Three stocks that will profit from electric-vehicle growth

Professional investor Konrad Sippel of Solactive, index provider for the Electric Vehicle Charging Infrastructure ETF, picks three firms solving the electric-vehicle charging challenge.

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Why Elon Musk's Twitter takeover could mark the end of the reign of the CEO

The overlords of the corporate world have had their day, says Matthew Lynn. Long live the Technokings!

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China housing market bubble could be a new headache for CCP

Mortgage lending growth in China is slowing amid ongoing downturn in real estate market, caused by defaults among developers, lockdowns and worsening consumer sentiment.The total volume of outstanding mortgage loans in China at the end of March was 53.2 trillion yuan ($8 trillion), rising by 6% compared to the same month of 2021 - the lowest pace since the start of tracking these data by the PBOC, in 2009.In 2021, the volume of mortgage loans in China grew by 7.9%.According to preliminary data from China Real Estate Information Corp., home sales by China's top 100 property developers fell nearly 60% in April amid lockdowns in a number of major cities, despite easing of restrictions in the housing market in more than 60 cities in China.China's average mortgage rate stood at 5.42% in March, down 17 basis points year-to-date, the PBOC said on Friday.China mainland Yuan has been declining for the third week in a row as the government tries to cushion the blow from devastating lockdowns by stimulating exports. USDCNY rallied 5% since April 15 and is expected to continue devaluation as the CCP pledged to boost support to the ailing economy.

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Britain’s post-Brexit trade chaos

The government has yet again postponed introducing post-Brexit checks on EU imports. Why has it done this, and does it matter?

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MacKenzie Scott: America’s fairy godmother

MacKenzie Scott pledged to keep on giving money away till the safe was empty when she split from husband Jeff Bezos. That’s easier said than done when you own a chunk of Amazon.

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FOMO Friday: GBP Plunges To Fresh Lows

GBPUSD CollapsesIt’s been another exciting week in financial markets. Several key moves have kept traders on their toes this week and as we draw to a finish the main attraction appears to be the sell-off in GBP. We’ve had plenty of record action recently, such as the massive decline in JPY, and this week was no different. GBPUSD fell to its lowest level since June 2020. So, let’s take a look at what caused the move and, as ever, if you caught it? Well done! If not? There’s always next week.What Caused the Move?BOE Issues Dire WarningThe main catalyst behind the latest plunge in GBP was the May BOE meeting on Thursday. While the bank hiked rates by .25% as expected, the accompanying statement highlighted a much bleaker outlook than bulls were hoping for.BOE governor Bailey warned that the UK was facing a “massive downturn” over the remainder of the year as a combination of soaring energy prices, rampant inflation and ongoing supply-chain issues takes its toll. The BOE’s latest forecasts included heavy upward revision to its inflation view with the bank now forecasting CPI to peak around 10% by early next year. Bailey warned that severe impact on real incomes was unavoidable and that inflation would take around two years to moderate and fall back to the bank’s 2% target.With the bank now forecasting an even tighter squeeze on consumers over the rest of the year, rate path expectations have moderated. Nevertheless, two members of the BOE were seen voting in favour of a larger .5% hike, reflecting the growing rift within the BOE as it tries to deal with current UK economic conditions.Political Uncertainty Grows in the UK Away from the BOE, the latest set of local elections in the UK put further downward pressure eon the pound. The leading UK Conservative party was seen losing 131 seats while the main opposition gained 87 seats. The results have added to the sense of political uncertainty in the UK on the back of a long list of government scandals.Technical ViewsGBPUSDThe sell-off in GBPUSD this week has seen the market breaking down through the prior 2022 lows at 1.2426. Price is currently testing the bear channel support level and, while beneath the 1.2426 level, the focus is on a further push lower. Bearish MACD and RSI readings support a continued decline with 1.2022 the next bear target to note.

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GBP after BoE flagged stagflation risks

We saw another dovish rate hike from the BoE, as the central bank delivered a strong stagflation warning alongside a quarter point lift to Bank Rate, which now stands at 1.00%. The BoE’s projections implied that market pricing had been too aggressive on future rate hikes, which saw Gilts rallying in the wake of the statement, despite the bank’s announcement that it will now consider starting to sell its bond holdings. ECB members, which seem at loggerheads over the timing of the first rate hike, may take note, as Fed and BoE moves this week are a showcase on how to deliver “dovish hikes”.

The BoE hiked Bank Rate by a quarter point to 1.00% – as widely expected, as pretty much flagged at the last meeting. The decision brings the policy rate to the highest since 2009, although the 6-3 vote and warnings of a sharp slowdown in growth and a contraction in activity for most of next year highlights that there is now more caution on the policy outlook. Indeed, while the statement states that “most members of the Committee judge that some degree of further tightening in monetary policy may still be appropriate in coming months”, it added that “there are risks on both sides of that judgement and the range of views among these members on the balance of risks”. Nevertheless, with the policy rate now at 1% the Committee will still consider beginning the process of selling U.K. government bonds held in the Asset Purchase Facility.

The fourth consecutive hike from the BoE came against the background of higher than expected growth at the start of the year and a further tightening in labour markets, which left the risk of second round inflation effects on the table. Business confidence indicators have remained robust and continue to signal strong growth momentum, while consumer confidence has already been hit by the cost of living crisis. On balance the majority of Committee members didn’t expect the pain inflicted on households to slow consumption and demand sufficiently to bring inflation sustainably back to target down the line. The majority still saw the need for another rate hike today.

However, the case for additional tightening all but evaporated and the new projections suggest that market expectations for the rate path are much too pessimistic. Indeed, while U.K. inflation is set to peak above 10% later in the year, the policy report suggests that tightening in line with market pricing would leave inflation well below the BoE’s target. Market expectations had priced in a succession of hikes to bring Bank Rate to 2.5% by the middle of next year.  While today’s statement still suggests that most MPC members agree that “some degree of further tightening in monetary policy might still be appropriate in the coming months”, it is pretty clear that in the central scenario there won’t be as much tightening as the 150 basis points that markets had expected.

The central bank’s new projections warn that the economy is now expected to shrink for most of next year, with a technical recession on the horizon, as “sharp rises in global energy prices” are hitting household income and companies’ profit margins. The BoE now expects the economy to be around 2% smaller than was anticipated back in February, and inflation is estimated to peak just over 10% in the final months of this year. This would be the highest inflation rate since the early 1980s. Against that background, the labour market is expected to suffer next year, with joblessness anticipated to rise in every quarter until 2025 and the ILO unemployment rate to peak around 5.5%.

The policy report said “Conditioned on the rising market-implied path for Bank Rate and the MPC’s current forecasting convention for future energy prices, CPI inflation was projected to fall to a little above the 2% target in two years’ time, largely reflecting the waning influence of external factors, and to 1.3% in three years, well below the target and mainly reflecting weaker domestic pressures. The risks to the inflation projection were judged to be skewed to the upside at these points, given the risks of more persistent strength in nominal wage growth and domestic price setting than had been assumed.”

In projections conditioned on the alternative assumption of constant interest rates at 1%, CPI inflation was expected to be 2.9% and 2.2% in two and three years’ time respectively.” That would be a tad higher than target, but much closer than the outcome under the market implied path. While market rates declined, many consumers still face higher bills on top of the spike in the cost of living that has been hitting confidence already. Indeed, BoE’s Bailey said the peak in U.K. inflation is likely to be later than in other economies. While he also suggested that when CPI inflation starts to fall it will decline rapidly, though that won’t help consumers now. Bailey said the BoE recognises the hardship facing many in the U.K., but again that won’t mean much to those already feeling the squeeze.

It will increase the pressure on the government though to address the problem, and for Boris Johnson, who is facing tough local elections today, the BoE’s move couldn’t have come at a worse time. The IMF already put the UK’s growth forecast at the bottom of the G7 economies, and we suspect that even if steady rates still show inflation slightly above target at the end of the forecast period, the bank will take a pause now. Fine tuning via a careful and gradual reduction of bond holdings will likely be sufficient at this point and pressure not to squeeze household income further and endanger the housing market will likely mean caution on additional hikes.

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 distribution.

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A simple lesson from Warren Buffett that even children can learn

Warren Buffett has an incredible investment record. And at the core of his strategy there is one very simple principle. Rupert Hargreaves explains what it is and how it can help you.

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Investment Bank Outlook 06-05-2022

CIBCFX FlowsTokyo saw its inflation accelerated to highest in near 30 years in April, Bloomberg said this was largely dur to soaring energy prices. One reporter noted that strong connection in Tokyo CPI to the national CPI which will be published on May 20. A similar boost will complicate BoJ message on inflation. Japan reopened today, UST yields ticked up and investors bought $YEN. Offshore $CNH took out the 6.7000 and it was nasty, sharp move to 6.7140, then above 6.7300, helped push US$ higher.According to our trader, Vaibhav said not surprising that over the first hour of bond trading we witnessed better selling interest from Japan and seems like there has been more away. We have therefore reversed some of the late day strength seen in New York but I won’t be surprised if yesterday’s lows get tested in our session ahead. 10-year UST yields rose above 3.07%.RBA published it quarterly SOMP and said it will need to raise interest rates further as unemployment is forecast to drop to the lowest level since 1974, fuelling wages growth and underpinning inflation. RBA also revised up forecasts of inflation this year at 4.6%, well above the 2-3% target band. However, RBA sees inflation lower mid-2024. AU$ slipped on back of $CNH move, got down to 0.70825 and then buyers surfaced, suspect linked to 0.7100 strikes maturing today and Monday total AU$1.7bn.EUR$ got to 1.05175 but somehow limited bounce despite the hawkish ECB comments overnight. Some rumour that small gamma play linked to downside strikes from 1.0520 to 1.0500. Market is expecting a weak German March industrial production, out at 2.00 pm Hong Kong.CitiEuropean OpenThe Asian session seemed muted, but there were undercurrents present ahead of payrolls today. UST yields pushed higher in Asia, while overnight losses in equities have spread to Asia. Tech-related FX in KRW and TWD have struggled as a result. THB opened substantially lower, although our trader noted no unusual flows. In G10, JPY was the worst performer as rate differentials came into play. AUD saw the SoMP confirm the RBA’s trajectory towards more rate hikes, for which the market is already well priced. CNH broke above the 6.70 handle that was closely watched.Looking ahead, payrolls for USD and CAD will feature prominently. We will also keep a close eye on SEK’s Riksbank minutes and EUR data in the form of Germany IP and retail sales, in addition to ECB speak. GBP will see BoE officials speak, which may add colour to yesterday’s decision. Over in EM, TWD, BRL and CLP see inflation prints, while MXN sees Gross fixed investments data.USDUSD trades on payrolls data at 13:30 BST for April. Citi Economics expects a continued slowing in the monthly pace of job gains in April, with nonfarm payrolls rising by 360k. Average hourly earnings should rise 0.5%MoM and 5.5%YoY in April, although with risks of an even larger increase in our view. We expect the unemployment rate in April to fall modestly to meet the pre-pandemic low of 3.5%, with roughly balanced risks. We also have Fed’s Williams on the agenda at 14:15 BST and Fed’s Bostic at 20:00 BST, though only the former may influence price action in the near-term.

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Daily Market Outlook, May 6, 2022

Daily Market Outlook, May 6, 2022 Overnight Headlines China Orders Government, State Firms To Dump Foreign PC’s Chinese Analysts: PBoC Many Ease MonPol In Q2 Despite Fed Hiking Shanghai Says Covid Infections On Downward Trend For 2 Weeks Japan’s Tokyo Consumer Prices Rise At Highest Pace In Seven Years Japan's PM Kishida Hints At Border Reopening For Travellers In June Japan Seeks Quick Start To US-Led Indo-Pacific Economic Framework The RBA Drastically Raises Inflation Forecasts, Flags More Rate Hikes ECB Doves Put To Flight As Interest Rates Set To Rise In July Dollar Dominance Crushes Asian Currencies As Bond Yields Surge Crude Oil Gains On Supply Concerns After EU Laid Out Plans For Sanctions US Unveils Plan To Buy Back 60 Mln Barrels For Emergency Oil Stockpile Press Sec Psaki: White House Concerned About OPEC Antitrust Bill Asian Shares Slide After Wall Street Frets Over Rate Hike ConsequencesThe Day Ahead Most Asian equity markets are down sharply overnight. That follows a big fall in US equities yesterday, reversing the previous day’s rally. Markets appear to be reassessing their initial positive response to Wednesday’s Fed monetary policy update reflecting concerns that US interest rates have significantly further to rise. Former Fed Vice-Chair Clarida warned that interest rates will need to rise to at least 3.5% to tame inflation. Meanwhile, European Central Bank policymaker Holzmann said that they would discuss hiking rates at the June meeting and are likely to decide on one. Today’s US monthly labour market report will, as usual, be seen as a key bellwether of economic conditions. The April update obviously comes too late to have an impact on this week’s decision to raise rates, but both it and succeeding reports are likely to be important factors in determining the extent to which the Fed continues to hike rates. In his press conference following Wednesday’s US monetary policy update, Fed Chair Powell noted concerns about inflationary pressures not only from international conditions but also from a ‘red hot’ labour market that risks pushing up wage growth. Last week’s Q1 Employment Cost Index showed labour costs growing at their fastest pace for more than 25 years. Today’s report is unlikely to reveal any signs of labour market pressures easing. Look for another solid monthly rise in employment of 450k and a further fall in the unemployment rate to 3.5%, taking it back to its pre-pandemic low. Most noteworthy may be earnings growth which should hold close to the recent high of 5.6%y/y. The UK April PMI construction index will provide timely information from an important cyclical sector. The March reading for overall activity was unchanged from February, holding at its highest level since last June. However, business optimism fell to its lowest since October 2020 reflecting concerns about inflationary pressures and the potential economic impact of the Ukrainian crisis. A number of Bank of England and US Fed policymakers are scheduled to speak today, and attention will be on what they have to say about this week’s monetary policy announcements. In the case of the Fed, possibly of most interest will be whether policymakers have anything more to say regarding whether a 75 basis point rate hike at an upcoming meeting is a likely option after Fed Chair Powell seemed to talk down its probability. FX Options Expiring 10am New York Cut EUR/USD: 1.0425 (491M), 1.0530-35 (370M) 1.0550 (263M), 1.0570-75 (550M), 1.0600 (581M) 1.0650 (782M), 1.0700 (569M), 1.0800 (1.2BLN) USD/JPY: 128.50 (1.345BLN), 130.00 (410M), 131.00 (465M) GBP/USD: 1.2400 (441M), 1.2450 (592M), 1.2500 (415M) EUR/GBP: 0.8450 (581M), 0.8500-10 (600M), 0.8550 (731M) 0.8575-85 (933M) USD/CHF 0.9570 (300M). EUR/CHF: 1.0450 (417M), 1.0675 (710M) AUD/USD: 0.7000 (524M), 0.7100 (908M), 0.7200 (972M) 0.7300 (2.27BLN) USD/CAD: 1.2700 (988M), 1.2725 (382M), 1.2745-55 (764M) 1.2760-70 (710M), 1.2800 (912M), 1.2835-40 (1.29BLNTechnical & Trade ViewsEURUSD Bias: Bearish below 1.0950 Bullish above EUR/USD – Consolidates above 1.0500 ahead of US jobs report EUR/USD opened -0.77% at 1.0540 after USD broadly gained on higher US yields After trading 1.0550 early Asia it came under pressure when Asian markets fell EUR/USD traded down to 1.0517 before settling around 1.0535 late morning Bids are eyed ahead of 1.0490 where support has formed this week More support at the April 28 trend low at 1.0469 Resistance is at the 10-day MA at 1.0567 and 21-day MA at 1.0707 Market awiats US jobs report and reaction in the US Treasury market EUR/USD likely to remain under pressure while USD is safe-havenGBPUSD Bias: Bearish below 1.30 Bullish above. Gently bid on bargain hunting, in a busy session +0.05% in a 1.2334-1.2380 range with consistent strong interest on D3 PM Johnson's Conservatives suffer early losses in local elections Many seats still to be counted- litmus test for PM's popularity Charts; momentum studies edge lower, 5, 10 & 21 day and week MA's slide 21 day Bollinger bands fall, as the strong bearish setup is back in play 1.2525 10 DMA resistance tested this week - first major barrier 1.2786 falling 21 day moving average remains pivotal resistance 1.2325 NY low and 1.2252 June 2020 base are initial supportsUSDJPY Bias: Bullish above 125 Bearish below Bid with 2022 high in sight, as Treasury yields climb +0.3% in a 130.10-130.80 range, USD bid with firmer UST yields in Asia Tokyo consumer prices rise at fastest pace in 7 years Data may be an indicator of more broad based inflation in Japan Techs - 5, 10 & 21 daily, weekly and monthly moving averages head higher Rising Kijun line adds to the strong bullish trending setup Close below 126.45 Kijun line needed to end the topside bias 131.25 April 2022 top initial resistance then 135.20 2002 peak Tokyo 130.10 low then NY afternoon 129.99 base first supportAUDUSD Bias: Bullish above .7300 Bearish below AUD/USD opened -1.9% at 0.7114 after USD surged on hawkish Fed outlook Early Asian buying sent AUD/USD to 0.7132 before reversing lower Asian shares fell hard and USS/CNH broke higher to send AUD/USD to 0.7082 Buyers stepped in when markets settled and AUD/USD is back to 0.7110/15 AUD/USD vulnerable as risk assets remain unsettled US payrolls today may push US yields and USD higher Resistance is at 10-day MA at 0.7121 and close above relieves pressure Strong resistance is at 0.7265/85 where the 21-day and 200-day MAs converge Support is at Monday's 0.7030 low and break targets 0.6967

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Market Update – May 6 – Massive U-turn ahead of NFP

The markets did a big U-turn after Wednesday’s post-FOMC rally, and the pop in rates hammered Wall Street. Along with positioning, the recent massive swings in the markets and mostly bearish tones have been fostered by escalating fears over inflation, an overly aggressive tightening path from the Fed, and increasing angst over slowing growth, in other words, “stagflation.” That potential was imbedded in the Q1 productivity report that revealed near record contraction in productivity as well as unit labor costs, leaving a hollow ring to Chair Powell’s beliefs that the Fed can tame inflation and that the economy can achieve a “softish” landing with a “significant chance” of avoiding a “significant slowdown, or a big jump in unemployment.”

RBA flags further tightening ahead. The RBA said in its quarterly monetary policy report that it will need to raise interest rates further, against the background of tightening labour markets that risk triggering a wage price spiral.

• USDIndex at a 5th winning week – breached 103.95. Currently at 103.84 ahead of US jobs report that is likely to back the case for aggressive monetary policy tightening.
• Equities – was crushed by the revived hawkish outlook and the pop in yields. The USA100 dove over -5% but finished with a -4.99% decline. The USA500 tumbled -3.56%, with the USA30 -3.12% lower.
• Yields 10-year up 17 bps to 3.105%, with the 2-year up 10 bps to 2.738%. 
• Oil climbed to 111.36 high, after the Biden administration outlined a plan to refill oil reserves (SPR). But it has dropped right back down to 109.34. Reportedly, the Department of Energy will put out a tender for 60 mln barrels in the fall, according to an unnamed source. But the purchases will be at some time in the future, which saw the price fall back. Having the government an assured buyer should provide some support. Meanwhile, the looming EU ban on Russian oil imports and the less hawkish than feared FOMC result have helped calm fears. There were no surprises from OPEC which stuck to its plan for a modest hike in output.
• Gold drifted back to 1866 as the USD and Treasury yields rallied.
• Bitcoin tumbled 8% overnight, hitting at 35,278.
• FX markets – EURUSD at 1.0508, USDJPY helds above the 130.50, Cable down to  1.2333. AUD turns below 0.7100.

Biggest FX Mover @ (06:30 GMT) GBPCHF (-0.73%) declned intothe EU open at 1.2157, with next support to 1.2114.  MAs & Stochastics bearishly crossed and RSI is at 36 sloping lower. H1 ATR 0.00169, Daily ATR 0.01081.

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 distribution.

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The Crude Chronicles - Episode 134

Oil Traders Reduce LongsThe latest CFTC COT institutional positioning report shows that oil traders reduced their net-long positions once again last week. While there was firm buying in crude, brent positions saw a larger reduction in upside exposure, resulting in a net reduction in oil upside over the week. Despite the reduction in upside positioning, oil prices have been higher again this week with crude prices now testing the April highs.Ukraine Conflict Keeps Upside Risks IntactOil prices continue to derive firm support from the backdrop of the ongoing conflict in Ukraine. With violence between Russia and Ukraine showing little sign of stopping in the near-term, oil supply remains significantly disrupted. The main focus this week has been on the EU plan to move away from Russian oil and gas within a six-month timeframe. Given that the EU relies heavily on Russian oil imports (accounting for roughly a third of imports by 2020), there is now a major focus on finding alternative providers.OPEC Meeting in Focus TodayLooking ahead, the key focus today will be on the OPEC+ meeting due to take place later today. The group has come under increased pressure to hike output at a faster pace in order to help combat the spike in energy prices linked to the Russian invasion of Ukraine. However, the group has refrained from any quicker pace of production hikes, sticking to it’s own plan of adding back in around 400k barrels per day, each month. Additionally, data -shows that OPEC members have been failing to meet their current monthly quotas, suggesting that any further increases in monthly quotas would have limited impact.EIA Reports Headline Inventories BuildThe rally in oil prices this week comes despite the latest report from the Energy Information Administration. The EIA reported a 1.3 million barrel increase on the week, marking an extension from the previous week’s 0.7 million barrel increase and a firm beat on the 0.7 million barrel drawdown the market was looking for. However, there were solid drawdowns in both gasoline and distillate inventories, which fell by 2.2 million barrels and 2.3 million barrels respectively.Technical ViewsCrude OilFor now, oil prices remain within the recent 95.93 – 108.74 range which has framed price action over the last six week. However, price is once again testing the upper end of that range, suggesting room for a break higher, with the market still underpinned by the rising trend line. Above 108.74, 114.71 is the next resistance to note. To the downside, any break of the 95.93 level will put the focus on deeper support at 83.75.

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Investment Bank Outlook 05-05-2022

CIBCFX FlowsFrom our economics team: Another 50 bps move seems likely at the next meeting as a result, but the statement didn’t hint at anything more than “ongoing increases”. There were no dissents in favour of a larger hike today. We still expect that as rates approach 2% later this year, there will be enough signs of cooling inflation and growth to return to 25 bp moves, with a peak in the mid-2% in early 2023.This is what our macro strategist Bipan said, not really realistic for Powell to commit that far out, so I wouldn’t characterize that comment as particularly dovish with regards to markets. However just listening to Powell, I get the sense that he’s grown more concerned with respect to inflation and expectations thereof. Powell started the presser off by reassuring the audience that they understood the risks of too high inflation. Comments on “further surprise” on inflation possibly in store plus “inflation may flatten, but not drop”. Bipan said the market reaction is largely a function of positioning going in. But peel that away and you’re still left with a very hawkish central bank. That should cushion the US$ against the funders once the take profit move is done for.Our head of rates trading Pawan asked since when was 50 bps hike considered dovish? Fact is market is pricing in excessive and Fed not mentioning 75 bps just got people taking profit. Pawan believes the Fed will go another two times of 50 bps hike then pause.$YEN briefly moved up to 129.54, there are suspicions that the move was caused by Japanese retail but with Japan closed today, it was all a speculation. Market slowed down, eventually weakened to 128.765.AU$ remained supported, despite weak CNH and Caixin PMIs. Trade surplus widened in April to AU$9.3bn beating estimates of AU$8.4bn. Commodity futures also firmed up. Strong resistance noted near the 100-day SMA which lies at 0.7262. Think we could be locked in range until payrolls tomorrow. Large option strikes at 0.7300 for AU$2.05bn and AU$780mio at 0.7200.EUR$ firmed up to 1.0642 after stops triggered above 1.0630. Large strikes at 1.0600 for €1.82bn mature today.Macro strategist Jeremy Stretch said we expect the BoE to hike rates by a further 25 bps at today’s meeting, with rates rising to 1.0%. Such a move will take the bank to the threshold at which it previously announced it would consider moving from passive to active QT.CitiEuropean OpenA dovish FOMC yesterday in the US session raised rates by 50bps, and Fed Chair Powell essentially took 75bps off the table for future meetings. UST yields dived, along with USD, while equities soared. The Asian session felt the reverberations of the decision, although by and large it was a somewhat tranquil session. AUD dipped lower slightly, and Aussie rates bull steepened alongside the UST moves overnight. Moves higher in NOK and lower in GBP came ahead of their respective rate decisions, as focus shifts away from the FOMC. PHP CPI came in hotter than expected while THB headline CPI came in under consensus.Looking ahead, we will see a flurry of rate decisions. GBP, CZK, PLN and CLP are expected to be live, while decisions in NOK and HUF are not. We also see OPEC+ meeting today, where they are expected to agree to raise production targets by 432k bpd for June. We will also see CPI prints from CHF and TRY, as well as ECB speak. Lastly, we flag that JPY, ILS and KRW are on holiday.

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Daily Market Outlook, May 5, 2022

Daily Market Outlook, May 5, 2022 Overnight Headlines China Caixin Services PMI Drops To Lowest In More Than Two Years Chinese Analysts See Potential For Economy To Rebound In May Shanghai Covid Cases Fall Slightly, New Infections In Beijing Hold Steady Australia’s March Trade Balance Surprises As Surplus Widens Fed Hikes Rates Half Point, Will Shrink Assets To Curb Inflation US Treasury To Cut Auction Sizes For The Coming Quarter Yellen Sees Solid Growth, Possible ‘Soft Landing’ For US Economy Bank Of England Set For 4th Straight Rate Hike To Fight Inflation UK PM Johnson Gives EU Final Chance To Compromise Over Protocol Brazil’s Central Bank Lifts Key Rate, Signals Another Of Smaller Size India’s Central Bank Roils Markets With Surprise Rate Hike Before Fed US Dollar Bruised As Fed Hike Dashes More Hawkish Bets BofA: BoJ May Spend $100B To Slow Yen Slide If USD/JPY Nears 140 FitchRatings: Slumping Yen Could Prompt BoJ Yield Target Recalibration Australian Bonds Rally As Rates Traders Pare Hike Bets After Fed Oil Steadies Before OPEC+ Meet After Surging On EU Russian Ban Japan Considers Financial Support To Boost US LNG Output Asian Shares Firm As Fed Tempers Aggressive Rate Hike BetsThe Day Ahead Asian equity indices are mostly higher following yesterday’s US Fed policy update. As expected, interest rates were raised by 50bp, the largest increase since 2000, while the start of balance sheet reduction in June was confirmed. Chair Powell indicated that further 50bp rises at the next two meetings in June and July were ‘on the table’ which would bring the top end of the range of the Fed funds rate up to 2%. The rally in risk sentiment in late US trading appeared to result mainly from Powell playing down the likelihood of 75bp increases. Elsewhere, the impact of China’s zero-Covid policy was evident in the Caixin services PMI which plunged to 36.2 in April. Today’s focus is the announcement of the Bank of England’s monetary policy decision at midday, followed by the press conference with Governor Bailey. A fourth consecutive increase in interest rates seems to be on the cards. We expect the majority of the nine-strong Monetary Policy Committee (MPC) to vote for a further 25bp increase in Bank Rate to 1.00%, taking it to its highest since 2009, although we suspect that some members may prefer different courses of action. Updated economic projections in the Monetary Policy Report are likely to see a lift in the BoE’s near-term inflation forecasts which could prompt some members of the MPC – notably Catherine Mann and/or Michael Saunders – to seek a more rapid pace of tightening. However, on the flip side, at least one member – most likely Deputy Governor Cunliffe – may vote against a hike, just as he did in March. Such divergence in views highlights the difficult balancing act facing central banks in setting policy in the current environment (slower growth and high inflation) that continues to make plotting the likely path of policy uncertain. The BoE’s latest set of economic projections will factor in its assessment of the impact of the war in Ukraine, which should add a downside skew to GDP growth projections. Meanwhile, despite the probable higher near-term inflation forecast, the BoE’s longer-term projections seem likely to be cut. With the latest forecasts set to be conditioned on a higher market-implied path for UK interest rates as well as a weaker growth outlook, the BoE will probably now project an even bigger undershoot of the inflation target in three years’ time. That would be an indication that current market pricing for interest rates to rise to at least 2.25% by the year-end is excessive. Expect the Committee to maintain a cautious message regarding prospects for further tightening.FX Options Expiring 10am New York Cut EUR/USD: 1.0500-10 (1.6BLN), 1.0570-80 (810M) 1.0600 (1.8BLN), 1.0675 (290M), 1.0750-55 (1.0BLN) 1.0765 (600M) USD/JPY: 128.00 (410M), 130.70 (395M) GBP/USD: 1.2550 (502M), 1.25890 (320M), 1.2700 (392M) AUD/USD: 0.7000 (516M), 0.7030 (343M), 0.7135 (393M) USD/CAD: 1.2615 (280M), 1.2865-70 (513M) 1.2880-90 (761M), 1.3075 (1.2BLN), 1.3100 (2.6BLN) USD/CHF 0.9700 (230M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.0950 Bullish above Consolidates post – Fed gains in quiet Asian session EUR/USD opened +0.98% at 1.0622 after late rally due to Powell comments It eased to 1.0604 early Asia before finding buyers ahead of 1.0600 It hipped back up to 1.0642 before settling unchanged at 1.0620/25 The 10-day MA is at 1.0603 and another close above that reading solidifies support Resistance is at the 21-day MA at 1.0727, which should be stiff resistance Bids tipped 1.0575/80 and a break below would shift pressure to the downside Trading in Asia was quiet due to Tokyo holiday EUR/USD may consolidate ahead of US non-farm payrolls FridayGBPUSD Bias: Bearish below 1.30 Bullish above. GBP/USD pares Powell – spurred gains pre – BoE event risk 1.2542 is low water-mark for cable since its Powell-spurred jump to 1.2637 Fed chief poured cold water on the idea of 75 bps Fed hikes 1.2453 was GBP/USD low shortly before Powell addressed 75 bp hike question BoE event risk at 1100 GMT; 25 bps rate hike to 1% expected... GBP could leap on 50 bps hike surprise/weaken on "dovish hike" 1.2637 = highest level for GBP/USD since Apr 26 (1.2772 was high that day)USDJPY Bias: Bullish above 125 Bearish below USD/JPY's relapse has found support ahead of a key Fibo Relapse on Wed to break the daily tenkan line that is now at 129.11 The market failed to register a close under it Support found ahead of 128.60, a 61.8% retrace of 126.97-131.25 (EBS) rise There is a good chance that bulls can rebuild to retest 2022 131.25 peak Tenkan and kijun lines are positive aligned, reinforcing the bullish market EUR/JPY sees a 136.84-137.53 Thursday range so far, according to EBS dataAUDUSD Bias: Bullish above .7300 Bearish below AUD/USD rally hits a wall with no fresh trigger for bulls AUD/USD turns lower, deflected by strong resistances looming Offers at 0.7253 protects 200 DMA at 0.7284 Last 0.7236, failure at those levels may cue long-trimming After post-FOMC USD selloff, no fresh triggers on horizon Asia shares up modestly on heels of Wall St; S&P futures flat China's dismal Caixin services PMI won't help AUD

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