Notes/Observations
– Inflation and central banks remain in focus. Markets still seem prone to the ebb and flow of news around inflation; Chile, India recently hikes; Poland expected to continue tightening later today. BOT left its Benchmark Interest Rate at 0.50% with the vote being 4-3 with dissenters requesting a 25bps hike.
– Focus on ECB decision on Thursday.
– US CPI data on Friday ahead of FOMC decision next week with its tightening likely remaining at full throttle.
– Asia closed higher with the Hang Seng outperforming on the hopes of a more accommodative Govt stance against tech stocks. Europe indices trade lower and bond yields higher as economic data across the continent relatively matches estimates.
– Notable moves in USD/TRY, up +2% after Turkey Pres Erodgan yesterday reiterated stance that Govt would not raise rates and actually cut them instead. Elsewhere Gold -0.1%, BTC +2.9%, ETH +1.6%, Brent +0.4%, WTI +0.6%, DXY +0.4%, S&P500 Futures -0.4%.
Asia
– South Korea Q1 preliminary GDP (2nd reading) Q/Q: 0.6% v 0.7% advance; Y/Y: 3.0% v 3.1% advance.
– Japan Q1 Final GDP Q/Q: -0.1% v -0.3%e; GDP Annualized Q/Q: -0.5% v -1.1%e.
– Japan Apr Current Account Balance: Β₯501.1B v Β₯513.2Be); Trade Balance (BOP): -Β₯688.4B v -Β₯735.0Be.
– India Central Bank (RBI) raised the Repurchase Rate by 50bps to 4.90% (more-than-expected) citing rising inflationary pressures.
– China Deputy Commerce Min (MOFCOM) Wang: stated that foreign Trade stabilization faced uncertainties; Saw global demand growth as low.
– China PBOC International Dept Offical Zhou stated to keep guiding financing costs lower; Reiterates govt view to keep CNY currency reasonably stable and strengthen currency flexibility.
Ukraine conflict
– Ukraine has not reached any agreement with Russia or Turkey allowing safe passage of grain ships in the Black Sea; Russian Foreign Min Lavrov to meet with his Turkish counterpart for talks in Ankara on Wed (Jun 8th).
Europe
– UK PM Johnson said to be under pressure from Tory MPs to cut taxes to help rebuild unity and address the cost of living.
Americas
– Treasury Sec Yellen testified that the US economy is entering a transition from recovery to stable and steady growth. Virtually impossible to insulate ourselves from shocks on oil markets such as those caused by Russia’s invasion of Ukraine. Inflation is unacceptable but is likely to remain high.
– Chile Central Bank ((BCCh) raised the Overnight Rate Target by 75bps to 9.00% (as expected).
Energy
– Weekly API Crude Oil Inventories: +1.8M v -1.2M prior.
Speakers/fixed income/FX/commodities/erratum
Equities
Indices [Stoxx600 -0.22% at 441.92, FTSE -0.26% at 7,579.47, DAX -0.36% at 14,504.59, CAC-40 -0.49% at 6,468.78, IBEX-35 -0.11% at 8,831.50, FTSE MIB -0.20% at 24,318.00, SMI -0.50% at 11,476.79, S&P 500 Futures -0.43%].
Market Focal Points/Key Themes: European indices open generally lower, and remained under pressure as the session wore on; better performing sectors include consumer discretionary and technology; sectors among those trending lower are financials and telecom; Haldex receives takeover offer from SAF-Holland; earnings expected in the upcoming US session include Brown-Forman and Campbell Soup.
Equities
– Consumer discretionary: Inditex [ITX.ES] +4% (earnings; pricing comments), Wizz Air [WIZZ.UK] -5% (earnings).
– Financials: Credit Suisse [CSGN.CH] -7% (trading update; possible job cuts).
– Industrials: Haldex [HLDX.SE] +44%, SAF-Holland [SFQ.DE] -5% (offer for Haldex), Renault [RNO.FR] +3% (buyback), Chemring [CHG.UK] -7% (earnings).
Speakers
– EU Commission President Von der Leyen proposed an extra β¬600M in funds for food security;She stressed that needed Ukraine Black Sea ports up and running again.
– France Fin Min Le Maire: Inflation should begin to ease in early 2023.
– Russia Foreign Min Lavrov stated that its special military operation in Ukraine was going according to plan.
– Turkey Foreign Min Cavusoglu noted that talks with Russia’s Lavrov were fruitful; Turkey ready to adopt UN plan regarding Ukraine grain
OECD updated its Economic Outlook which cut the 2022 global GDP growth forecast from 4.5% to 3.0% and cut the 023 global GDP growth forecast from 3.2% to 2.8%.
– Japan Fin Min Suzuki reiterated view that a weak JPY currency (yen) had both positive and negative impacts. Weak yen currency had a negative impact when wage momentum was weak and added that wage momentum was currently weak.
– BOJ Gov Kuroda reiterates stance that was important for FX to move stably and reflect fundamentals. Wage hikes were needed to stable and sustainable 2% inflation. Reiterated stance that policy was not targeting the FX rate; had yet to achieve the stable inflation target.
– Thailand Central Bank Policy Statement noted that the vote to keep policy steady was 3-2 (dissenters sought a 25bps hike). Kept policy steady to support economy but noted the accommodative policy was less necessary. High inflation was longer than expected and would stay elevated due to oil prices.
– Thailand Central Bank updated its Staff Projections which raised 2022 Headline CPI forecast from 4.9% to 6.2% and also raised the 2023 Headline CPI forecast from 1.7% to 2.5%. BOT also raised the 2022 GDP growth forecast from 3.2% to 3.3% while cutting the 2023 GDP growth outlook from 4.4% to 4.2%.
– Beijing reported zero community COVID cases for 5th straight day.
Currencies/Fixed Income
– EUR/USD steady at 1.0690 ahead of Thursday ECB meeting. Analysts expect the central bank to end its net asset purchases in June and signal a first interest rate rise for July. Some dealers note that recent inflation data for the regions would warrant the 1st rate hike as early as June.
– USD/JPY hit a fresh 20-year high above 133.70 in the session. Japanese officials out in full force to convince G7 it was not targeting the FX rate but focusing on sustainable inflation.
– TRY currency (Lira) weakened to move beyond the 17.00 level after Turkey President Erdogan reiterated stance that this govt would not raise rates and would continue to cut rates.
Dollar index (DXY) mildly higher as risk appetite dwindles on momentum from yesterday’s Wall Street selloff due to Target’s profit warning.
– GBP/USD – lower at 1.255 as UK Tory party pressures PM Johnson to provide tax cuts to assist with cost of living.
– USD/CHF – climbs higher this morning at 0.9765.
– AUD/USD – declines below 0.72 handle, trades at 0.7188.
– NZD/USD – steady decline to 0.645.
– USD/CAD – pushes higher towards 1.255.
Economic data
– (CH) Swiss May Unemployment Rate: 2.1% v 2.1%e; Unemployment Rate (seasonally adj): 2.2% v 2.2%e.
– (DE) Germany Apr Industrial Production M/M: 0.7% v 1.2%e; Y/Y: -2.2% v -2.4%e.
– (UK) May Halifax House Price Index M/M: 1.0% v 1.1% prior; Y/Y: 10.5% v 10.8% prior.
– (NO) Norway Apr Industrial Production M/M: -0.5% v +2.5% prior; Y/Y: 3.0 %v 3.0% prior.
– (NO) Norway Apr Manufacturing Production M/M: 1.0%v 1.4% prior; Y/Y: +2.4% v -2.1% prior.
– (SE) Sweden May Budget Balance (SEK): 69.2B v -16.0B prior.
– (RO) Romania Q1 Preliminary GDP (2nd reading) Q/Q: 5.2% v 5.2% advance; Y/Y: 6.5% v 6.5% advance.
– (FR) France Apr Trade Balance: -β¬12.2B v -β¬12.7B prior; Current Account: -β¬3.4B v -β¬3.4B prior.
– (ES) Spain Q1 INE House Price Index Q/Q: 2.6% v 1.2% prior; Y/Y: 8.5%v 6.4% prior.
– (HU) Hungary May CPI M/M: 1.7% v 1.2%e; Y/Y: 10.7% v 10.4%e.
– (HU) Hungary Apr Industrial Production M/M: -1.6% v -0.2% prior; Y/Y: 4.7% v 6.4%e.
– (HU) Hungary Apr Preliminary Trade Balance: -β¬0.5B v -β¬0.7B prior.
– (CZ) Czech May Unemployment Rate: 3.2% v 3.2%e.
– (TH) Thailand Central Bank (BOT) left the Benchmark Interest Rate unchanged at 0.50% (as expected).
– (MY) Malaysia end-May Foreign Reserves: $112.8B v $111.4B prior.
– (TW) Taiwan May Trade Balance: $2.4B v $4.7Be; Exports Y/Y: 12.5% v 14.1%e; Imports Y/Y: 26.7% v 21.5%e.
– (IT) Italy Apr Retail Sales M/M: 0.0% v 0.1%e; Y/Y: 8.4% v 5.6% prior.
– (UK) May Construction PMI: 56.4 v 56.6e (16th month of expansion).
– (EU) Euro Zone Q1 Final GDP (3rd reading) Q/Q: 0.6% v 0.3% prelim; Y/Y: 5.4% v 5.1% prelim.
– (EU) Euro Zone Q1 Household Consumption Q/Q: -0.7% v -0.8%e; Govt Expenditures Q/Q: -0.3% v +0.4%e; Gross Fixed Capital Q/Q: 0.1% v 1.1%e.
– (EU) Euro Zone Q1 Final Employment Q/Q: 0.6% v 0.5% prelim; Y/Y: 2.9%v 2.6% prelim.
– (IS) Iceland May Preliminary Trade Balance (ISK): -28.3B v -16.9B prior.
Fixed income issuance
– (DK) Denmark sold total DKK4.08B in 3-month and 6-month Bills.
– (SE) Sweden sold total SEK12.5B vs. SEK12.5B indicated in 3-month and 6-month Bills.
– (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 2.125% May 2032 Bonds; Avg Yield: 2.92% v 2.70% prior; bid-to-cover: 3.24x v 3.47x prior.
– (UK) DMO sold Β£2.5B in 1.0% Jan 2032 Gilts; Avg Yield: 2.296% v 1.925% prior; bid-to-cover: 2.85x v 2.64x prior; Tail: 0.2bps v 0.2bps prior.
Looking ahead
– (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to raise the Base Rate by 75bps to 6.00% (no set time).
– (IN) India to sell INR330B in 3-month, 6-month and 12-month bills.
– (CH) Switzerland to sell 2037 and 2064 Bond.
– 05:30 (ZA) South Africa May Sacci Business Confidence: No est v 95.6 prior.
– 05:25 (EU) Daily ECB Liquidity Stats.
– 05:30 (DE) Germany to sell β¬4.0B in 0% Feb 2032 Bunds.
– 05:30 (PT) Portugal Debt Agency (IGCP) to sell β¬0.75B in 0.30% Oct 2031 OT; bonds.
– 05:30 (GR) Greece Debt Agency (PDMA) to sell 12.onth bills.
– 05:30 (HU) Hungary Debt Agency (AKK) switch auction.
– 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays).
– 06:00 (IE) Ireland Apr Industrial Production M/M: No est v 1.7% prior; Y/Y: No est v -6.6% prior.
– 06:00 (ZA) South Africa Q2 BER Business Confidence: No est v 46 prior.
– 06:45 (US) Daily Libor Fixing.
– 07:00 (US) MBA Mortgage Applications w/e Jun 3rd: No est v -2.3% prior.
– 07:00 (BR) Brazil May FGV Inflation IGP-DI M/M: 0.8%e v 0.4% prior; Y/Y: 10.7%e v 13.5% prior.
– 07:00 (UK) Weekly PM Question time in House.
– 08:00 (CL) Chile May CPI M/M: 1.1%e v 1.4% prior; Y/Y: 11.4%e v 10.5% prior.
– 08:00 (BR) Brazil CONAB Crop Report.
– 08:00 (UK) Daily Baltic Dry Bulk Index % at points.
– 10:00 (US) Apr Final Wholesale Inventories M/M: 2.1%e v 2.1% prelim; Wholesale Trade Sales M/M: No est v 1.7% prior.
– 10:30 (US) Weekly DOE Oil Inventories.
– 12:00 (RU) Russia May CPI M/M: 0.2%e v 1.6% prior; Y/Y: 17.3%e v 17.8% prior.
– 12:00 (RU) Russia May CPI Core M/M: 0.5%e v 2.0% prior; Y/Y: 20.0%e v 20.4% prior.
– 12:00 (CA) Canada to sell 5-year notes.
– 13:00 (US) Treasury to sell 10-year notes.
– 18:00 (NZ) New Zealand May Heavy Truckometer M/M: No est v 2.3% prior.
– 19:01 (UK) May RICS House Price Balance: 76%e v 80% prior.
– 19:50 (JP) Japan May M2 Money Supply Y/Y: 3.6%e v 3.6% prior; M3 Money Supply Y/Y: 3.2%e v 3.2% prior.
– 21:00 (PH) Philippines Apr Trade Balance: -$5.0Be v -$5.0B prior; Exports Y/Y: 12.0%e v 5.9% prior; Imports Y/Y: 27.3%e v 27.7% prior.
– 23:30 (JP) Japan to sell 6-Month Bills.
Source: TradeTheNews.com Staff
Forex technical analysis and forecast: Majors, equities and commodities
