rise and hence so will the valuation of Ocean Wilsons, which currently trades on a discount to its own NAV of about a third. 

A respectable performance

The remaining 79% of Hansa is performing creditably: 43% is invested in core regional funds and about 12% in each of global equities, thematic funds and diversifying funds. The performance of the global-equities portfolio has been disappointing in recent years – having been “too value orientated”, says Letchfield – but has picked up recently. The core regional funds have performed broadly in line with global indices, but the thematic funds, comprising healthcare, biotech, disruptive growth and environmental, have far out-performed. The diversifying funds have lagged in the last year, but did exceptionally well in the two prior years.

These equity-heavy allocations could change if Letchfield becomes more cautious, but at present he is relaxed. “We expect a powerful recovery, abundant liquidity and central banks to err on the side of caution,” he says. He remains a long-term bull on the US (57% of the investment portfolio) due to “its ability to tackle problems and rejuvenate itself”. Turnover in funds is low, although turnover of direct holdings is greater.

Closing the discount

Hansa aims to be comparable with RIT Capital Partners, capturing most of the upside of equity markets, but limiting the downside. This would require changes. Few believe the Salomons would ever agree to the sale of Wilson Sons, but that’s probably wrong. Doing so would turn Ocean Wilsons into a pure investment firm, which could be merged with Hansa.

With share buy-backs and perhaps enfranchisement of Hansa’s non-voting shares, the discount to NAV could fall from nearly 40% on a look-through basis to 10%, giving the shares upside of nearly 50%. The possibility of an exit from Brazil makes it worth locking away at the current bargain price.

from Moneyweek RSS Feed https://moneyweek.com/investments/funds/investment-trusts/603309/an-investment-trust-with-plenty-of-potential-at-a
via IFTTT

Why you shouldn't rush to remortgage your home

Your home is not actually “a piggy bank made of bricks”, says Claer Barrett in the Financial Times. But booming property prices and low mortgage rates mean “many otherwise sensible people” are acting as though it is. UK Finance, which represents the banking and finance sectors, says that over half of homeowners who refinanced last year “withdrew additional equity from their homes”. 

No wonder. “Rock-bottom mortgage rates” are back, says Helen Crane on thisismoney.co.uk. TSB has launched a two-year fix at 0.99% for remortgagers with a 40% deposit. It is the first such sub-1% fixed mortgage on the market since 2017. Those taking the 0.99% TSB deal are charged a £1,495 fee, so it can still prove cheaper to take a “higher rate with a lower fee”. Someone remortgaging a £300,000 property at 60% loan-to-value would be up £376 per year better off if they borrowed from Santander at 1.34% (fee £49) rather than taking the 0.99% TSB mortgage.  

Splashing the cash 

There are “three main risks” for remortgagers, says Barrett. First, interest rates rise, making the debt more burdensome. Second, “the asset you’ve bought falls in value”. Finally, a change in circumstances means “you can no longer service your debts”. For younger people who “do not remember the property crash or double-digit home loan rates of the 1990s”, the first two can be easy to overlook. 

Increasing numbers of parents are remortgaging to help their offspring buy a house, reports Melissa York in The Sunday Times. Children under the age of 35 say they received an average of £19,000 for a deposit from the bank of mum and dad last year; 21% got more than £30,000. “Children will inherit that property anyway”, so why not make “that money… work harder earlier”, says Miles Robinson of broker Trussle. Lenders are tapping into this market with specialist products such as the Barclays Family Springboard Mortgage.  

Home renovation is another booming area, says Stephen Maunder for which.co.uk. Mortgage broker Habito reports that 62% of Britons are planning home improvements this year. Many will pay with money they set aside during lockdown, but others are tempted to tap into the rising value of their home. 

Remortgaging because you fancy a nicer kitchen is one thing, but be careful about selling it to yourself as an investment: going into more debt “in an attempt to increase a property’s value ahead of a sale is a gamble – and won’t necessarily give the uplift you hope for”. 

A sub-1% mortgage rate certainly looks more appealing than the 3%-4% typically charged on personal loans. The longer term length of a mortgage also means lower monthly repayments. But the time taken to repay a debt is just as important as the headline interest rate. For example, £10,000 added onto a 19-year mortgage at 1.25% costs £1,240 in total interest. The same amount paid back as part of a five-year personal loan at 3.25% costs £848. The monthly payments from remortgaging are lower (£49 compared to £180 for the loan) but you ultimately pay more for that extra flexibility in your monthly budget. 

Yet the remortgagers may still come up trumps: if inflation takes off and the Bank of England doesn’t hike interest rates then the mortgage borrower may find that the pounds they are paying back at the end of the mortgage term are worth rather less than they were when they borrowed them.

from Moneyweek RSS Feed https://moneyweek.com/personal-finance/mortgages/603304/why-you-shouldnt-rush-to-remortgage-your-home
via IFTTT

Investment Bank Outlook 01-06-2021

BNP Paribas UNITED STATES: Having limited the damage in 2020, the US economy is now recovering fast, driven by a vaccination campaign that is steaming ahead and raising hopes of collective immunity to Covid-19 being achieved at some point in the summer. The economy has also benefited from the exceptional fiscal stimulus package, which is twice the size of that put in place after the financial crisis of 2008. As a result, US GDP growth will be close to 7% in 2021, opening the way to a rapid return to pre-crisis levels. The employment deficit remains significant as a result of the pandemic, but this should steadily be absorbed, opening the way to a rapid fall in the unemployment rate, which is expected to drop below the 5% mark in the second half. Expected inflation has risen sharply and is unlikely to fall back, particularly as reported inflation is picking up. Over the coming months the latter is likely to run well above the 2% target set by the Federal Reserve, but this will not cause the central bank to deviate from its accommodating stance.CHINA: After plummeting in Q1 2020, economic activity has experienced a V-shaped rebound since Q2. Economic growth will stay strong in 2021, still supported by industrial production and exports. Manufacturing investment growth should accelerate in the short term while investment growth in infrastructure and real estate projects is expected to slow. The growth recovery in the services sector and in private consumption has started later and been slower, but it should gain momentum in 2021. The authorities are expected to reduce very gradually their fiscal policy support measures and continue the cautious credit policy tightening, which was initiated in Q4 2020 in order to stabilize domestic debt-to-GDP ratios and contain risks in the financial system.EUROZONE: After an historic recession in 2020 (-6.8%, annual average), the Eurozone economy should firmly rebound this year (+4.2%), especially from the H2. In 2022, the economic recovery would be still on track with an economic growth of +5%. Globally, Eurozone GDP could reach its pre-crisis level faster than we expected before, around the middle of 2022. The current resurgence in the pandemic across many Member states and new health restrictions keep weighing on the dynamics of the recovery and uncertainties remain at a significant level. Nevertheless, the expected acceleration of vaccines rollout is the brightest spot for the economy in the months ahead. Also, in this still tricky situation, the policy-mix will remain accommodative to support the recovery. The European central bank has already announced a higher pace of assets purchases, helping to maintain very favorable financing conditions in the Eurozone. Over the coming months, one of the most important issues to focus on will be to restore consumers’ confidence. This constitutes an essential vector of a prompt and sustained recovery.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/investment-bank-outlook-01-06-2021"
via IFTTT

Daily Market Outlook, June 1, 2021

Daily Market Outlook, June 1, 2021 Equity markets across the Asia Pacific were broadly steady overnight, as inflation concerns continued to temper sentiment. As expected, the Reserve Bank of Australia left policy unchanged at its latest meeting and signalled that it would decide whether to extend its QE programme at its next meeting in July. Meanwhile, yesterday the OECD revised up its expectations for the world economy. Notably, the upward revision was led by developed economies, including the UK, which it now expects to grow by 7.2% this year, from its previous forecast of 5.1% made back in March.Ahead of next week’s ECB policy meeting, today’s Eurozone CPI release for May will provide a timely update on inflation trends. Eurozone inflation has been rising of late and a further increase is expected in May. Indeed, already released French data showed a rise to 1.8%y/y from 1.6% previously, while yesterday’s German inflation data print showed a pick-up to 2.5%y/y from 2.0%. Expect annual Eurozone headline inflation to rise to 1.9% from 1.6% in April. That would be its highest since November 2018 and broadly in line with the ECB’s inflation target of close to but below 2.0%. However, the rise is almost solely due to higher energy prices as the core measure (excluding food & energy) is forecast to still only be 0.8%y/y from 0.7% previously. Consequently, the data may reinforce the convictions of many ECB policymakers that they are still not close to achieving their target on a sustainable basis.Elsewhere, today’s calendar is full of a number of updates on the manufacturing sector. Both the Eurozone and UK manufacturing PMI reports are second readings that are not expected to be revised. Those first estimates were consistent with expectations that, after a fall in Q1, Eurozone and UK GDP will rebound in Q2. Less positively, the surveys also continued to point to concerns about inflationary pressures with some evidence of recruitment difficulties now adding to the previous comments about supply chain bottlenecks and higher commodity prices.Meanwhile, in the US, ahead of Friday’s bellwether payrolls report, the manufacturing ISM report is expected to show the US economy continuing to motor ahead. The headline index is forecast to remain above 60 for a fourth consecutive month, consistent with a further solid increase in activity. Elsewhere, a number of central bank members are due to speak, including BoE Governor Bailey who is appearing at a Reuters event on “Building a Finance System Fit for a Clean, Resilient and Just Future”. However, from a monetary policy perspective, comments from US Fed members Quarles and Brainard are likely to attract more interest.CFTC DataBullish EUR, GBP Sentiment Strengthens Data up to Tuesday May 25 and were released on Friday May 28.Currency traders are turning more negative on the broader outlook for the USD again. After last week’s CTFC data showed little change in the overall USD short, the data through last Tuesday showed the aggregated short position measured against the major currencies rising USD1.3bn over the week to USD16.8bn. Net gold longs rose sharply, gaining USD3.6bn to return to late February levels, in what is effectively another manifestation of broader USD bearishness.Investors bolstered bullish bets on the EUR; gross longs rose the by around 4k contracts on the week while gross short positioning little changed from the May 18th week. The net EUR long position is now back to where it was in early March. In the GBP, net long positioning was bolstered by gross shorts covering; gross longs were little changed in the week. Net EUR longs rose USD669mn and net GBP longs rose USD504mn on the week, accounting for the bulk of the increase in the aggregate USD short position.Investors remain largely unimpressed with commodity/high beta FX. While year to date returns for the NZD, AUD and MXN (the latter two effectively flat) have been unimpressive, all three have out-performed the EUR over that timeframe and the CAD is one of the top performers among the majors since the start of the year (+5.4%). Net positioning in the AUD, NZD and MXN was effectively flat on the week while the decent net CAD long that has developed recently saw some very light net trimming (down USD108mn) on increased gross shorting activity.The traditional FX havens saw little change in overall positioning on the week; net JPY shorts persist, even though the JPY was little changed through the reporting week. Net JPY shorts reflect the only area of this market where sentiment is even more negative than the USD. Net CHF positioning saw some short covering in the week but the modestly bearish bias that emerged through mid-April persists.G10 FX Options Expiries for 10AM New York Cut(Hedging effect can often draw spot toward strikes pre expiry if nearby)EUR/USD: 1.2150 (2.1BLN), 1.2195-1.2205 (450M), 1.2225 (504M), 1.2240 (580M), 1.2275 (1.7BLN), 1.2300 (920M)USD/CHF: 0.8975-80 (290M)AUD/USD: 0.7650 (363M), 0.7800 (364M)USD/CAD: 1.2025 (350M), 1.2100 (350M)USD/JPY: 109.00 (251M), 109.75 (325M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.2150 bullish aboveEURUSD From a technical and trading perspective, the close through 1.2120 is constructive but bulls must defend 1.21 to set up a test of 1.2270/80. A close through 1.2150 would suggest a corrective phase developing.Flow reports suggest topside offers congested through to the 1.2300 level with weak stops limited through the 1.2320 area and long term trend line around the 1.2345 area likely to see strong offers before weak stops opening the topside to further gains through the 1.2400 level.GBPUSD Bias: Bullish above 1.4150 bearish belowGBPUSD From a technical and trading perspective, as 1.4150 now acts as support, bulls will target a test of 1.43. Only a close back below 1.4150 would concern the bullish thesis opening the window for a corrective cycle.Flow reports suggest topside offers light through the 1.4200 level however, very few stops and stronger offers starting to appear through to the 1.4250 level and then increasing through to the 1.4310 area before weakness and stops appear for a break through to the 1.44 level before sentimental offers increase, downside bids light through to the 1.4100 level before stronger bids appear for any move beyond the 1.4050 level as congestion and sentimental levels appear.USDJPY Bias: Bullish above 108 targeting 112USDJPY From a technical and trading perspective, as 108.30 supports bulls will target 110.70’s, a closing breach of 108.30 would suggest a corrective move to test 106.30Flow reports suggest downside light through the 108.50 before opening the market to a new test of the 108.00 level, stronger 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 .7790 bullish aboveAUDUSD From a technical and trading perspective, the breach of .7790 refocuses attention on the downside as .7820 contains upside attempts, look for a test of .7680.Flow reports suggest topside offers into the 0.7800 area with weak stops through the 0.7820 before opening for a new run higher and strong offers likely through the 0.7840-60 area to build for the 79 cent level. Downside bids light through the 0.7750 area and stronger bids likely continue through to the 0.7700 area before weak stops appear below the 0.7680 and a stronger 0.7650 area then holds the downsideDisclaimer: 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-june-1-2021"
via IFTTT

Market Update – June 1 – USD Back under pressure

Market News Today – USD weighed into the new month.  USDIndex down into close under 90.00 at 89.75 now. RBA – No Change and no fuss – although they did highlight the improving jobs market, concern over housing price surge and the Covid outbreak in Victoria – AUD been a good performer along with GBP over night. Asian markets positive at 1-month highs, positive PMI data from JPY & CNY and AUD Housing data, lifted sentiment. Oil up ahead of OPEC+ meeting (not expected to discuss output beyond July and wants to wait and see what happens with Iran) “sources”. Brent over $70.00, USOil at $67.65 and 12 week highs. GOLD bid by inflation worries & weaker USD – trades at $1913, next key resistance $1922-5.

This week – Heavy dose of global data – top of the shop is US NFP, Eurozone Retail Sales & GDP  monthly PMI data – The data could  reveal the acceleration in annual inflation growth for major economies.

European Open – Holidays in the U.K. and the U.S. made for a very slow start to the week yesterday. Investors will be back today but trading so far has still been muted. The June 10-year Bund future is down -5 ticks, while in cash markets the 10-year Treasury rate has lifted 2.0 bp to 1.62% in catch up trade. DAX and FTSE 100 futures are up 0.4% and down -0.3% respectively, while U.S. futures are posting fractional gains. Further indications of strengthening growth are also accompanied by lingering inflation concerns and of course tapering jitters. In FX markets EURUSD is little changed at 1.2233, while Cable has lifted to 1.4227

Today – EZ, UK, US Final Manufacturing PMI, EZ Flash CPI, US ISM Manufacturing PMI, Fed’s Quarles, Brainard, BoE’s Bailey and JMMC/OPEC+ meetings.

Biggest FX Mover @ (07:00 GMT) AUDCHF (+0.25%) rallied from near 16- week lows on Friday’s close at 0.6920 yesterday to close at 0.6950. Rallied again today to 0.6977  ahead of RBA, since cooled to support at 0.6960. MAs remain aligned higher, RSI 55.00 and now neutral, MACD histogram & signal line choppy, remain over 0 line from below. Stochs. moving lower out of OB zone from earlier. H1 ATR 0.0008, Daily ATR 0.0041.

Click here to access our Economic Calendar

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 /241261/
via IFTTT

Dollar Weakens; Monthly Payrolls Data Eyed

from Forex News https://www.investing.com/news/forex-news/dollar-weakens-monthly-payrolls-data-eyed-2519577
via IFTTT

Dollar Down as Investors Digest the Curbing of Yuan, Await Key U.S. Economic Data

from Forex News https://www.investing.com/news/forex-news/dollar-down-as-investors-digest-the-curbing-of-yuan-await-key-us-economic-data-2519572
via IFTTT

Dollar in doldrums as traders ponder Fed policy path; sterling soars

from Forex News https://www.investing.com/news/economy/dollar-in-doldrums-as-traders-ponder-fed-policy-path-sterling-soars-2519506
via IFTTT

Pound Climbs to Three-Year High as Vaccines Spur Growth Hopes

from Forex News https://www.investing.com/news/forex-news/pound-climbs-to-threeyear-high-as-vaccines-spur-growth-hopes-2519500
via IFTTT