- The prospect of ECB monetary easing – flash CPI inflation lower than expected “Sell on rumour, buy on fact”
- Dollar Index has broken above 80.4 which has been a key pivot level since September
- Treasury yields sharply higher in last two days (but resistance on 10yr Treasury yield at c. 2.57%).
- Slow drift higher for equity market has come under some profit-taking as bond yields have increased
- Improvement of geopolitics in Ukraine means Gold remains under pressure but is oversold near term
- Don’t forget Non-farm Payrolls!
- Euro rallying after inflation data
- Key near term resistance band at $1.3650/$1.3670
- No over to the ECB for Thursday’s monetary policy decision – what to do?
- Main refinancing rate cut of 15bps is likely, with negative deposit rates possible, LTRO extension also possible.
- QE is unlikely at this stage though.
- Mixed technical signals after breaking 7 month uptrend.
- Key support now at $1.6680
- UK data is still showing strength – watch for the services PMIs.
- Stronger Non-farm Payrolls would be a drag on Cable
- Is a good reflection of the improvement and breakthrough in the Dollar Index
- Now needs to consolidate the break above 102.00 pivot level.
- Next upside test is the old uptrend resistance and underside of the 144 day ma
Can often struggle without the driving force of earnings season. Now the breakouts need to form support around the old resistance levels. But earnings season is now at an end and this could mean a struggle to continue the gains.
- S&P 500 breakout support at 1902
- DAX breakout support at 9810
- FTSE is lagging though and failed to breakout, increasingly looking corrective once more.
- Incredibly weak since the Ukrainian presidential election created legitimacy and an amount of stability.
- Under pressure from a strengthening US dollar, but also disappointing demand has also added to the decline.
- Technical indicators are a concern and suggest selling into strength.
- Resistance band $1260/$1268.
- Expect a retest of $1231 before further downside
Watch out for:
Wednesday 4th June
- UK – Services PMI
- US – ADP Employment
- US – ISM Non-manufacturing
Thursday 5th June
- UK – BoE rates
- Eurozone – ECB monetary policy plus Draghi’s press conference
Friday 6th June
- US – Non-farm Payrolls
- US – Unemployment (also watch for the participation rate again)
Monday 9th June
- Bank Holiday – Germany, France, Switzerland
Tuesday 10th June
- China – Inflation
- UK – Manufacturing Production
Wednesday 11th June
- UK – Unemployment
- New Zealand – monetary policy
- US – Pending Home Sales
Thursday 12th June
- Australia – Unemployment
- US – Retail Sales
Friday 13th June
- Japan – BoJ monetary policy
- China – Industrial Production
- US – University of Michigan sentiment (Prelim)