Dollar Takes the Offensive as Investors Disappointed by EU Inflation Data

EU leaders were able to agree on a sixth package of sanctions last night that would include an embargo on Russian oil, excluding pipeline supplies to landlocked countries. The decision to hit Russia's export revenues will have a high cost in potentially higher inflation and lower EU growth. The ECB's search for a compromise between real output and inflation should remain the key determinant of the short-term movements of the Euro.The dollar managed to find support on the last day of May. U.S. bond yields have picked up again in what looks like a belated reaction to a series of pro-inflation data and events in recent days, namely strong U.S. consumption data released last Friday, Fed official Waller's hawkish comments pointing at the Fed’s confidence in tightening ("households’ balance sheets are in great shape"), as well as the oil rally. The reason why the dollar makes slow progress higher is that bond yields outside of the US are rising as well. On Monday, investors cut exposure in European bonds as the German inflation report showed that consumer price growth reached a new high of the current business cycle - 7.9%:At the same time, monthly inflation accelerated to 0.9%, almost doubling the forecast. EU data published today showed that inflation also exceeded the forecast and amounted to 8.1% against the forecast of 7.7%, actually matching the inflation rate in the US. Investors reacted negatively to the data as the risks that the ECB's policy will lead the economy into stagflation have increased. The euro and pound sterling lost about half a percent against greenback, with the risk of a strong NFP report on Friday, putting an end to rumors about Fed’s “September pause” in hiking rates, likely leading to a deeper decline. The targets for EURUSD are the levels 1.07 and 1.064:GBPUSD is likely to look for support at 1.25, the previous horizontal level where significant support was consolidated:

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BTCUSD – Hits two-week high above 32k

BTCUSD, Day

Cryptocurrencies have taken a dip this week, with BTCUSD hitting a new two-week high of $32,228 after ignoring the strong rally in the stock market last week prompted by the clarity in the minutes of the FOMC meeting and the easing of the lockdown measures in major Chinese cities, which will allow production to resume and could see consumer spending skyrocket.

As for yesterday’s movement, BTCUSD closed up more than 8%, ETHUSD 10% and XRPUSD gained more than 7%.  The rise this week and a break of the two-week $30,000 zone seems to mark the end of the bottom of the Bitcoin price. However, in the technical overview the price is still stuck in the downtrend channel frame. This is consistent with the movement of indicators like the MACD, which is still significantly below the 0 line, and the RSI, which is below the 50 level. And as seen in the Day timeframe, Bitcoin may be forming a strong pattern. If the price fails to break above the $33,000 zone, we may see the price swing back down again and continue the bearish flag. There is significant support in the low zone at $26,600. Conversely, if the price is able to rise above $33,000, there will be the next resistance around the $40,000 figure.

Traders will be keeping an eye on the movement of the US stock market as it returns from a long weekend. Will it be able to maintain the uptrend momentum from last week?

Click to view  economic calendar 

Chayut Vachirathanakit

Market Analyst

Warning: This content is provided for general marketing communications. For informational purposes only. and is not considered independent investment research. No part of this communication consists of or should be considered to contain investment advice or investment solicitation or solicitation for the purpose of buying or selling any financial instrument All information is collected from reliable sources. And every data contains an indicator of past performance. It is not a guarantee or a reliable indicator of future performance. Users should be aware that any investment In leveraged products, there is some degree of uncertainty. And investments like this are associated with high risks. for which the user is solely responsible We are not responsible for any loss. arising from the investment using the information generated by this communication This communication must not be reproduced or redistributed. without our written permission.

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USDJPY, H4 | Potential For Bullish Continuation

Type: Bullish BounceKey Levels:Resistance: 128.843Pivot: 127.896Support: 127.15Preferred Case:On the H4, with prices breaking above the ichimoku indicator and breakout from descending trendline, we have a bullish bias that price will rise from our pivot at 127.896 where the horizontal overlap resistance is to our 1st resistance at 128.843 in line with the swing high resistance, 127.2% Fibonacci extension and 78.6% fibonacci retracement.Alternative Scenario:Alternatively, price may break pivot structure and head for 1st support at 127.15 where the horizontal overlap support is.

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GC1!, H4 | Potential Bullish Continuation

Type: Bullish BounceKey Levels:Resistance: 1867.4Pivot: 1839.8Support: 1830.8Preferred Case:On the H4, with prices bouncing off the ichimoku cloud and breakout from descending trendline, we have a bullish bias that price will rise from our pivot at 1839.8 where the horizontal swing low support and 38.2% fibonacci retracement are to our 1st resistance at 1867.4 in line with the horizontal swing high resistance,61.8% Fibonacci retracement and 38.2% Fibonacci retracement.Alternative Scenario:Alternatively, price may break pivot structure and head for 1st support at 1830.8 where the horizontal overlap support is.

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Market Update – May 31

Stock markets traded mixed. Overnight Chinese data showed a slowdown in the pace of contraction in the manufacturing sector. Beijing’s new policy support, which includes cash handouts for hiring graduates and support for internet companies’ offshore listings, supported the sentiment a bit. In the rest of the world though, inflation jitters returned and yields spiked, with Australia’s 10-year up 8.5 bp and the German Bund yield lifting 1.0 bp to 1.06%. US Dollar stabilized as Treasury yields spiked.

European open:  Swiss economy stronger than expected at the start of the year. Official GDP numbers beat expectations and showed a quarterly growth rate of 0.5% q/q up from 0.3% q/q in Q4 last year. Services were still held back at the start of the quarter by virus restrictions, and the impact of Russia’s invasion of Ukraine won’t show in these numbers yet. SNB head Jordan warned that the fallout from the war and sanctions against Russia could mean stagflation risks globally, but still, with these numbers, the SNB’s negative interest rate environment will also be challenged.

• USDIndex recovered slightly to 101.79.
• Equities – Nikkei and ASX meanwhile closed with losses of -0.3% and -1.0% respectively as inflation jitters returned and yields spiked. GER40 and UK100 up 0.9% and 0.4%.
• Yields – US 10-year rate has jumped 9.4 bp to 2.83% as markets return from yesterday’s holiday.
• Oil – USOil spiked to $119.20 per barrel as demand expectations pick up and EU leaders agreed a partial ban on Russian oil.
• Bitcoin extended gains above 20-day SMA for the first time since April 7.
• FX markets – USDJPY lifted to 127.33, EURUSD down to 1.0734, Cable below the 1.26 mark.

Today – GDP from Switzerland and Canada for Q1, German unemployment, Eurozone HICP. US housing index, Chicago index and Consumer Confidence. The Biden-Powell meeting is also on tap.

Biggest FX Mover @ (08:00 GMT) EURUSD (-0.39%) declined to 1.0730 due to USD strength. MAs aligning lower, MACD histogram zeroed, RSI 35 & falling, H1 ATR 0.00117, Daily ATR 0.00942.

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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Investment Bank Outlook 31-05-2022

CIBCFX FlowsDeputy Governor Hawkesby said RBNZ is forecasting a period of subdued consumption as higher rates impact some households, given that global and domestic risks, a recession is well within the realms of possibility. He added the economy is well placed to cope with high interest rates. New Zealand’s building permits fell to -8.5% from +6.2%, this is a volatile number but not market mover. NZ$ was bought at the beginning for NZ$¥. NZIER said RBNZ will raise OCR by 50 bps in July. However, things turned when US$ was bought across the board. Business confidence continue to decline in May to -55.6 while activity slumped to -4.7. NZ$ was pushed to 0.6525.Our macro strategist Patrick said his preference is to sell into any NZ$ rally with stop above 0.6625, the 50% retracement of the 0.6217-0.7034.Discussion within the desk, our trader Jon believes the RBA will be less aggressive than the RBNZ when comes to rate hikes. He prefers to short AU$NZ$. Spread between the 2-year AU-NZ yields also suggesting lower cross. Fade the rally to 1.1014 with stop above 1.1070.AU$ rose to 0.7103 after the Tokyo open then declined to 0.7163. China’s PMIs improved in May and this boosted the AU$ and the crosses. Good resistance around 0.7200-05 area, furthermore Death Cross developed in the daily chart. The only notable option strike is at 0.7171 for A$1.12bn due tomorrow.Month-end and the Japanese bought $YEN and the YEN crosses, only selling came from the retail day traders, who were taking profit. One US bank issued a note today that US$ has turned and exited its short $YEN position. They could be right because the momentum has been consistent past week, $1.2bn of options strikes at 127.50-55 due tomorrow should offer some support.European leaders have agreed to partial ban on Russian oil, sanctions would forbid the purchase of crude oil and petroleum products from Russia delivered to member states by sea but include a temporary exemption for pipeline crude. This covers more than 2/3 of oil imports from Russia. EUR$ backed off on back of stronger US$. Trendline resistance at 1.0799, likely to see some sellers emerge and stops 1.0855 thereafter. There are fair amount of downside strikes due today to take note of. Although distant, they are quite sizeable. More than €8.1bn worth of strikes 1.0590-1.0600.Oil futures are up but the greenback rules over the Loonie. Initial purchase of CAD¥ pressured the $CAD to 1.2653. Once that was done, the pair reversed back towards 1.2680s. Our macro strategist Bipan said the move below the 1.2700 handle suggests that we need to relax our call for a move to the 1.33 area for now. We still see price action resolving higher and above 1.30 over time, but we’ll need to be patient with that view. In the near-term, we expect levels to gyrate between 1.25 and 1.30. Also, the lack of an immediate catalyst this week suggests that the risk/reward in receiving OIS for BoC dates isn’t there. While we think terminal will reprice lower, and the Bank won’t go as aggressive as the market is pricing, we don’t envisage that to be the message at this week’s BoC.

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Daily Market Outlook, May 31, 2022

Daily Market Outlook, May 31, 2022 Overnight Headlines• China's factory activity falls at slower pace as COVID curbs ease• CN May NBS Manufacturing PMI 49.6, 47.4 prev; Composite 48.4, 42.7 prev, NBS non-Mfg PMI 47.8, 41.9 prev• China’s cabinet issues a series of policies to stabilize the economy- cabinet document• China’s cabinet: Will guide actual lending rates lower• EU, resolving a deadlock, in deal to cut most Russia oil imports• Japan's April factory output slumps in worrying sign for economy• JP Apr Industrial O/P Prelim MM SA, -1.3%, -0.2% f’cast, 0.3% prev; YY SA -3.3%, -0.8% prev• JP Apr Retail Sales YY, 2.9%, 2.6% f’cast, 0.9% prev, 0.7% rvsd• JP Apr Unemployment Rate, 2.5%, 2.6% f’cast, 2.6% prev; Jobs/Applicant Ratio 1.23, 1.23 f’cast, 1.22 prev• Biden highlights Fed inflation role ahead of Powell meeting on Tuesday• Fed's Waller backs 50 bps rate hikes until "substantial" reduction in inflation• POLL-U.S. house price inflation to cool as buyers sidelined by higher rate• Australia Q1 GDP up in the air as strong demand sucks in imports• AU Q1 Current Account Balance SA, 7.5 bln, 13.4 bln f’cast, 12.7 bln; Net Exports Contribution, -1.7%, -1.4% f’cast, -0.2% prev• AU Apr Building Approvals, -2.4%, 2.0% f’cast, -18.5% prev• AU Q1 Business Inventories, 3.2%, 1.0% f’cast, 1.1% prev• New Zealand business sentiment worsens as inflation remains intense, -55.6, -42.0 prevThe Day Ahead Asian equity markets are mixed this morning after yesterday’s gains. The easing of lockdown in Shanghai and better-than-expected PMI data underpinned Chinese stocks, but concerns about global central bank policy responses to inflation weighed on the broader market. Yesterday saw German May inflation rise significantly more than forecast to 8.7% on the EU-harmonised measure. Brent crude oil has risen above $124 a barrel, reflecting a partial EU ban on Russian oil imports. US 10-year Treasury yields increased by 10bp to 2.84%. The Lloyds Bank Business Barometer’s overall business confidence in May rose for the first time in three months, since Russia’s invasion of Ukraine, but it weakened in consumer-related sectors. The confidence index gained 5 points to 38%, while hiring intentions picked up and price and wage pressures remained elevated. Despite the confidence uplift, nearly half of businesses expressed concern about inflation or rising costs and about a third were worried about an economic slowdown. Later this morning, the Bank of England will release its latest credit data. Mortgage approvals may have edged lower in April from around 70k in recent months. Secured lending has continued to grow, while there has been a notable pickup in consumer credit, according to the BoE data. The BRC shop price index will be released in the early hours of tomorrow. The focus in the Eurozone will be on the flash estimate for CPI inflation in May. Yesterday’s surge in German inflation points to upside risks for Eurozone headline inflation to rise to a new high of 7.7%. The ECB is still doing QE but, in response to sharply rising inflation, President Lagarde has indicated that asset purchases will end in early July and that interest rate lift-off is likely to occur at its 21 July meeting with a 25bp increase, but more hawkish members will be calling for a larger rise. In the US session, markets will be looking for a fourth fall in five months in the Conference Board consumer confidence index. Expect the headline index to fall to 106.0, while the consensus forecast is for a deeper decline. Although the US labour market remains strong, real incomes are being dented by high inflation. US house price data will also attract attention as rising interest rates curtail activity in the sector.FX Options Expiring 10am New York Cut EUR/USD: 1.0590-00 (8.31BLN), 1.0625-30 (1.57BLN) 1.0645-50 (1.3BLN), 1.0725-30 (490M), 1.0740-50 (650M) 1.0760 (854M), 1.0775-80 (590M), 1.0800 (1.12BLN) 1.0880 (1.12BLN) USD/JPY: 127.75-85 (740M), 129.65 (250M) GBP/USD: 1.2450 (878M), 1.2500 (258M), 1.2520-25 (615M) 1.2545-50 (3.82BLN), 1.2645 (2.29BLN), 1.2680 (835M) 1.2710 (303M) EUR/JPY: 133.50 (659M), 135.24 (240M) EUR/GBP: 0.8475 (270M), 0.8500 (551M), 0.8525 (205M) 0.8565-75 (570M, 0.8650 (244M)) AUD/USD: 0.7000 (615M), 0.7090 (261M), 0.7120-25 (660M) 0.7150 (238M) USD/CAD: 1.2660-65 (286M), 1.2700 (407M), 1.2800 (329M) NZD/USD: 0.6475 (426M), 0.6515 (233M) 0.6600 (797M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.07 Bullish above EUR/USD traded to the exact point to fulfill a tech correction then dropped A 38.2% retracement drop from 2022 high 1.1495 to 2022 low 1.0349 is 1.0787 The target for a minimum technical correction of the down move was achieved May 30 EUR/USD reached 1.0787, then dipped, May 31 range 1.0734-77 EBS EUR/USD VWAP has turned bullishGBPUSD Bias: Bearish below 1.26 Bullish above. GBP/USD has rallied from May's 1.2156 low to 1.2666 in June This is a minor correction of a major decline GBP/USD previously dropped from 2022 high at 1.3749 The drop that followed taper talk last year is 1.4250-1.2156 Targets for resumption that decline: 1.20 Daily VWAP has turned bullishUSDJPY Bias: Bullish above 127 Bearish below USD/JPY up 0.4%, rises to a more than 1-week high; Asia range 127.53-128.35 Boosted by higher UST yields; 10 year yield jumps 11 bps on inflation fears German inflation, oil rally raises specter of aggressive global rate rises Fed's Waller backs 50 bps hikes until "substantial" reduction in inflation EU agrees to cut 90% of Russian oil imports by year-end Resistance 128.30-35, 128.50-60, support 127.75-80, 127.50-55AUDUSD Bias: Bullish above .7200 Bearish below Muted reaction to improved China PMI AUD/USD little changed around 0.7170/75 following improved May China PMI AUD/USD fell as low as 0.7163 before the data as USD broadly moved higher Rise in US yields and month-end USD buying flows weighed on AUD/USD

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Three funds to cash in on today’s real-estate megatrends

Professional investor Matthew Norris of the VT Gravis UK Listed Property Fund picks three real-estate investment trusts that track long-term themes.

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Transferring out of your final salary pension could cost you dear

Thinking about transferring out of a final salary pension? It could cost you a lot more than you might think, says David Prosser.

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Buy this ports operator and get a free hedge fund

This investment company is valued at less than its Brazilian ports and logistics assets alone

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GBPUSD, H4 | Potential Bullish Continuation

Type: Bullish BounceKey Levels:Resistance: 1.26674Pivot: 1.26036Support: 1.25573Preferred Case:On the H4, with price moving above the ichimoku indicator and the RSI indicator moving in an uptrend momentum, we have a bullish bias that price will rise from our pivot at 1.26036 where the horizontal overlap support is to our 1st resistance at 1.26674 in line with the 61.8% Fibonacci retracement, 100% Fibonacci projection and swing high resistance.Alternative Scenario:Alternatively, price may break pivot structure and head for 1st support at 1.25573 where the horizontal overlap support and 23.6% Fibonacci retracement are.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/gbpusd-h4-or-potential-bullish-continuation30"
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GC1!, H4 | Potential Bullish Continuation

Type: Bullish BounceKey Levels:Resistance: 1867.9Pivot: 1847.2Support: 1833.5Preferred Case:On the H4, with prices moving above the ichimoku cloud and breakout from descending trendline, we have a bullish bias that price will rise from our pivot at 1847.2 where the horizontal pullback support is to our 1st resistance at 1867.9 in line with the horizontal swing high resistance,61.8% Fibonacci retracement and 38.2% Fibonacci retracement.Alternative Scenario:Alternatively, price may break pivot structure and head for 1st support at 1833.5 where the horizontal overlap support and 38.2% fibonacci retracement are.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/gc1-h4-or-potential-bullish-continuation30"
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WTICOUSD, H4 | Potential Bullish Continuation

Type: Bullish BounceKey Levels:Resistance: 130.356Pivot: 118.018 Support: 105.984Preferred Case:On the H4, price is moving above the ichimoku cloud and within the ascending trend channel, which supports our bullish bias that price will rise from the pivot at 118.018 in line with the swing high and with the 78.6% fibonacci projection to the 1st resistance at 130.356 at the swing high . Additionally, presence of bullish presence pressure on the MACD indicator further supports our bullish bias.Alternative Scenario:Alternatively, price may break the support structure at the pivot and drop to the 1st support at 105.984 in line with the swing low and 50% fibonacci retracement.

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SILVER FUTURES, H4 | Potential Bullish Continuation

Type: Bullish BounceKey Levels:Resistance: 23.504 Pivot: 21.943Support: 20.413Preferred Case:On the H4, with price moving above the ichimoku cloud, it supports our bullish bias that price will rise form the pivot at 21.943 in line with the overlap support and 23.6% fibonacci retracement to the 1st resistance at 23.504 in with the 50% fibonacci retracement. Additionally, the presence of bullish pressure at current price on the MACD indicator further supports our bullish bias.Alternative Scenario:Alternatively, price may break the support structure at the pivot and drop to the 1st support at 20.413 at the swing low.

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