AUDUSD, H4 | Potential Bullish Continuation

Type: Bullish BounceKey Levels:Resistance: 0.74593Pivot: 0.716Support: 0.70099Preferred Case:On the H4, with price moving above the ichimoku cloud, we have a bullish bias that price will rise from the pivot at 0.716 at the overlap support to the 1st resistance at 0.74593 at the overlap swing high. and in line with the 61.8% fibonacci projection.Alternative Scenario:Alternatively, price may break the support structure at pivot and drop to the 1st support at 0.70099 in line with the 61.8% fibonacci retracement and 61.8% fibonacci projection and swing low.

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S&P500, H4 | Potential Bullish Continuation

Type: Bullish BounceKey Levels:Resistance: 4299.05Pivot: 4078.52Support: 3905.04Preferred Case:On the H4, with price moving above the ichimoku cloud, we have a bullish bias that price will rise from the pivot at 4078.52 in line with the 38.2% fibonacci retracement to the 1st resistance at 4299.05 at the overlap swing high.Alternative Scenario:Alternatively, price may break the support structure at the pivot and drop to the 1st support at 3905.04 in line with the 61.8% fibonacci projection.

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CHFJPY: How high will it rise?

BOJ Governor Haruhiko Kuroda said that a weak Yen is beneficial for the Japanese economy if the moves are not too sharp. He stressed that moves in the currency market should reflect fundamentals and that central banks are carefully watching their impact. The Japanese economy is still recovering from the pandemic and facing downward pressure from rising commodity prices, he said, and therefore monetary tightening is not at all the right step. These dovish comments on Monday further weakened the Yen.

The comments came as the Yen was broadly selling off, fuelled by a spike in 10-year T-note yields to a 3-week high on Monday. The yield on the German 10-year bond also jumped to as low as 1.323. USDJPY hit a high on Monday, up +0.77%, posting fresh 2-decade highs. The central bank divergence is the main bearish factor for the Yen, as the Fed is in the middle of a rate hike cycle, the ECB is poised for a hike, and the RBA has just raised rates, while the BOJ is still chasing QE and keeping rates at record lows.

Technical Overview

CHFJPY – Another currency with negative interest rates which is often used as a hedge currency, as uncertainty over the world’s prospects spreads. The BOJ is at -0.10% and the SNB is at -0.75%, but the Yen is often in the spotlight compared to the Swiss franc. Switzerland with its calmer monetary policy is far from the spotlight, while the BOJ, with its ultra-easy policy, has often been in the media spotlight and has built a negative stigma on the Yen since the pandemic hit. The CHFJPY currency pair has soared, printing a 7-year high, gaining more than 25% from its May 2020 low. Confirmation of the long-term trend has been in place since the pair broke a multi-year high of 118.59 in April last year. The move to the upside has even surpassed the 61.8% FR retracement level of the 2015 peak draw and 2016 low. A move to the upside should test the 78.6% FR (140.00-140.50) level if the move continues north.

CHFJPY, H8In the intraday period this morning, Tuesday (07/06), the pair surpassed the resistance at 136.17. A move to the upside is projected for FE 61.8% at 139.01 (from pullback lows 117.52–136.17 and 127.49). As long as 127.49 holds as support, the outlook remains on the upside. The price returning below the 136.17 move will confuse the outlook and the bias will settle down for a while.

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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Global Inflation Pressures Build up as oil Braces for a Breakout of key Technical Level

The RBA surprised markets on the meeting today delivering a hawkish 50 bp rate hike. Consensus forecast was a 25 bp move, swap markets priced in a bit more aggressive move of 40 bp. The RBA decided to take decisive action against inflation, which accelerated to 5.1% YoY according to the latest data, while consumption data and pace of construction growth in the country also allowed for a quick normalization of monetary policy.The Australian dollar behaved rather unexpectedly after the meeting: having jumped to 0.7250 after the meeting, AUDUSD went into decline and returned to the levels that preceded the meeting:This could happen for several reasons, namely: The rate differential (which determines carry trade flows) played a smaller role in 2022, short-term movements in the pair showed a greater dependence on the dynamics of the local stock market and abroad; Without clear signs of economic recovery in the main trading partner, China, traders are likely to demand a premium in AUD for this risk.The dollar strengthened sharply on Monday amid a rapid rise in Treasury yields. 10-year Treasury bonds are already offering yields of over 3%, yesterday's high was 3.05%:The Japanese yen lost the most among the currencies of the G10 countries, which fell by 1.8% against the dollar during the day, to the lowest level since April 2002. The USDJPY rate tested the level of 133.Bond yields are rising as speculation that the Fed will slow down its policy tightening in September becomes less and less plausible. The US economy continues to show gains including stable consumption levels as well as good employment growth. The latest NFP report exceeded expectations with almost 400K job growth.In European sovereign debt markets, pressure is mounting on the ECB to speed up the process of policy normalization. This can be seen in the behavior of European bond yields, with 10-year German bonds offering 1.3% YTM (the highest since May 2014), while Italian bonds with the same maturity are trading at a yield of 3.4%, which has not happened since the end of 2018. The BoFA expects a cumulative ECB rate hike of 150bp by the end of this year, with two increases of 50bp each taking place in July and September. Such expectations contain the fall of EURUSD; however, it is clear that the market could be demanding too much from the ECB now, and on Thursday the regulator may disappoint, announcing a moderate pace of rate hikes. In this case, EURUSD is likely to rush to support at 1.05.Three major investment banks Goldman, Citi, Barclays revised their forecasts for oil prices in the third and fourth quarters of this year upwards. Goldman expects prices to rise to $140 in the summer, as rebalancing is slow at current price levels, and a seasonal increase in fuel demand is coming. Technical analysis says about consolidation around $120 per barrel before a possible breakout:It is very likely that against this backdrop we will see a new round of depreciation of European currencies, as hawkish actions by the BoE or the ECB may increase risk of stagflation, while attempts to keep rates low will likely fuel inflation further, which will worsen real yield outlook and force investors to reduce exposure to European assets.

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Market Spotlight: CADJPY Long Hits Target

CADJPY Heading HigherAs with my EURJPY long, the recent CADJPY breakout idea has now hit its target at 105.33 following the breakout above 102.17. JPY weakness has been a prevailing market theme over recent weeks and both CAD and EUR have been well positioned to take advantage of this dynamic. With the BOC hiking rates by a further .5% last week, and signalling further hikes to come, CADJPY looks likely to continue higher near term. Indeed, the retail market is overwhelmingly short the pair, suggesting room for continued upside. With this in mind, bulls can look to hold longs through 106.57 while the breakout region holds, anticipating a larger move to come.Keep an Eye OnCanadian employment data at the top of the week will be the main data driver. With hawkish BOC expectations well entrenched, any data to reinforce that narrative will keep the pair pressured higher near term. Keep an eye on risk flows over the week also with JPY weakness likely to develop further if equities can continue higher.

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Gold Futures (GOLD1!), H1 Potential For Bullish Bounce

Type: Bullish RiseKey Levels:Resistance: 51144Pivot: 50723Support: 50416Preferred Case:On the H1, stochastic indicator is bouncing off resistance level which supports our bullish bias that price will rise from the pivot at 50723 where the swing low support and 78.6% fibonacci retracement are to the 1st resistance at 51144 in line with the pullback resistance and 61.8% fibonacci retracement .Alternative Scenario:Alternatively, price may break pivot structure and drop to the 1st support at 50416 in line with the overlap support and 50% fibonacci retracement .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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Soybeans Futures ( ZS1! ), H1 Potential For Bearish Drop

Type: Bullish RiseKey Levels:Resistance: 1716'4Pivot: 1702'6Support: 1675'4Preferred Case:Price is moving below the ichimoku cloud which supports our bearish bias that price will drop from the pivot at 1702'6 where the overlap resistance and 23.6% fibonacci retracement are to the 1st resistance at 1716'4 in line with the swing high resistance, 50% fibonacci retracement .Alternative Scenario:Alternatively, price may break pivot structure and drop to the 1st support at 1675'4 in line with the swing low support, 100% fibonacci projection and 50% fibonacci retracement .Fundamentals:Since both countries, Russia and Ukraine, are major exporter of agriculture goods and their persistent war will lead to a shortage of agricultural goods and give us a bullish bias for soybean .

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SILVER FUTURES (SILVER1!), H1 Potential For Bullish Momentum

Type: Bullish RiseKey Levels:Resistance: 62842Pivot: 61613Support: 60555Preferred Case:On the H1, price is bouncing off the ichimoku support which supports our bullish bias that price will rise from the pivot at 61613 where the overlap support and 61.8% fibonacci retracement are to the 1st resistance at 62842 in line with the 61.8% fibonacci projection and swing high resistance.Alternative Scenario:Alternatively, price may break pivot structure and drop to the 1st support at 60555 in line with the swing low support, 100% fibonacci projection , 161.8% fibonacci extension and 50% fibonacci retracement .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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Daily Market Outlook, June 7, 2022

Daily Market Outlook, June 7, 2022 Overnight Headlines Australia's Central Bank Raises Rates By 50 Bps In Major Surprise Shanghai Port Daily Volume Rises To 95% Of Normal Levels - SSN Poll: China's May Exports, Imports Seen Recovering As Supply Chains Restart China Analysts: Economy To Rebound In 2H On Stimulus, Virus Containment Household Spending In Japan Is Declining As Growing Costs Increase Strain USTR Tai: Fighting Inflation More Complicated Than Cutting China Tariffs Weakened UK PM Scrapes Through After Damaging Confidence Vote UK Shoppers Cut Spending By Most Since Covid Lockdown In 2021 Japanese Yen Falls To 132 Against Dollar, Hitting 20-Year Low Oil Up On Demand Recovery Expectations In China, Covid Curbs Relax Asia Stocks Mixed In Choppy Trade, Amid Treasury Slide Apple Just Announced Its New iPhone Software And M2 ChipThe Day Ahead Equities across the Asia-Pacific region are mostly trading lower this morning, in part driven by the larger-than-expected hike in interest rates by the Australian central bank. The Reserve Bank of Australia (RBA) lifted policy rates by 0.5%, above the quarter-point increase expected by markets to take the Cash Rate Target to 0.85%. Interest rate markets are pricing in further aggressive tightening with the cash rate seen rising above 3.5% in the next 12 months. UK PM Johnson survived last night’s confidence vote by a majority of 63 (211 for Mr Johnson vs 148 against). Mr Johnson is set to reconvene his cabinet this morning to outline plans for an announcement on a new set of policy commitments in the coming weeks. In the UK, the final reading of the services PMI report for May is expected to confirm that a marked slowdown in service sector activity occurred last month. The ‘flash’ reading reported a drop in the headline index from 58.9 to 51.8, a sharp loss of momentum compared with April and consistent with only modest growth. The softening in the pace of growth was partly attributed to the war in Ukraine and China’s lockdowns, as well as the cost-of-living crisis. In response to the latter, Chancellor Sunak announced an additional package of measures worth £15bn to support mainly the most vulnerable households, including one-off payments for low-income households, pensioners and the disabled. There was also universal support for all households with a doubling of the energy rebate to £400 which is now a grant rather than a loan. Overall, according to the Treasury’s analysis, the measures announced both this week and in February, will benefit households in the lowest income decile by around £1,200. The average household will benefit by about £800. However, speaking in front of a Treasury Select Committee yesterday, Mr Sunak said that it was not possible to fully insulate people from the rise in the cost of living, but he also refused to rule out further support if energy bills were to rise by even more than expected in the autumn. Elsewhere, it is a quiet day for key economic news and data. In the US, latest trade balance data for April are expected to show a narrowing in the deficit. Already released US ‘goods’ trade data point to a considerable improvement in the overall deficit on a monthly basis. Imports of goods fell by 5%, which may be a China lockdown effect, while export growth also slowed. Meanwhile, the results of the Eurozone Sentix investor confidence survey for June are expected to show an improvement from -22.6 to -21.2 reflecting the recent stabilisation in equity markets in recent weeks following the sell-off across April and most of MayFX Options Expiring 10am New York Cut EUR/USD: 1.0600 (1.13BLN), 1.0650-60 (464M) 1.0700 (552M), 1.0730-40 (1.3BLN), 1.0790-00 (606M) USD/JPY: 130.15 (226M), 131.00 (451M), 132.50 (450M) GBP/USD: 1.2400-10 (557M), 1.2525 (215M) EUR/GBP: 0.8575 (233M), 0.8600 (367M), 0.8625 (370M) 0.8650 (501M) AUD/USD: 0.7200 (415M), 0.7220 (454M) NZD/USD: 0.6445 ( 546M). USD/CAD: 1.2695 (610M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.07 Bullish above EUR/USD sinks 1.0752-1.0684 Jun 6 and trades 1.0700-1.0670 Jun 7 Traders have established a big bet on EUR/USD rising in advance ECB Few expect ECB to hike this month, many see hikes from July onwards Recent buyers made money so profit taking is natural ahead a big event Traders tend to reestablish profitable bets, dip buyers likely to emerge A 50% retracement May recovery rally is 1.0568, mid 20-day VWAP 1.0620 Good chance of a dip below 1.0600 while 1.0500-50 should draw buyers EUR/USD VWAP remains bullishGBPUSD Bias: Bearish below 1.26 Bullish above. Political damage to UK PM Johnson hurts the pound Johnson survived confidence vote, but 41% of Tory MPs voted against him Tentative signs of a bear trend with lower daily highs Key level to watch today at 1.2411, 50% Fibo 1.2156-1.2666 Resistance at 1.2561 and 1.2617 Bearish 14-day momentum developing now falling away from neutral levels Daily VWAP is neutral to bearishUSDJPY Bias: Bullish above 127 Bearish below Japan's household spending fell as rising costs hit consumers Kuroda to hold yields, Fin Min Suzuki cautious on weak yen Suggests no changes to policy in the short term USD/JPY trades +0.55% near top of 131.86-132.75 range - trend is your friend Techs, break of 131.35 May trend high Pivotal support at 129.60/65 Tokyo 131.86 low is initial support, then 131.35 May trend high Blue sky to the next resistance, being the 135.20 2002 highAUDUSD Bias: Bullish above .7200 Bearish below AUD/USD down 0.2% heading into Europe after whippy 0.7248-0.7160 Asia range Fails to hold on to gains made after RBA raised rates 50 bps RBA's hefty hike and hawkish tone accentuates global inflation fears Bonds, stocks sold further; ASX 200 down 1.45%, U.S. 10-year yield inches up Focus turns to ECB meeting Thursday and U.S. CPI Friday Support 0.714-50, 0.7110, resistance 0.7220-25, 0.7245-50

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ECB:How Big The July Rate Rise Will Be?

The focus is fully on the ECB meeting on Thursday and in particular President Lagarde’s press conference. Rate settings are expected to be held steady for now, and while there are some members who see the urgency to act sooner rather than later as inflation goes through the roof, the ECB’s timetable for the phasing out of stimulus effectively excludes a move on rates this week. Net asset purchases need to end first and Lagarde is expected to confirm that this will happen early in July, which would pave the way for a rate hike in July.

Lagarde has already mapped out two moves in July and September and the basic scenario is for “gradual” 25 bp steps, although the discussion on a bolder kick off with a 50 bp boost in July has already started. We suspect that Lagarde will stick with a focus on “gradualism” for now. But she will not rule out a 50 bp step as the need to maintain credibility and assert the Bank’s commitment to price stability and the 2% inflation target seem increasingly urgent.

Eurozone HICP inflation hit a new record high of 8.1% y/y in preliminary readings for May — a sharp jump from the 7.4% y/y reading in April and yet another upside surprise. The renewed overshoot will further undermine confidence in chief economist Lane and the forecasting ability of his staff. That may have partly prompted Lagarde’s move out of Lane’s shadow last week, and her apparent decision to override the chief economist’s caution on policy normalization and his renewed focus on the dampening impact of the rise in prices on consumption trends.

To be fair a large part of the current inflation picture is due to factors that lie outside of the control of the ECB and which won’t be changed by a hike in policy rates. Energy price inflation remains THE most important part — reaching 39.2% y/y in May and accounting for two percentage points of the annual rate. The Ukraine war, sanctions against Russia, and ongoing virus disruptions in China have meant ongoing and/or renewed supply chain disruptions and a sharp pick-up in imported inflation that is largely outside of the central bank’s remit.

Hence ,without decisive action the ECB now is at risk of losing control of the situation and letting inflation expectations go through the roof. Preventing second round effects has to be the order of the day. While wage growth has looked modest so far, this is a lagging indicator, and the start of warning strikes in Germany’s steel sector are a sign that the ECB may come to regret not moving earlier on rates. The IG Metall union is calling for pay increases of 8.2%, and employers are unlikely to get away with the one-off payment they have been offering thus far. The difference is crucial of course, as a one-off payment doesn’t lift wages permanently.

 The markets meanwhile, also are looking ahead to the ECB meeting Thursday and the CPI report Friday, both seen bearish for fixed income. Trading was on the quiet side with few catalysts and with the Pentecost holiday in much of Europe. The 2-year rate is up 2.3 bps at 2.675%, with the wi 3-year and wi 10-year each 1.5 bps cheaper at 2.895% and 2.960%, respectively. European rates have pared earlier losses and are slightly richer, with the exception of the Gilt where the rate is up 2 bps at 2.172%, playing catch-up after the long Jubilee weekend. There are also jitters ahead of a no-confidence vote on PM Johnson. The Bund is now fractionally in the green at 1.266%, and Italy’s BTP is down 3.3 bps at 3.357%. Stocks are rallying with the S&P future and the NASDAQ up 1.0% and 1.37%, respectively, with the Dow 0.78% firmer. The FTSE is up 1.16% and the DAX is 1.0% higher.

EURUSD

So far the confirmation that the ECB is on course to hike rates has helped to put a floor under the Euro and put an end to talks of parity against the US Dollar – at least for now. EURUSD has settled around the 1.0630- 1.0786 mark, the past 2 weeks. Although the Ukraine war and the tensions with Russia will likely cap the upside for the single currency, especially as the risk that Russia will cut off gas supplies remains on the table and could see the Eurozone heading for a recession over the next year.

Against that background, this week’s round of data releases is unlikely to really change much, as the data are mostly backward looking. The calendar is virtually empty on Monday, with public holidays in parts of Europe likely to make for somewhat lower volumes, even if most markets are open.

 

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 distributed without our prior written permission.

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SILVER1!, H4 Potential For Bullish Continuation

Type: Bullish RiseKey Levels:Resistance: 64046Pivot: 61739 Support: 58718Preferred Case:On the H4, with price moving within the ascending trend channel and above the ichimoku cloud , we have a bullish bias that price will rise from our pivot at 61739 in line with the 23.6% fibonacci retracement and 61.8% fibonacci projection to the 1st resistance at 64046 in line with the 38.2% fibonacci retracement .Alternative Scenario:Alternatively, price may drop from the pivot to the 1st support at 58718 at the swing low.Fundamentals:No major news

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Oat Futures ( ZO1! ), H1 Potential For Bullish Bounce

Type: Bullish RiseKey Levels:Resistance: 690'6Pivot: 679'3Support: 673'1Preferred Case:Price is moving above the ichimoku cloud which supports our bullish bias that price will rise from the pivot at 679'3 where the pullback support and 23.6% fibonacci retracement are to the 1st resistance at 690'6 in line with the swing high resistance, 78.6% fibonacci projection and 78.6% fibonacci retracement .Alternative Scenario:Alternatively, price may break pivot structure and drop to the 1st support at 673'1 in line with the overlap support and 38.2% fibonacci retracement .Fundamentals:Since both countries, Russia and Ukraine, are major exporter of agriculture goods and their persistent war will lead to a shortage of agricultural goods and give us a bullish bias for oat.

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USDCHF, H4 | Potential For Bearish Continuation

Type: Bearish ReversalKey Levels:Resistance: 0.97506Pivot: 0.96719Support: 0.95535Preferred Case:On the H4, with MACD moving in a bearish momentum, we have a bearish bias that price will drop to our 1st support at 0.95535 where the 61.8% Fibonacci retracement and swing low support are from our pivot at 0.96719 in line with the overlap resistance and 23.6% fibonacci retracement.Alternative Scenario:Alternatively, price may break pivot structure and head for 1st resistance at 0.97506 where the swing high resistance and 38.2% fibonacci retracement are.

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Recession talk is a red herring – here’s what investors should focus on instead

There is a lot of talk of impending recession. But that’s not something you should worry too much about, says John Stepek. What’s more important is that the world is changing – and you need to change the way you invest.

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