Market Update – June 3 – Wild Swings Continued

Trading is rather directionless this morning in the lead up to the jobs data. USD moved lower (USDIndex 101.70). Stocks extended gains overnight (NASDAQ +2.69%) and Treasuries bounced from red to green and back again. Asian markets managed pretty broad gains, with tech stocks still outperforming after they led yesterday’s rally on Wall Street (Nikkei +1.2%, ASX +0.9%) with China & HK closed today. European FUTS are lower (Italy, Spain & France closed & UK closed until Monday). Treasury announced a $96 bln package of coupon auctions for next week. Yesterday’s data showed strength in jobless claims and weakness in ADP private payrolls and factory orders.

• USDIndex pulled back to 101.70, reverting all the gains from Wednesday.
• Equities – USA500 (+1.84%) at 4189, while the USA30 was 1.33% firmer. The GER40 future is up 0.8% while US futures are looking more cautious as key US payroll numbers come into view.
• Yields 10-year rate was up 0.5 bps to 2.91%, with the 2-year 0.2 bps lower at 2.64%.
• Oil – USOil spiked to $116.27 before correcting to $114.60 now, following the bullish EIA inventory report that overshadowed the boost in production announced by OPEC+ in July and August, only to tumble on reports OPEC+ was considering excluding Russia from production quotas which suggested increased output from Saudi and the UAE to make up for the loss.
• Gold rallied to $1874.
• Bitcoin back above $30k.
• FX markets – USDIndex is slightly lower, EURUSD managed to move up to 1.0755, USDJPY is still holding close to 130.00, Cable is at 1.2574.

NOTE: NFP is unlikely to make any difference in terms of the Fed – but the labor market into Q3 will be an important determinant for the FOMC. Meanwhile, the markets continue to vacillate on risk-on, risk-off flows, and waver on inflation/growth uncertainties, as well as the outlook for the responses from key central banks, while volatility in energy and the ongoing distortions from supply chains also continue to impact.

Today – EU Retail Sales, US NFP, ISM Services PMI and Speech from Biden.

Biggest FX Mover @ (06:30 GMT) Cocoa (-1.55%) dipped to 50-period SMA at 2740 from 2537. MAs aligning lower, MACD lines decline but hold above 0, RSI 46 but pointing higher, H1 ATR 19.07, Daily ATR 51.92.

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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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Incoming US Economic Data Hints the Fed will not Bend to Bearish Market Sentiment

A raft of US economic data for the first quarter, including surprising quarterly decline in GDP, sowed the seed of doubt in the market that the economy could withstand a series of aggressive Fed rate hikes and not slide into recession. However, incoming data for the second quarter consistently rebutted these fears, which helped risk assets to stabilize and Treasury yields to rise again, reflecting decline in demand for defensive assets. The US labor market remains in good shape, households maintain a solid pace of consumption, and the difficulties faced by the US manufacturing sector and construction were not as serious as previously thought.Yesterday's JOLTS report highlighted that the gap between labor demand and supply remained wide in May, so if Friday's NFP report points to weak job growth in May, markets could again attribute it to problems matching labor supply to demand rather than to weakening demand for labor force. As a result, the focus will once again be on wages as the main proxy for the dynamics of consumer income and, consequently, consumer spending. The latter indicator directly affects consumer inflation. The number of open vacancies, according to the report, decreased from 11.855 to 11.4 million (consensus 11.35 million):However, given the number of unemployed, this means that there are two vacancies for every unemployed American. For comparison, in the UK there is one vacancy per unemployed person, and in Germany - only 0.4.One of the leading indicators of shortages in the US labor market is the rotation of the labor force, i.e. the rate of layoffs, remained at a fairly high level for the third month in a row - 2.9%. This indicator is one of the key proxies of the bargaining power of employees, which directly affects the dynamics of wages.The continued deficit in the labor market provides upward pressure on wages. As it is one of the main pro-inflationary factors, inflation is expected to remain robust and slowly return to the Fed's 2% target. As a result, the chances that the Fed will change its rhetoric remain low. At the same time, this cannot be said for the central banks of the European continent, where imports remain the main factor in inflation, and a too aggressive pace of policy tightening could provide a critical mass for a recession.US manufacturing data beat expectations, with the ISM unexpectedly up from 55.4 to 56.1 (consensus 54.5). There were expectations in the market that weak data on the Chinese economy and an ambiguous picture given by regional indices would most likely lead to a decrease in the ISM index, however, the details showed that the index of new orders unexpectedly rose (from 53.5 to 55.1 points), as well as the index of production (from 53.6 to 54.2 points). The rest of the sub-indices indicated that inflationary pressures remain in supply chains.With Chinese manufacturing activity indexes leading the US ISM indices, the easing of lockdown restrictions in China raises the possibility of a positive surprise in US data in the coming months.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/incoming-us-economic-data-hints-the-fed-will-not-bend-to-bearish-market-sentiment"
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The unintended consequences of ESG

ESG is the fastest growing corner of the asset management industry. But Merryn-Somerset Webb explains how neglecting fossil fuels is causing unintended consequences.

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Platinum Futures (PL1!), H1 Potential for Bullish Rise

Type: Bullish RiseKey Levels:Resistance: 1026.3Pivot: 1000.5Support: 988.0Preferred Case:Price is moving within the ascending trend channel and is moving above the ichimoku cloud which supports our bullish bias that price will rise from the pivot at 1000.5 where the pullback support is to the 1st resistance at 1026.3 in line with the swing high resistance.Alternative Scenario:Alternatively, price may break pivot structure and drop to the 1st support at 988.0 in line with the swing low support.Fundamentals:Due to increasing inflation rates in the US,UK and other developed economies, we have a bullish view on the precious metal.

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CRUDE OIL FUTURES (CRUDEOIL1!), H1 Potential For Bearish Drop

Type: Bearish MomentumKey Levels:Resistance: 8886Pivot: 8788Support: 8454Preferred Case:On the H1, price is moving below the ichimoku cloud and breaking from the ascending channel which supports bearish bias that price will drop from our pivot at 8788 in line with the pullback resistance to the 1st support at 8454 in line with the swing low support, 161.8% fibonacci extension and 78.6% fibonacci retracement .Alternative Scenario:Alternatively, price may break through pivot structure and rise to the 1st resistance level at 8886 in line with the pullback resistance.Fundamentals:Due to the Russian-Ukraine invasion and a shortage of oil shipments from Russia, oil prices are projected to continue to increase. As a result, we've adopted a bullish stance.

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The best current account switch deals

Banks are offering attractive cash incentives to entice new customers, but Ruth-Jackson Kirby explains why it’s important to read the small print before you move.

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Market Update – June 2 – USD Ticks Higher, Stocks Slip Yields Firmer

USD moved higher (USDIndex 102.43) Stocks had a weak US session (NASDAQ -0.72%) and Yields rallied to 2.931%. Asian markets followed US lower (Nikkei -0.16%, Hang Seng -1.10%) with China closed today. European FUTS are lower (Italy, Spain & France closed & UK closed until Monday). Central bank outlooks and China’s virus lockdowns remain in focus (Shanghai open but zero policy still in place) amid concern that aggressive monetary policy tightening will weigh on growth outlook. BOC increased rates by 50bp  & Bullard remained very hawkish, both expected. Oil prices bounced ahead of OPEC+ today – Saudi Arabia ready to boost output should Russian production fall.

• USDIndex rallied to 102.72 from 101.28 & one-month lows on Monday. Back to 102.40 now.
• Equities – USA500 -31 (-0.75%) at 4101, US500FUTS at 4100 now. Walmart & Meta -2.49% (Sheryl Sandberg to leave Meta after 14 yrs as COO)
• Yields 10-year yield higher (2.931% at close), trades at  2.91% now.   
• Oil & Gold had mixed sessions – USOil sank to $111.60 before correcting to $113 now following SA news ahead of OPEC+ meeting, Gold rallied over $1850 to $1852 from $1830 yesterday.  
• Bitcoin slipped back under $30K after 3-day move north. Trades at $29.8K now.
• FX markets – EURUSD down under 1.0700 again to 1.0670,  USDJPY breaks over  130.00, Cable trades at 1.2500, from 1.2450 yesterday.  

Overnight –  AUD Trade Balance significantly better than expected.

Today – ADP Employment, Weekly Claims, Weekly Oil Inventories, OPEC+ Meeting, Speeches from Mester NY Fed’s Logan.

Biggest FX Mover @ (06:30 GMT) USDCHF (-0.54%) A surprise spike in Swiss CPI puts pressure on SNB to act. Pair dived from 0.9640 to 0.9575. MAs aligning lower, MACD histogram negative & breaks 0 line, RSI 35 & falling,  H1 ATR 0.0013, Daily ATR 0.0070.

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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Investment Bank Outlook 02-06-2022

CIBCFX FlowsNew Zealand first quarter terms of trade rose 0.5% over the quarter against estimates of +1.3%. Slight improvement in the previous quarter to -0.9% from -1.0%. Stats New Zealand said export volume fell 7% while import volume fell 2.6%. Little change in the NZ$. Intraday resistance 0.6568 and support around 0.6425. Small option expiry at 0.6500 for NZ$375mio, there is a put strike at 0.6445 due Tuesday for NZ$545mio. Rather muted price action since, we saw a small spike to 0.6488 which was caused by AU$NZ$ but no drama.According to FT, Saudi Arabia indicated to western allies that it is prepared to raise oil production if Russia’s output falls substantially under sanctions. Fears of outright supply shortages have risen after EU launched another round of sanctions which included seaborne cargoes. Oil futures fell, August contract slipped under $109.50 from $111.00. $CAD rose to 1.26745 where we encountered some offers.In our FX Weekly, Bipan wrote it was not surprising that the BoC delivered 50 bps hike, taking the overnight rate to 1.50%. BoC voiced more concern with respect to inflation and that the risk of inflation becoming entrenched had risen. Statement flagged that Canada is now operating in an environment of excess demand – which implies that the output gap is now fully closed. Of course, this necessitates additional rate hikes to bring inflation back to target, and a signal that the Bank could act more forcefully if needed to do so. At the April MPR, Governor Macklem repeatedly mentioned that he saw the policy rate rising to neutral, which the Bank gauges to be around 2.50%. Whether there’s a need for that rate to rise above that level is the question that many will be looking at in the coming months.On the BoC, our economics team sees another 50 bps hike in July, our forecast that we’ll see signs of a growth deceleration by early fall, allowing the BoC to slow to a 25 bps hike in September, and then a pause before a final quarter point to 2.5% in early 2023. $CAD got down to 1.2609 then bounced back up. Our trader Jon believed it was more a US$ move, hawkish comments from Fed speakers Daly, Bullard and Barkin. Bipan said in the near-term, $CAD should keep in the 1.25-1.30 range and in the long-term, the risks are still skewed towards a break higher out of that range.Australia April trade surplus widened to A$10.495bn against consensus of A$9bn. AU$ didn’t benefit from the data, slightly lower from where North America ended. Resistance near the 100-day SMA 0.7229, first support at 0.7150 then 0.7127. Small downside strikes due today, A$430mio at 0.7140 and A$330mio at 0.7100. Keep an eye on the daily charts, potentially a second Death Cross could develop.Fed-BoJ policy divergence back in play, looks like we are likely to tackle the 20-year high soon. After an initial move to 129.89, $YEN came back bid as UST yields rose. Japanese retail traders have all taken profit and some have begun short position. I believe they will add towards previous high 131.35. Strikes at 132.00 for $1.06bn due today.Dull day for EUR$, we have been in this 1.06455-585 since I sat down. Fresh offers noted above 1.0660 which limited the bounce off low 1.0627. Intraday support around 1.0640/42 but think we will extend towards 1.0607. ECB speakers today are Villeroy and de Cos in Paris. Expect some hawkish remarks.Former Bank of England MPC member Andrew Sentance wrote in The Times that the Bank should raise interest rates to 3% next year. He argued that the Bank need to aggressively accelerate pace of monetary tightening to contain inflation pressures. BoE raised rates to 1.0% last month but Sentance said the Bank’s slow response has caused a mismatch between rates and inflation that leaves the economy’s real rate in negative. GBP$ little lower, support at 1.2472 the 38.2%. Decent strike at 1.2450 but this matures next week.CitiEuropean OpenPost the UST bear flattening towards the end of the European session yesterday, markets were relatively calm, and Asian FX volumes slumped 25% compared to 30d averages. G10 FX kept within a tight range to the dollar and UST yields were up just a touch in Asia. Oil prices dipped on the back of an FT report that Saudi Arabia has indicated it is prepared to raise oil production if Russia’s output falls substantially, while equity held steady. USDKRW was up sharply, mostly on a higher open, while USDIDR saw a test of the 14500 support.Ahead, we expect volumes to be light with GBP on a long weekend starting today. USD will listen to Fedspeak today and await initial jobless & continuing claims prior to NFP on Friday. CAD will eye the Economic Progress Report Speech which will be closely watched after yesterday’s hawkish messaging. EUR looks to guidance from ECB speakers ahead of the quiet speaker, while SEK listens to Riksbank speakers. HUF gets their One-Week Deposit Rate, where Citi Economics predicts a hike of 20bps to 6.65%. BRL eyes GDP figures. Lastly, we flag that OPEC+ is likely to stick to a planned 432k bpd increase in oil production in their meet today.

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Daily Market Outlook, June 2, 2022

Daily Market Outlook, June 2, 2022 Overnight Headlines Saudi Arabia Ready To Pump More Oil If Russian Output Sinks Under Ban EU Push For Partial Russian Oil Ban Delayed By Hungary’s Demands Rate Hikes Spur Bets That Asian Central Banks Will Keep Going Companies Struggle With Rising Prices, Fed’s Beige Book Says Fed’s Bullard Sees 3.5% Rates Setting Up Cuts In 2023 Or ‘24 Fed's Daly: Let's Get U.S. Interest Rates To 2.5% As Quickly As We Can China Orders $120 Billion Credit Line For Infrastructure Growth Relationship Needs To Mend Before China Drops Aus Trade Bans Australia Trade Surplus Widens In April On LNG Exports BoJ’s Adachi Says It’s Too Early to Tighten Monetary Policy BoE's Cunliffe Seeing Evidence Of Slowdown In Housing Market US Dollar Up For A Third Day After Hawkish Fed Commentary Bitcoin Retreats To Consolidate Below $30,000; Solana Tumbles Australia’s Bond Yields Jump On Bets Of Outsized RBA Rate Hike Asian Shares Fall On Inflation, Recession Concerns; Oil Skids JPMorgan Chief Says ‘Hurricane’ Is Bearing Down On EconomyThe Day Ahead US stocks slipped overnight while treasury yields jumped further as a series of solid economic data point to a resilient US economy which means that the Federal Reserve is on track to maintain its policy tightening plan. The main US benchmarks fell by 0.5-0.8%, tracking the decline in European stocks earlier. Asian markets saw another day of mixed performances as stocks rose in Japan but fell in Hong Kong and China. Treasury yields rose by 1-10bps, led by the front end of the curve amid a synchronized increase in global bond yields. The market’s main focus remained on the elevated global inflation and central banks’ monetary policy. The yield on the benchmark 10Y UST climbed 6bps to 2.91%, its strongest level in two weeks. The USD outperformed all G10 and nearly all Asian currencies, supported by higher yields and strong data. The dollar index closed 0.7% higher at 102.50. The Japanese yen posted deeper losses of 1.1% alongside the Norwegian krone as investors zeroed in on policy divergence between the Fed and BOJ. CAD had a choppy trade and closed the day marginally lower, after the Bank of Canada raised its benchmark policy rate by 50bps as expected. Gold futures were steady at $1843.30/oz despite the USD strength. In the oil market, WTI traded slightly firmer (+0.5%) at $115.26/barrel. The global benchmark Brent tanked 5.3% to $116.29/barrel, ending a nine-day winning streak amid profit taking activity. Brent was also weighed by news of a possible suspension of Russian participation in OPEC+ output deal which may lead to higher Saudi and UAE production. FX Options Expiring 10am New York Cut EUR/USD: 1.0550-55 (920M), 1.0575-85 (432M) 1.0600 (242M), 1.0625 (300M), 1.0650 (886M) 1.0660 (300M), 1.0700 (1.0BLN), 1.0710-15 (552M) 1.0725-30 (2.26BLN), 1.0735-40 (1.78BLN) 1.0745-50 (993M) USD/JPY: 129.50-55 (520M), 129.95-00, 130.05-07 (300M) 130.45-55 (600M), 131.00 (255M) AUD/USD: 0.7025-35 (390M), 0.7050-60 (626M), 0.7100 (330M) 0.7140-50 (609M). NZD/USD: 0.6500 (377M) USD/CAD: 1.2595-00 (740M) USD/ZAR: 15.2500 (250M), 15.5600 (551M), 15.60 (746M) 15.7500 (250M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.07 Bullish above EUR/USD's recent rise has been stymied right by the 1.0787 Fibo 1.0787 Fibo is a 38.2% retrace of the 1.1495 to 1.0349 fall FX traders should be mindful of the thickening daily Ichimoku cloud The 1.0765-1.0933 region, should also weigh Wednesday saw a big relapse, which could well continue in coming sessions EUR/USD VWAP has turned bullishGBPUSD Bias: Bearish below 1.26 Bullish above. Bearish reversal underway after Wednesday close llean bearish but now await fresh signals The next Fibo off the 1.2156-1.2666 gain comes at 1.2411, 50% Early Thurs action mildly corrective but still below 1.2568 14-day positive momentum fading and RSI neutral Risk to 1.2411 while below 1.2568USDJPY Bias: Bullish above 127 Bearish below USD/JPY remains better bid, JPY crosses remain buoyant too in Asia Divergence in BoJ and other central bank policies market focus BoJ again reiterated easy policy bias, OK with FX USD/JPY surged from 128.65 to 130.19 yesterday, Asia 129.89-130.24 EBS Still better bid, Japanese importer, investor, other demand on dips Japanese exporter, other offers help cap topside $766 mln 129.95-130.07 option expiries today provide gravitational pullAUDUSD Bias: Bullish above .7200 Bearish below AUD/USD down 0.45% in Asia as traders target stops below 0.7150 Weighed down by risk aversion as inflation and recession concerns hit stocks Higher U.S. yields, Fed's balance sheet reduction underpin USD Australia trade data better than expected but taken in stride Focus shifts to U.S. jobs data Fri and RBA meeting rate meeting Tuesday Stronger than expected GDP Wed has raised expectations of 40 bps rate hike Support 0.7130-35, 0.7090-0.7100, resistance 0.7190-95, 0.7225-30

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Allianz's $6bn scandal exposes Germany's cosy corruption

Allianz’s $6bn scandal is just the latest example of wrongdoing by a major German company.

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Allianz's $6bn scandal exposes Germany's cosy corruption

Allianz’s $6bn scandal is just the latest example of wrongdoing by a major German company.

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Oil And Bitcoin are Undergoing Strategic Correction

Having jumped, Bitcoin got back to the supporting level of 28600 to retest it. It’s also noteworthy that the price of Bitcoin might also drop to the level of 25000 and then only jump. The general sentiment points to the fact that Bitcoin should jump soon. So, it is worth observing what is going to happen next.As it can be seen from the daily timeframe, gold is trying to form a bullish flag to signify the continuation of the current ascending trend. Presently, the asset can only approach the downtrend away from which it might drop. For now, gold is on the rise.Oil has approached the level of 120 (121) and formed a beautiful bearish engulfing. The latter might signify the upcoming price drop to the level of 101 and retesting of the broken line of the reversed fan.

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Profile: Queen Elizabeth's pocketbook

The Queen’s frugal habits and dedication to the job have endeared her to (most of) her subjects. But where does her money come from – and how much does she have? Jane Lewis reports.

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SOYBEAN, H4 | Potential Bearish Momentum

Type: Bearish BreakoutKey Levels:Resistance: 1755.12Pivot: 1691.08 Support: 1633.13Preferred Case:On the H4, with price showing bearish pressure on the MACD indicator and price recently breaking the ascending trend channel, we have a bearish bias that price will drop from our pivot at 1691.08 in line with the 38.2% fibonacci retracement to our 1st overlap support at 1633.13 in line with the 78.6% fibonacci projection .Alternative Scenario:Alternatively, price may reverse off the pivot and rise to the 1st resistance at 1755.12 in line with the swing high.

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