Investment Bank Outlook 16-05-2022

Credit AgricoleAsia overnightSentiment started the session strong on the back of a mortgage rate cut in China over the weekend and signs of an easing of its Covid lockdowns in Shanghai. But the investor mood turned sour following the downside surprises in the China cyclical data. At the time of writing, S&P500 futures and a modest majority of Asian bourses were trading lower. The weak China data led to the Antipodeans being the underperformers in the G10 in the Asian session and the JPY was the outperformer.USD: the chief propagator of Fed tightening around the worldThere are many channels through which the Fed is tightening spreads around the world at present. They range from the higher costs of borrowing in USD to spikes in risk aversion which trigger portfolio outflows and increase the cost of funding of more vulnerable borrowers in their local currencies. The USD has become a very important propagator of Fed tightening in its own right. Indeed, the USD’s rapid ascent of late has forced a number of central banks to try to match the Fed’s tightening measures in order to stabilise their own currencies and thus prioritise financial stability over economic growth. The need for aggressive monetary tightening has been made more urgent by the fact that the USD strength coincided with very elevated commodity pricesJPY: having it both ways?The JPY has received a burst of support from weakening risk sentiment as well as lower UST yields. Indeed, the return of UST yields and global equity markets moving in the same direction has also seen the return of the JPY’s usually strong negative correlation with global equity markets. Previously, higher UST yields and the Fed’s tightening was driving equities lower and leading to a muted response in the JPY as the currency was torn between being pulled lower by higher long-end UST yields and being supported by weaker equity markets. The JPY is now having it both ways as investors face the dual risk of the world’s two largest economies potentially sputtering – the US as the Fed hikes rates to control inflation and China due to its zero-Covid policy. This dual threat is driving long-end UST yields lower in line with equities. The JPY will continue to receive support until concerns on at least one of these dual fronts gives way.EUR: can it avoid gassing out?Heightened concerns over a potential cut to EU energy supply from Russia took its toll on the EUR, while this week and next could prove a watershed with regard to whether Russia would put its threats into action over gas payments. Any interruption to gas flows to the largest EU economies could indeed risk reviving recession fears in the area, while the European Commission is due to publish its latest economic forecasts this morning. Lower growth and higher inflation for this year are almost a given, while attention could ultimately focus more on how such bleak developments filter through to 2023. While clear evidence of stagflation risks in the Eurozone could indeed keep the EUR on the back foot, the media reports on the European Commission’s draft projections over the weekend may have reduce the scope for negative surprises today. Meanwhile, the EUR is unlikely to find any relief from the latest external trade data.

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Market Update – May 16 – A “bad” start of the week

USD started the week off its 20-year highs. China data disappointed –industrial production down -2.9% y/y in April, while retail sales plunged -11.1% y/y. China keeps MLF and repo rate rates unchanged. The PBOC disappointed hopes for further easing in the light of lockdown measures and kept the MLF policy rate unchanged once again. Stocks markets mostly managed gains, but mainland China bourses struggled, after a weak data round that highlighted the negative impact of the country’s zero Covid policy, (CSI300 -1% but Nikkei + 0.3% ). Yields had fallen to their lowest levels in a couple of week, which was seen as overdone given inflation remains elevated and the Fed will be maintaining a hawkish policy stance to bring pressures under control. Oil corrected to $108 whilst Gold dipped to $1804.

• USDIndex steady at 104.60.
• Equities – USA500 turned lower (–0.6%) at 3984 now, USA100 fell 0.5%. EUROSTOXX 50 and UK100 futures both eased 0.3%. 
• Yields corrected, with a -1.3 bp correction in the 10-year Treasury rate, which is currently at 2.906%.
• Oil also corrected as China jitters clouded over the demand outlook, and USOIL dropped back to currently $108.10 from levels over $111 earlier in the session.
• Gold slump continued with a test of the key $1800 floor.
• Bitcoin languishes at $29K now, after bouncign to $31K early morning.
• FX markets – EURUSD sideways between 1.0390 to 1.0415, USDJPY eased to 128.70 and Cable continues to struggle; returns at 1.2200 area.  AUD lower in Asia.  

Overnight –  Shanghai aimed to reopen broadly and allow normal life to resume from June 1. Markets in Thailand, Malaysia and Indonesia were closed for holidays.

Today – The calendar also includes the second reading for Eurozone Q1 GDP, which is likely to confirm the quarterly growth rate at 0.2% q/q. BoE Monetary Policy Report Hearings. NY Fed’s Williams will take part in a moderated discussion. The Empire State is expected to fall to 16.0 in May after surging 36.4 points to 24.6 in April.

Biggest FX Mover @ (06:30 GMT) CADJPY (+1.44%) Rallied to 1.2980 before pulling back again to 1.2900 lows. Now back to 1.2938.  MAs aligning lower but not bearishly crossed yet, MACD signal line & histogram holds below 0, RSI 44 & declining, H1 ATR 0.00225, Daily ATR 0.01077.

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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Where will Walmart’s stock price go?

The stock market rally on Friday last week was quite good, but not enough to give a strong indication that the correction to the March 2020 gains has been completed. However, the attempted rebound that started on Thursday turned into a broad rally into the week’s close, setting the stage for a potentially good start to this week. That puts additional emphasis on this week’s earnings report from major retailer Walmart.

Walmart Inc. will report Q1 2022 earnings on Tuesday, before the market open. This report comes amid rising prices of basic goods against consumer demand. Markets expect Walmart to earn $1.48 per share, down 12%, with revenue largely unchanged at $138.8 billion. Target earnings per share are forecast to fall 17% to $3.06, with earnings up 0.9% to $24.4 billion.

Walmart Inc.’s exposure to low-income buyers who felt inflationary pressures throughout Q1 is causing concern. Coupled with the reduced government stimulus and the recent performance of stocks, it will be quite difficult to generate additional gains from current levels. However, Wall Street is currently posting slightly faster growth across all metrics, suggesting the market believes Walmart has been conservative given the uncertain outlook.

Meanwhile, based on Zacks Investment Research with 12 analyst forecasts, the consensus EPS forecast for the quarter is $1.46. The reported EPS for the same quarter last year was $1.69. Shares are ranked at #4 (SELL).

Technical Overview

Walmart traded at $148.00 last week, up 0.67% on Friday. Looking back, Walmart stock soared to a new all-time high of $160 last month, but has since fallen back more than 7%.

Trading volume has steadily increased over the past 30 days, suggesting the downtrend could gain momentum and push the stock back towards the 61.8% FR ($143) retracement level, even to the 2022 low of $132. Meanwhile, the closest resistance level is at $153. A better report will support stock prices, while a worse report will send prices down. Technically, Friday’s price bounce is still above the 200 EMA and Kumo, while the 2 oscillation indicators are both in the selling area.

In general, the stock trend is still up, and the current decline is still a correction to the uptrend that has been going on for 2 years.

Click here to access our Economic Calendar

Ady Phangestu

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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Daily Market Outlook, May 16, 2022

Daily Market Outlook, May 16, 2022 Overnight Headlines Goldman Sachs Cut US Growth Forecasts For 2022, 2023 McConnell Sees Wednesday Senate Vote On Ukraine Bill China Keeps Key Rate Unchanged Amid Sharp Slowdown China Economy Cools Sharply In April As Lockdowns Bite Shanghai Official: Aim For Return To Normal Life In June EU Consider Gas Price Cap In Supply Disruption Scenario EU Growth, Inflation Outlooks Worsens On Energy Crisis BoE’s Bailey Set For Tough Grilling Over Inflation Record UK PM To Sign Off On Plans To Scrap Part Of NI Protocol NATO Prepares To Add Finland, Sweden To Its Defences Food Problem Piling Up As India Restricts Wheat Exports Hedge Funds Lower Bets On US Stocks As Losses SurgeThe Day Ahead Reports on the weekend indicating China will relax come COVID restrictions in Shanghai are likely to boost sentiment as the restrictions have severely impacted China's economic growth trajectory and worsened supply chains problems that were already stressed by the war in Ukraine. Last week’s GDP release for March showed that the UK economy had suffered a sequential monthly slowdown in activity across the first quarter. In March alone, the economy was judged to have contracted, having stagnated in February. In part, the moderation is likely to be a reflection of the sharp rise in the cost of living, which is set to worsen in the coming months and quarters. However, with inflation set to rise further in the coming months, the Bank of England’s Monetary Policy Committee continues to face a significant challenge in setting the appropriate monetary policy stance. Later today, Bailey and three MPC colleagues (Ramsden, Haskel and Saunders) testify to a House of Commons Committee about their latest policy decision. Markets will be looking for clues on the likelihood of further interest rate increases and most immediately whether another rate hike is likely in June. BoE policymakers seem likely to once again emphasise that market expectations of further significant rate rises are excessive but may be reluctant to offer more on their immediate policy intentions. Data wise, today’s economic calendar is limited to the US Empire State manufacturing survey for May and the Eurozone trade data for March. While supply chain issues are likely to result in the headline measure of the Empire survey dropping month on month. However, the extent to which reports of cooling demand are behind the moderation in output will be closely watched. Elsewhere, ECB speakers Panetta and Lane are scheduled to speak. In recent weeks, speculation that the ECB could follow other central banks in raising interest rates has increased. Such that, interest rate markets currently envisage the ECB’s deposit rate (currently set at -0.50%) as potentially being positive by the end of the year with the first hike expected in July (a possibility flagged by ECB President Lagarde last week). The extent to which such a view is shared by other members of the governing council will be closely watched by markets. Early tomorrow morning, the ONS will release the latest UK labour market report, which is expected to show a fall in employment in the three months to March, although the unemployment rate is forecast to hold at 3.8%. However, with the level of unfilled job vacancies still close to record highs, the market overall still seems very tight. That points to ongoing domestic inflation risks from accelerating wage growth. There will be plenty of Federal Reserve comments this week, with a long list of speakers including Fed Chair Jerome Powell. Other speakers include New York Fed President Williams, St Louis Fed President Bullard (very hawkish), Philadelphia President Harker, Chicago Fed President Evans, and Cleveland Fed President Mester. Investors will focus on the bond market's reaction to Fed comments. The 10-year Treasury yield topped out at 3.20% last Monday and some analysts believe the move lower from that level provided the equity market enough oxygen to rally on FridayCFTC Data (Reuters Data) USD spec long to Nov '21 high in May 4-10 period.; $IDX +0.43% EUR flips to long; specs +22,907 contracts now +16,529, EUR$ +0.1% in period $JPY +0.23% in period, specs -9,660 contracts now short 110,454 GBP specs -5,785 contract now -79,598; US-UK rate diff, Brexit weigh on GBP$ AUD, CAD specs sell 13,198, 14,436 respectively; CAD flips to slight short BTC specs buying dip, long grows by 315 contracts to +703FX Options Expiring 10am New York Cut AUD/USD: 0.6880 (731M), 0.7000 (380M), 0.7150 (274M) USD/CAD: 1.2825 (440M), 1.3000 (400M), 1.3015 (237M) NZD/USD: 0.6360 (215M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.07 Bullish above EUR/USD opened 1.0405 after rising 0.28% Friday when risk assets rebounded Mood darkened in Asia following weaker than expected China data EUR/USD eased to 1.0394 before settling around 1.0395 into the afternoon EUR/USD trending south with short & medium term VWAP’s bearish A break above 1.0580 daily VWAP needed to ease bearish pressure 2017 low 1.0340 targeted by bears, break will put parity in playGBPUSD Bias: Bearish below 1.26 Bullish above. Short lived early gains, as risk appetite reverses -0.2%, at the base of a 1.2235-1.2296 range - solid flow through the session Bid with risk after Friday's bounce, then reversed after China data missed Small businesses lending dries up as economic outlook darkens Using "Brexit freedoms" in finance could erode policy that protects users 20 day VWAP fall, as the strong bearish setup remains in place 1.2156 NY low and Asia's 1.2296 high are initial support and resistanceUSDJPY Bias: Bullish above 127 Bearish below USD/JPY still prone to spec-inspired swoons, up into Tokyo fix, then down USD/JPY 129.15 late NY to 129.67 into Tokyo fix, off since to 128.70 EBS Market still heavy, Japanese importer, other bids from 128.70, trail down Market seen heavy above 129.50 for now, wider 127.54-131.35 range for now US yields off after early bounce, Tsy 10s to 2.953% before ease to 2.886% Tokyo risk mood better, Nikkei +0.3% @26,509, AXJ bourses mixed JPY crosses mirror USD/JPY moves, bid early, off post-Tokyo fix, market thinAUDUSD Bias: Bullish above .7200 Bearish below AUD/USD opened 0.6935 after rising 1.17% Friday when risk assets rallied AUD/JPY buying out of Tokyo sent the AUD/USD up to 0.6960 at one stage AUD/USD eased after the AUD/JPY flows dried up and slipped back to 0.6930 China retail sales and IP badly missed expectations and AUD/USD fell again E-minis were up 0.4% early and fell to -0.85% after the China data AUD/USD stalled around 0.6900 before falling to 0.6873 Support at Friday's 0.6859 low and the trend low made on Thursday at 0.6829 AUD/USD sellers tipped at 0.6960/75 with resistance 0.7010

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A family-run investment trust to buy and lock away

Menhaden Resource Efficiency made a slow start, but progress is encouraging. Buy before the discount closes, says Max King.

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Get set for another debt binge as real interest rates fall

Despite the fuss about rising interest rates, they’re falling in real terms. That will blow up a wild bubble, says Matthew Lynn.

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Hong Kong’s brain drain

A change in the political atmosphere and a harsh zero-Covid regime has seen thousands flee the global financial hub. Does it have a future – or will Shanghai take over?

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Events to Look Out for Next Week

Inflation pressures remain elevated near historic highs, worries over aggress Fed tightening knocking the economy into recession are still on. Slowdown fears are also being exacerbated by slumping economies abroad with building fears of a recession in Europe. Stagflation risks in Europe and UK amid the fallout from the tensions between the west and Russia over Ukraine and lockdowns in China will remain in focus although on the latter there is some sense that the worst may be behind us. The week ahead is expected to be another massive one, as Central Bankers speeches will dominate along with Inflation and Retail Sales readings from the globe.

Have a look at the most important events of the coming days in our usual weekly publication.

Monday – 16  May  2022

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• Retail Sales & Industrial Production (CNY, GMT 02:00) – April’s Retail sales are anticipated to contract further at -6.0% y/y following -3.5% y/y in March, while Industrial Production should grow by only 0.7% y/y. These indicate further slowing out of China.
• European Commission releases Economic Growth Forecasts (EUR, GMT 09:00)
• Empire State Manufacturing Index (USD, GMT 12:30) – The highly volatile Empire State data is expected to show a steep decline to 15.50 from 24.60 in April.
• Inflation Report Hearings (GBP, GMT 14:15) –The BOE Governor and several MPC members testify on inflation and the economic outlook before Parliament’s Treasury Committee.

Tuesday – 17 May 2022

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• RBA Meeting Minutes (AUD, GMT 01:30) – The minutes could spark some light on the RBA’s next actions, even though RBA already flagged further tightening ahead. On May 6, 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.
• Average Earnings (GBP, GMT 06:00) – Average Earnings including bonus for March are expected to remain steady at 5.4% (3Mo/Yr). The ILO unemployment rate is seen unchanged at 3.8% in March .
• Gross Domestic Product (EUR, GMT 09:00) – S.A GDP for Q1 is expected unchanged at 0.2% q/q and 5% y/y.
• FOMC Member Bullard Speech (USD, GMT 12:00)
• Retail Sales (USD, GMT 12:30) – April Retail sales are anticipated to increase at 0.5% for the headline and 0.3% for the ex-auto measure, after respective March increases of 0.7% and 1.4%. Strength in core prices will lift nominal sales, though we expect an -8% drop for the CPI gasoline index that will depress gasoline sales. A continued unwind of the lift from 2020-21 stimulus has been seen, and restraint from the end of child tax credits in January after the earlier loss of extended jobless benefits in September.
• Fed Chair Powell Speaks (USD, GMT 18:00)
• FOMC Member Mester Speaks (USD, GMT 18:30)
• Gross Domestic Product (JPY, GMT 23:50) – GDP for Q1 is expected to drift at -0.4% q/q and -1.8% y/y, clearly showing the impact of supply chain disruption, energy crisis etc.

Wednesday – 18 May 2022

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• Consumer Price Index and Core (GBP, GMT 06:00) – The additional tightening all but evaporated, and the new projections suggest that market expectations for the rate path are much too pessimistic. The UK 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. The headline for April’s UK CPI inflation is anticipated to spike to 9.1%y/y from 7% y/y.
• Consumer Price Index (CAD, GMT 12:30) – The April CPI is expected to grow by 1&  with core at 4.2% y/y from 5.5% y/y, adding to the backing for steady BoC policy this year.
• Building Permits & Housing Starts (USD, GMT 12:30) – Housing starts are expected to fall -0.7% to a 1.780 mln pace in April from a 16-year high pace of 1.793 mln in March and 1.788 mln in February. Permits are expected to fall to 1.878 mln from 1.881 mln in March and a 16-year high pace of 1.895 mln in January.

Thursday – 19 May 2022

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• Employment and Unemployment Rate (AUD, GMT 01:30) – The Australian jobs market is expected to show a positive employment report, with 40k jobs in April and unemployment is anticipated to tick lower to 3.9% from 4.0%.
• Annual Budget Release (NZD, GMT 02:00)
• Philly Fed Index (USD, GMT 12:30) –The Philly Fed manufacturing index fell -9.8 points to 17.6 in April, a little below forecast, after surging 11.4 points to 27.4 in March. The index continues to trace a saw-toothed monthly pattern amid the various headwinds and tailwinds, though has softened since hitting a 48-year high of 50.2 last April.

Friday – 20 May 2022

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• Retail Sales (GBP, GMT 06:00) – – UK retail sales for April expected to give further glimpse into geopolitical damage, with a very pessimistic outcome as forecasts sustain contraction picture. Retail Sales declined to -1.4% m/m in March, while April reading is seen at -1.0% m/m.
• MPC Member Pill Speech (USD, GMT 07:30)

Click here to access our Economic Calendar

Andria Pichdii

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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DXY, H4 | Potential Bullish Continuation

Type: Bullish BounceKey Levels:Resistance: 105.384Pivot: 103.599Support: 102.487Preferred Case:On the H4, with price expected to bounce off the Ichimoku support, we have a bullish bias that price will rise to our 1st resistance at 105.384 in line with 78.6% Fibonacci projection from our pivot of 103.599 in line with our horizontal swing low.Alternative Scenario:Alternatively, price may break structure and head for the 1st support at 102.487 in line with the horizontal swing low support.

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Investment Bank Outlook 13-05-2022

Credit AgricoleAsia overnight The dust has tentatively settled across financial markets overnight, with risk sentiment making a timid recovery. In this context, the USD has given up only a modest part of the ground made yesterday against all G10 FX peers bar the JPY which has been a clearer underperformer during the Asian session. USD/JPY has indeed returned to 129, while ignoring the flurry of comments made by Japan FinMin Shunichi Suzuki and BoJ Governor Haruhiko Kuroda. The former repeated that rapid FX moves are not desirable, while the latter reiterated that bold monetary easing remains needed, and that linking any eventual exit from this accommodative stance to the end of his term at the helm of the BoJ (in April 2023) was not appropriate. Elsewhere, EUR/USD has slightly retraced to 1.04, while the commodity FX have recovered a tad more overnight. These latest developments still look relatively fragile, as global risk appetite is likely to decide on whether the USD is able to cement solid weekly gains against all G10 FX except the JPY.CIBCFX FlowsFooled by the Tokyo fix. Early birds sold $YEN hoping for risk-off to resume but was largely disappointed. Japanese banks started to scoop $YEN and the ¥-crosses. The fact that Sunday being May 15, our trader Jon believed that the Japanese corporate will execute their Goto-bi Day interest today. Buying intensified above 128.65 and rose to towards the fix. As expected, four Tokyo banks published their fixing at and above 128.90. Risk-on, Nikkei 225 gained more than 2%, Treasuries sold, 2-year yield above 2.6%, 10-year near 2.9%. Positive sentiment boosted $YEN and the ¥-crosses. BoJ again conducted fixed-rate bond-buying operation. Japanese retail day traders have been accumulating long $YEN will at some point start to take profit, I suspect close to 129.50.AU$ higher after an initial weak open, risk-on led the pair to 0.68915. Better buying came from AU$¥. But came under pressure after onshore $CNY rose above 6.8000, first time since September 2020. Shanghai Composite Index opened in positive territory, that helped the AU$. Support at 0.6805 then 0.6777, doubt they will be tested but if we do, note AU$1.4bn of 0.6725 put strikes mature today.$CAD moved lower and we believed this is likely linked to stronger MXN. In post-New York session, Argentinian central bank raised interest rates by 200 bps to 49%. This was followed by Central Reserve Bank of Peru lifting reference rate by 50 bps to 5.00%. We already had the rate hike by Banxico, so we believed investors sold $MXN as a proxy and this sort of dragged $CAD along, orderly manner. Small selling seen above 1.3080, there is a barrier at 1.3100, little of note downside. Strikes at 1.3040 and 1.3050 roll off today.Price action of the EUR$ was not on its own. At first it was EUR¥ which lent support to the single currency, then $YEN slipping back onto the 128-handle and EUR$ gained to 1.0390s.

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Yen Becomes Prima Donna Amid Recession Threats

US stocks have slumped sharply since their January 2022 peak: USA500 is nearing a bear market after losing more than -19%; USA100 plunged more than -28%; USA30 lost more than -15%; Bitcoin continues to move lower, losing more than 50% of its high price as the crypto world is rocked by the stablecoin fiasco. Bonds started to rise alongside the USD and JPY as investors sought a hedge. Global yields are slowly starting to look downwards.

https://tradingeconomics.com/bonds

Brutal volatility continues to grip financial markets, with threats that global central bank policies will plunge the global economy into recession. The caution born of gradual rate hikes, as data showed prices paid to US producers rose more than expected in April, reinforces bets that the Fed will further tighten policy. US Treasury Secretary Janet Yellen stated that the inflation rate in the country is the number one economic problem facing the government today. Meanwhile, the US Senate voted 80-19 in favor of granting Federal Reserve Chairman Jerome Powell another four-year term in the central bank’s driving seat.

The US Dollar had fallen hard against the Japanese yen during trading on Thursday, due to the risk aversion surrounding the market. The Japanese yen is considered a safe currency and has been oversold. There is more downward pressure on all JPY-related pairs.The JPY was up 1.24% against the USD in Thursday trade, 2.6% against the EUR, 1.7% against the GBP, 2% against the NZD and 2.3% against the AUD.

The Yen has weakened against most major currencies so far this year. As we know, there is a strong correlation between the interest rates of the 10-year US bonds and the USDJPY pair. On Monday, the US10Y rate hit 3.2% and the USDJPY pair set its maximum price for the year at 131.24 levels. The last four days have been marked by a marked decline in the US10Y rate and a stronger Yen.

Technical Overview

CADJPY – The pair has gained more than 1,350 pips since the start of the year, which equates to a 15% JPY loss against the CAD. The last 3 weekly candles have long upper wicks, indicating weak demand. On the weekly chart, AO is entering a downward phase. Comparing historical data, usually changes in the histogram on AO indicate that this trend will continue in the coming weeks.

The H4 chart shows the consolidation which has broken out, while the triangle formation is taking place. The price slid to the downside breaking the 99.00 support and the 200-period EMA. This can be seen from the validation of 2 oscillators on the lower side and the intersection of the Tenken Sen and Kinjun Sen 2 times above the kumo. A further downside move will test the 97.00 support first. On the upside, the retracement could hit the 100.00 mark again before prices act further in the week ahead.

Click here to access our Economic Calendar

Ady Phangestu

Market Analyst – HF Educational Office – Indonesia

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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Daily Market Outlook, May 13, 2022

Daily Market Outlook, May 13, 2022 Overnight Headlines Shanghai Aims To Achieve No Community Spread By Mid-May Rate Hike Bets Build In Japan, Despite BoJ Easy Money Insistence BoJ's Kuroda: Expected Rise In Inflation Will Lack Sustainability Kuroda Rules Out Near-Term Chance Of Tweaking BoJ's Dovish Guidance Australian DefMin: Chinese Spy Ship In Waters 'An Act Of Aggression' Fed’s Powell Can't Guarantee 'Soft Landing' As Fed Looks To Control Inflation Fed's Daly: No Reason To Alter Course For 50 Bps At Next 2 Meetings Fed Chair Jerome Powell Has Been Confirmed For Second Term Ukraine Aid Delayed After GOP Senator Rand Paul Objects To Vote BoC’s Gravelle: Bank Of Canada's 1% Policy Rate 'Too Stimulative’ US Team Flies To UK Amid Fears Over Northern Ireland Deal Market Nerves Prop Up Safe-Haven Dollar And Japanese Yen Oil Climbs Even As Weaker Demand Concerns Cap Gains EU Starts Considering Delay In Oil Sanctions As Hungary Digs In Asia Shares Rise As Fed Chief Again Pushes Back On Bigger Rate Hikes Musk Seeks To Scrap Tesla Margin Loan With New Twitter FundingThe Day Ahead There are limited economic data releases out of the UK and the Eurozone today. Expect Eurozone industrial production for March to fall by 1.8%m/m, partly reflecting the sharp 5.0%m/m drop in German output which highlights the impact of the war in Ukraine on the country’s industrial activity. Nevertheless, given that Eurozone CPI inflation has risen to 7.5%, there is still a focus on the increasing likelihood that the ECB is preparing for a July interest rate lift-off. Several ECB speakers have indicated that they favour or are open to a July hike. Notably, Bundesbank President Nagel favours a July rise, while President Lagarde has indicated that it is on the table. The ECB’s Centeno, Nagel and Schnabel are all scheduled to speak today. US data in the afternoon session include import price inflation data and the University of Michigan consumer sentiment survey. Consumer sentiment rose in April for the first time in four months to 65.2 as a strong labour market appeared to outweigh concerns about rising inflation. It is nevertheless sharply down from a year ago, expect it to dip to 63.5 for today’s preliminary May reading. US Fed speakers include Kashkari and Mester. The Fed last week increased rates by 50bp, the biggest rise since 2000, and confirmed that the reduction in its balance sheet (reversing QE) will commence in June. As noted above, Chair Powell indicated that 50bp rises at the next two meetings in June and July are likely which would bring the top end of the target range for the fed funds rate to 2%. That would be close to the neutral rate estimated to be somewhere between 2-3%. It is not clear at this juncture whether rates will have to rise above the neutral level to tame inflation which would likely to materially slow the economy.FX Options Expiring 10am New York Cut USDJPY - 129.90/130.00 550m. EURUSD - 1.0440/50 500m. 1.2350/70 600m. 1.2200 724m. 1.2100 647m. AUDUSD - 0.6720 1.25bn (P). USDCAD - 1.3040/60 1.71bn (1.15bn C). 1.2990/1.3000 1.07bn (898m C). 1.2740/50 1.25bn (722m P). EURCHF - 1.0400 817m. EURJPY - 137.50 629m. 134.50 643m. USDZAR - 16.75 1.10bn (C). 15.50 560m. Technical & Trade ViewsEURUSD Bias: Bearish below 1.07 Bullish above Trades +0.1% with the USD and UST yields firmer in a 1.0373-1.0398 range Optimism resurfaced in Asia, E-mini S&P +1%, Nikkei +2.5%, AsiaxJP +1.6% Positive sentiment may flow through to Europe, providing euro support Charts; daily momentum studies, 5, 10 and 21 day moving averages slide 21 day Bolli bands fall, bearish setup suggests a break of 1.0340 2017 low Close above 1.07 21 to end the downside bias - no close option strikes 1.0373 Asian low and 1.0464, 38.2% May fall initial support, resistanceGBPUSD Bias: Bearish below 1.26 Bullish above. +0.2%, as optimism resurfaced in Asia - E-mini S&P +1%, Nikkei +2.7% Trades towards the top of a 1.2193-1.2225 range with moderate interest Powell said he will fix inflation..., UST yields firmed Charts; momentum studies, 5, 10 & 21 day and week moving averages slide 21 day Bollinger bands fall, as the strong bearish setup gains momentum 1.2415 remains the first major resistance Close above the 1.26 needed to end the downside bias Targets a test of long term support at 1.2082, 76.4% of the 2020-2021 riseUSDJPY Bias: Bullish above 127 Bearish below USD/JPY rallies 0.4% as stocks recover in Asia after a bruising week Rises from a 128.30 open to 129.35 but fails to sustain gains Traders remain risk averse on global inflation and economic fears Markets dogged by fear rising global interest rates will spark recession USD downside limited as Powell reiterates rate pain warning Support 128.30-35, 128.00-05, 127.50-55, resistance 129.35-40, 129.65-70AUDUSD Bias: Bullish above .7200 Bearish below AUD/USD rallies 0.4% as stocks recover in Asia after sharp falls this week Trades in relatively narrow 0.68565-0.68915 range as bearish mood persists Inability to bounce much after 3.45% drop this week a sign of weakness Concerns on China's economy, COVID lockdowns, weak CNY weigh Metals slide; copper consolidates after fall below $ 9k to 7-month low Thurs Focus shifts to AU wages, jobs data next week for clues on RBA rate path Resistance 0.6910-15, 0.6945-50; support0.6830-35, 0.6800-05, 0.6759

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/daily-market-outlook-may-13-2022"
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Twitter faces concerns in its transition to Musk

As is well known, Elon Musk, the richest man in the world and CEO of Tesla, is close to buying the #15 social media player, Twitter, with a $44 billion deal that could take months (two or three at best) until Musk has secured funding, leaving Twitter along with its current projects and teams in limbo. During the transition period there are several issues regarding the changes that Musk can make, including the impact on Tesla.

Earlier today, CEO Parag Agrawal announced to employees via email that the company would enter a hiring pause and all existing job openings would be reviewed to determine if any “should be withdrawn.” He also announced an effort to reduce costs between marketing and travel, along with the departure of two of the main executives, that of consumer products, Kayvon Beykpour, and that of revenue, Bruce Falck, in a personnel reorganization, with the positions to  be assumed by Jay Sullivan. Falck was fired according to a tweet that he deleted.

“…leaders will continue to make changes in their organizations to improve efficiency as needed” -Agrawal.

This comes after Parag tried to reassure Twitter employees at a company meeting on Friday who were seeking answers regarding staff retention after Musk took over ownership of Twitter. A source close to Musk mentioned that he would not make such decisions until the deal is finalized, however, it was also leaked that there is already a tentative replacement for Parag, although his identity was not revealed. Parag will receive approx 42 million if he is fired within a year of the change.

“We need to continue to be intentional with our teams, hiring and costs” – Parag Agrawal

Another relevant issue would be the investigation by the SEC (US Securities and Exchange Commission) regarding whether Musk violated regulatory deadline to reveal he had accumulated a stake of at least 5% of Twitter. well as the FTC’s investigation into antitrust concerns.

The growth of the Twitter website compared to the same periods of last year in April (not yet reported), would have a -21.77% for the monthly growth and an increase of 89.93% for the annual. Twitter has a total of 4.5B in monthly traffic, with 21.7% in the US (991.61M), 15.4% in Japan (104.36M) and 5.5% in Turkey (251.33M). These data would mean a fall compared to the month of March.

In a more controversial move, Elon Musk also vowed to overturn Trump’s Twitter ban that occurred in January 2021 after he was accused that his tweets were encouraging criminal acts by his supporters such as the attack on the Capitol. This commitment was marked by his absolutist attitude to freedom of expression and the suggestion that Twitter needs to be more neutral and less “leftist”, which is worrying users who reacted negatively and asked for a better explanation on allowing the return of Trump and others. In addition,  governments are concerned that it would contradict the new Internet security laws along with the digital content rules in the UK and the EU, being one of the possible reasons why several investors are doubtful. Musk mentioned that temporary suspension is a better option in addition to the reduction in the expansion of artificial conversations by bots and users to generate debate on a specific topic and the limitation of the visibility of messages. Meanwhile, Trump said that he would not return to Twitter even if allowed and that he would prefer his social network “Truth Social Network”.

All of these issues have reduced Twitter’s market capitalization below Musk’s purchase price.

Twitter Technical Analysis

Twitter set a high in March 2020 at 19.98 from where the momentum began that marked its historical high at 80.62. The price then went down to mark a new low at the psychological level of 50.00 and 50% Fibo at 50.20, followed by a failure of maximums at 73.03 to fall to 31.41. Currently the price of the daily candle is at 44.85 with a high and a low price at 47.35 and 43.28 respectively. The fill of the gap seen in April is at 39.23, would mark a possible continuation of the downward trend with support at the March 20 level. If the latter is breached, the asset could retest the 21.36-28.05 area. On the flipside if it manages to overcome and maintain above the 50.00 level it could extend its bullish momentum to test highs at the 70.00 level. The volume seen from April to date is the largest in its history.

Click here to access our Economic Calendar

Aldo Zapien

Market Analyst – Educational Office – Mexico

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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Market Update – May 13 – USD dominates, Stocks lick their wounds

USD holds at highs following hot CPI & PPI data but with signs that the the peak may have been reached. Stocks stalled their recent declines, closing flat in the US and bouncing in Asian markets (Nikkei +2.6%), Yields climbed as risk appetite improved, Fed Chair Powell still flagged half-percentage point interest rate increases at the next two policy meetings, adding that the Fed is “prepared to do more!” and that stable prices are the “bedrock” of the economy but it will cause “some pain”. Oil continued to rally on supply concerns whilst Gold dipped to within $10 of $1800. Kuroda maintains dovish guidance even as Inflation moves higher, Russia threatens “technical retaliation” as Finland seeks NATO membership, Sweden to follow? Putin “humiliating himself on the world stage” – UK Foreign Sec. Truss.

• USDIndex rallied to within 5 ticks of 105.00 and remains at 20-year highs at 104.75 up from 103.60 last Friday.
• Equities – USA500 -5.10 (0.25%) at 3930, US500FUTS at 3955 now.  COIN +8.9%, TSLA -0.82%, (Musk would not back TRUMP in 2024). APPLE -2.69%, GM -4.59%.
• Yields rallied, 10-yr closed at 2.817%, significantly below key 3.00% level. Trades up at 2.89%   
• Oil & Gold both had weak & volatile sessions –  USOil rallied to test $108.00 earlier today from $98.00 on Wednesday.  Gold slump continued with a a test of $1810 on open today from highs this week at $1885, struggles at $1822 now. No safe-haven bid.
• Bitcoin languishes at $30K now, but up from $26.5k. 6th consecutive week lower.
• FX markets – EURUSD up from 1.0355 to 1.0400, parity calls rising. USDJPY dived from 130.00, to 127.50 yesterday now back to 128.70 and Cable continues to struggle at 1.2335.  AUD again outperformed in Asia.  

Overnight – JPY Money Supply better than expected & French M/M CPI in-line at 0.4%.

Today – US Export/Imports Prices, UoM (Prelim.) data, Speeches from ECB’s Schnabel, de Guindos & Fed’s Kashkari.

Biggest FX Mover @ (06:30 GMT) AUDJPY (+0.74%) Rallied from lows at 87.30  yesterday as risk appetite raised it’s head to 89.00 ( and next resistance) earlier. Now back to 88.55.  MAs aligning higher, MACD signal line & histogram moving higher & testing 0 line, RSI 48 & rising, H1 ATR 0.346, Daily ATR 1.67.

 

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 distribution.

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