Investment Bank Outlook 13-06-2022

Credit AgricoleAsia overnightIt was risk-off trading to start the week with investors having to contend with higher UST yields post the upside surprise in US inflation on Friday as well as the resumption of mass Covid testing in Beijing and Shanghai. The latter is raising concerns of another round of lockdowns. The UST curve has begun to invert with the 2s10s spread just holding above zero and the 5s30s spread turning negative for the first time since April. UST yield curve inversion reflects investors’ rising concerns about a US recession. At the time of writing, all Asian bourses as well as S&P500 futures were trading lower. In G10 FX, higher UST yields and risk-off trading led to USD outperformance with the NOK, AUD and JPY weakening the most against the USD during the Asian session. USD/JPY broke 135. The EUR largely shrugged off the outcome of the first round of the French parliamentary elections, as the first estimations put President Emmanuel Macron’s coalition well ahead of the left/far-left group in the number of expected seats, although still possibly falling short of securing an absolute majority on Sunday. Even in the case of a minority government for Macron’s coalition, the EUR should not be too underwhelmed.CitiEuropean OpenMarkets in Asia were buffeted by shockwaves from last Friday’s US CPI. Equities and high beta currencies ticked lower, while JPY suffered from widening rate differentials. US yields flattened further, led by the front end as Fed pricing continues to firm. China over the weekend saw more signs of its reopening stalling over virus concerns, and iron ore plunged in Singapore over this. Closer to the European Open, we note that the BoJ announced additions to the auction schedule of buys of JGB.Looking ahead, USD sees Brainard speak, although given the topic, headline risk is low. GBP will see monthly GDP and trade balance figures, EUR awaits a lineup of ECB speakers, with focus on any indications of a new fragmentation tool. TRY sees current account balance figures, PLN notes trade balance details and India awaits CPI.What happened in markets?G10 FX saw dollar reign as king yet again post the CPI print last Friday. High Beta currencies took most of the drubbing, with NOK down 0.73%, AUD -0.55%. JPY was also a big loser as widening yield differentials hit hard, down 0.52%.Equities continued their slide lower. S&P eminis were down 1.33% while Nasdaq100 futures were down 1.86%. Kospi and HSI were hit hard as well, down 3.21% and 2.81% respectively.Commodities: Oil prices have opened lower with Brent and WTI down around 1.5%, although given volatility, we do not read too much into it. Instead, we flag Citi Energy Futures Specialist Tim Evans’ Energy Futures - Weekly Overview for a full overview of the energy markets.Rates: US 2-3y yields are higher by another 10bps as Fed rate hike pricing continues to firm. March 2023 Eurodollar futures have sold off 20 ticks form the close, with Libor now implied >4% by middle of next week, a new hawkish extreme peak in hike pricing. More in March 2023 USD Libor implied >4%, FX FWDs on the move

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Daily Market Outlook, June 13, 2022

Daily Market Outlook, June 13, 2022 Overnight Headlines US Recession Expected For Next Year, Economists Forecast China Alarm US In Private Warnings To Avoid Taiwan Strait China Walking Back Loosening Just Weeks After Reopening Rate Hike Hopes Raise Worries Amid Debt-Laden Eurozone BoE Forecasted To Hike Interest Rates To New 13-Year High UK Faces Stagnation And Recession Risk, CBI Officials Warn Tory MPs Attack Over Plans To Rip Up N Ireland Brexit Deal Macron Majority Threatened After Parliament First-Round Vote Yen Hits Key 135 Level Amid BoJ's Increasingly Isolated Plans Bitcoin Sinks To 18-Month Low As US Inflation Impact Spreads SEC Regulator Investigating Goldman Sachs Over ESG Fund DHL Warns Supply Chain Won’t Recover To Pre-Covid DaysThe Day Ahead Equity markets across the Asia-Pacific region have started the week noticeably lower, reflecting a broad deterioration in risk sentiment. Markets remain challenged by the prospect of aggressive policy tightening, particularly by the US Federal Reserve, which risk driving a material slowdown in economic growth. Market sentiment has also been knocked by the re-emergence of Covid outbreaks in Beijing and Shanghai leading to some targeted curbs being imposed, with concerns rising that widespread restrictions could be put in place. The release of UK April GDP figures this morning showed the economy contract for a second-consecutive month. Declines were registered across all three broad sectors, industrial production, construction and services, which means that the Bank of England’s forecast of a 0.1% rise in GDP in Q2 overall, now looks ambitious. Over the remainder of the week, the focus will be on several central bank policy updates with potentially the most significant for markets being those by the Bank of England and the US Federal Reserve. The Fed seems set to add to the recent spate of aggressive tightening moves by central banks. In contrast, while financial markets expect the Bank of England to deliver another 25bp rate rise, its message and also the Bank of Japan and Swiss National Bank, may continue to be more cautious stressing the need to balance inflation concerns against downside growth risks. Later today, ECB officials Simkus, Holzmann and Guindos are due to speak. Last Thursday, the European Central Bank confirmed that it will probably raise interest rates by 25bp on 21 July. In addition, it indicated that rates could be hiked by a further 50bp in September with further rises expected to follow. Those announcements continued the recent trend of central banks surprising markets with more aggressive than expected tightening moves. While markets have largely priced in 75bp of policy rate increases over the next two meetings, comments from these officials will be closely watched for signs over how widely the ECB’s broad message is shared across the council members. Elsewhere there is a dearth of economic data with no releases due in the UK, US or Europe. Early tomorrow the Office for National Statistics (ONS) will release the latest UK labour market report, primarily covering the three months to April. Expect the latest read to show that the market remains tight with a solid 220k rise in employment and a drop in the unemployment rate to 3.6%. Headline wage growth is also forecast to rise further above the 7% (3m/year) mark.FX Options Expiring 10am New York Cut EUR/USD: 1.0475 (237M), 1.0550 (250M), 1.0575 (359M) GBP/USD: 1.2500 (224M). AUD/USD: 0.7150 (462M) USD/CAD: 1.2850 (200M) EUR/JPY: 140.00 (632M), 143.00 (1.69BLN)Technical & Trade ViewsEURUSD Bias: Bearish below 1.07 Bullish above EUR/USD's big two day slump broke and closed under the 1.0516 Fibo on Friday 1.0516 Fibo is a 61.8% retrace of the 1.0349 to 1.0787 May (EBS) rise That is increasing the scope for a much bigger slide well under 1.0452 Fibo 1.0452 Fibo is a 76.4% retrace of the same gain Fourteen-day momentum also turned negative on Friday FX traders have a negligible bet on dollar rising This is the case at the start of a major tightening in U.S. policy Currently traders are long of just 12.5 billion dollars (incl EM bets) At beginning of last Fed tightening cycle in 2015 they owned 48 billionGBPUSD Bias: Bearish below 1.26 Bullish above. GBP/USD falls to fresh four week low on negative UK April GDP Cable drops to 1.2255 on unexpectedly negative UK April GDP number Down 0.3% vs +0.1% f/c - 1.2255 lowest level since May 16 1.2264 was Asia low, as risk aversion hurt GBP and buoyed safe-haven USD Asian stocks slump; Nikkei down 3%. European/U.S. equity futures negative 1.2302 was Friday's low, after USD jumped on hot U.S. CPI data UK to unveil new N.Ireland trade rules today, risking EU clashUSDJPY Bias: Bullish above 127 Bearish below USD/JPY's bullish cycle has marginally breached the 2002 135.20 peak That has unmasked the October 1998 136.90 high 14-day momentum is positive, reinforcing the overall bullish market Market is stretched near-term, with traders looking to get long on dips Bids at the 133.25 level, which is ahead of last Thursday's 133.19 lowAUDUSD Bias: Bullish above .7200 Bearish below AUD/USD stabilizes near 0.7024, marks 4th straight drop Recovers from low of 0.7001 after blip up to 0.7072 Bollinger downtrend channel confirmed on close below 0.7043 Sea of red in Asia stocks following Friday's Wall St cue Investor anxiety heightened heading toward FOMC Wed Australia financial markets closed Monday

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A new beginning for the Rockwood Strategic investment trust

Rockwood Strategic investment trust has been making positive changes, says Max King. Investors should tune in.

from Moneyweek RSS Feed https://moneyweek.com/investments/funds/investment-trusts/604965/a-new-beginning-for-the-rockwood-strategic-investment
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Owning both bitcoin and gold has proved a winning strategy – will it continue?

Bitcoin is known for its volatility; gold for its stability. Together, says Charlie Morris, they can be a winning combination for investors looking to combat inflation.

from Moneyweek RSS Feed https://moneyweek.com/investments/alternative-finance/bitcoin-crypto/604963/bitcoin-and-gold-inflation-hedge
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EURCHF, H4 | Potential Bullish Momentum

Type: Bullish BounceKey Levels:Resistance: 1.04951Pivot: 1.03379Support: 1.02459Preferred Case:On the H4, with prices moving above the ichimoku indicator, we have a bullish bias that price will rise from our pivot at 1.03379 where the horizontal overlap support, 61.8% fibonacci retracement and 61.8% fibonacci projection are to our 1st resistance at 1.04951 in line with the swing highAlternative Scenario:Alternatively, price may break pivot structure and we can expect the bearish momentum to carry price to 1st support at 1.02459 in line with swing low support and 100% fibonacci projection.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/eurchf-h4-or-potential-bullish-momentum13"
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Key Economic Events and Reports for the Week Ahead

The key event next week will be the Fed meeting on Wednesday. The central bank will release an updated dot plot, which will reflect the FOMC's expectations for the path of the interest rate next year, as well as in the long term. This will probably be the most significant information for markets. With inflation accelerating in the US to 8.6%, investors are waiting for more decisive action from the Fed, for example, a 75 bp rate hike. However, the Fed has an obstacle on this path in the form of stagflation risks - the pace of tightening cannot become more and more aggressive indefinitely, so one should carefully consider the scenario where the Fed announces a more cautious step and risk assets react positively to the outcome of the meeting, and the dollar falls. There is a chance that the meeting will result in a classic "sell on the facts” move in the greenback.In addition to the Fed, the decision on the interest rate will be made by the Central Bank of Switzerland (SNB) on Thursday. As elsewhere, inflation is rising in the country, so a hawkish move that could cause a positive CHF reaction cannot be ruled out.On Friday, the Bank of Japan's monetary policy meeting will take place, and investors will be waiting for new details on possible BoJ interventions in order to contain the weakening of the yen. USDJPY rose to 135 this week and the monetary authorities warned that the rate may not reflect the fundamental value of the yen. However, markets do not expect any tightening, like QE cut or a rate hike.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/key-economic-events-and-reports-for-the-week-ahead-12062022"
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Fortress Russia’s economy is crumbling

Vladimir Putin invaded Ukraine in the belief that the Russian economy could withstand whatever the West threw at it. That belief is being severely tested.

from Moneyweek RSS Feed https://moneyweek.com/economy/global-economy/604958/fortress-russias-economy-is-crumbling
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No Signs of Slowdown in US Runaway Inflation Rattle Market Sentiment

Consumer prices (CPI index) in the US rose by 8.6% in May compared to the same month last year, according to data from the Department of Labor. This is the highest growth rate since December 1981. Thus, inflation has accelerated compared to 8.3% in April. Analysts polled by Bloomberg had expected consumer prices to rise 8.3% on average.Energy prices jumped 34.6%, the highest since September 2005, from 30.3% in April, while gasoline prices doubled (up 106.7%) to a record high.The cost of food rose by 10.1%, the growth rate exceeding 10% for the first time since the end of March 1981.Prices for new cars rose by 12.6%, for used cars and trucks - by 16.1%.The increase in consumer prices compared to the previous month in May amounted to 1% against 0.3% in April. Analysts' consensus forecast was for an increase of 0.7%.Prices excluding the cost of food and energy (Core CPI index) last month increased by 6% in annual terms and by 0.6% in monthly terms. In April, the increase was 6.2% and 0.6%, respectively.

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Why UK companies should lean in and poach Sheryl Sandberg

Sheryl Sandberg has quit Facebook. Now’s the time for corporate Britain to move in and poach her says Matthew Lynn.

from Moneyweek RSS Feed https://moneyweek.com/economy/people/604946/why-uk-companies-should-poach-sheryl-sandberg
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SGX NIFTY 50 INDEX, H4 Potential For Bearish Momentum

Type: Bearish MomentumKey Levels:Resistance: 16821.5 Pivot: 16484.5Support: 15914.5Preferred Case:On the H4, with price moving below ichimoku cloud and price recently breaking the ascending trend channel, we have a bearish bias that price will drop from the pivot at 16484.5 in line with the swing high and 100% fibonacci projection to the 1st support at 15914.5 in line with the swing low and 78.6% fibonacci retracement.Alternative Scenario:Alternatively, price may reverse off the pivot and rise to the 1st resistance at 16821.5 in line with the 61.8% fibonacci retracemeFundamentals:No major news

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/sgx-nifty-50-index-h4-potential-for-bearish-momentum"
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S&P 500, H4 Potential For Bearish Momentum

Type: Bearish MomentumKey Levels:Resistance: 4303.25 Pivot: 4159.25Support: 3888.25Preferred Case:On the h4, with price moving into a bearish pressure area on the MACD indicator and moving in a descending trendline, we have a bearish bias that price will drop from the pivot at 4159.25 to the 1st support at 3888.25 in line with the 78.6% fibonacci retracement at the swing low.Alternative Scenario:Alternatively, price may reverse off the pivot to the 1st resistance at 4303.25 at the swing high in line with the 61.8% fibonacci retracement.Fundamentals:No major news

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/s-and-p-500-h4-potential-for-bearish-momentum"
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US Dollar Index Futures (DX1!), H1 Potential for Bullish Rise

Type: Bullish RiseKey Levels:Resistance: 103.960Pivot: 102.925Support: 102.240Preferred Case:On the H1, price is moving above the ichimoku cloud and along the ascending trendline which supports our bullish bias that price will rise from the pivot at 102.925 where the swing low support is to the 1st resistance at 103.960 in line with the swing high resistance, 127.2% fibonacci extension and 100% fibonacci projectionAlternative Scenario:Alternatively, price may break pivot structure and drop to the 1st support at 102.240 in line with the overlap support and 78.6% fibonacci projection .Fundamentals:The CPI is forecast to rise by 0.7 percent from the previous month's 0.3 percent, but this is unlikely to affect the two 50-basis-point rate rises already factored in for June and July. This gives us a weak bullish view for the US Dollar Index Futures .

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/us-dollar-index-futures-dx1-h1-potential-for-bullish-rise"
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SILVER FUTURES (SILVER1!), H1 Potential For Bearish Momentum

Type: Bearish MomentumKey Levels:Resistance: 62362Pivot: 61483Support: 60211Preferred Case:On the H1, price has broken out from the ascending channel and is moving below the ichimoku cloud which supports our bearish bias that price will drop from our pivot at 61483 in line with the overlap resistance to the 1st support at 60211 in line with the overlap support, 61.8% fibonnaci retracement and 78.6% fibonacci projection .Alternative Scenario:Alternatively, price may break through pivot structure and rise to the 1st resistance level at 62362 in line with the swing high resistance and 61.8% fibonacci projection .Fundamentals:The outcome of the US CPI would confirm if inflation remains on a rising trend or if it is topping out which gives us a mixed bias on silver .

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/silver-futures-silver1-h1-potential-for-bearish-momentum10"
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Gold Futures (GOLD1!), H1 Potential For Bearish Momentum

Type: Bearish MomentumKey Levels:Resistance: 51144Pivot: 51040Support: 50683Preferred Case:On the H1, price is moving within the descending channel , MACD is showing bearish momentum and price is moving below the ichimoku cloud which supports our bearish bias that price will drop from our pivot at 51040 in line with the overlap resistance to the 1st support at 50683 where the swing low support, 100% fibonnaci projection and 61.8% fibonacci projection .Alternative Scenario:Alternatively, price may break through pivot structure and rise to the 1st resistance level at 51144 in line with the overlap resistance and 61.8% fibonacci retracement .Fundamentals:The outcome of the US CPI would confirm if inflation remains on a rising trend or if it is topping out which gives us a mixed bias on gold .

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/gold-futures-gold1-h1-potential-for-bearish-momentum"
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