Fundamental updates by Solid ECN

[SOLIDECN]

DE 30​

• Indices from Asia-Pacific launched new week's trading mixed - Nikkei traded 0.4% higher, S&P/ASX 200 moved 0.1% higher, Kospi dropped 0.2% and Nifty 50 added 0.2%. Indices from China traded 0.2-0.8% lower​
• Major European and US index futures are trading over 1% above Friday's cash closing prices​
• DAX futures trade almost 300 points, or around 2%, above Friday's cash close while S&P 500 futures 50 points higher, or around 1.2%​
• Silicon Valley Bank was sold to First Citizens with around $72 billion worth of assets being purchased at a $16.5 billion discount as part of the deal. All deposits assumed by First Citizens will be insured by FDIC up to the insurance limit​
• First Citizens will also receive a line of credit from FDIC for unforseen liquidity events​
• Russian President Putin announced that Russia will station tactical nuclear weapons in Belarus in response to Western countries increasing military support to Ukraine, especially UK providing Ukraine with depleted uranium ammunition​
• ECB Schnabel noted that headline inflation began to fall, but core gauges are more sticky. She said that financial stress have so far been limited mainly to financial markets​
• Fed Kashkari said that ongoing banking sector stress could bring the US closer to recession by triggering a credit crunch. However, he has noted that deposit outflow from smaller US banks have slowed and that confidence is being restored​
• According to Reuters report, Russia is considering extending limits of fertilizer exports by another six months, until November​
• Riksbank Governor Thedeen said that inflation is developing worse than it was previously thought and that another rate hike in April may be needed​
• Cryptocurrencies are trading higher at the beginning of a new week - Bitcoin gains 1.4%, Ethereum trades 1.3% higher and Ripple jumps 1.7%. Dogecoin lags and drops 0.2%​
• Energy commodities trade mixed - oil gains 0.6% while US natural gas prices drop 1.2%​
• Precious metals are pulling back - gold drops 0.3%, silver trades 0.8% lower while platinum and palladium dip around 0.1% each​
• EUR and AUD are the best performing major currencies while JPY and NZD lag the most​

Futures markets point to a positive opening of a new week in Europe with German DAX futures (DE30) trading almost 300 points above Friday's cash close. Index is attempting to break above a mid-term resistance in the 15,250 pts area.​

 

[SOLIDECN]

Breaking: EUR ticks higher after German IFO beat​

German Ifo Institutes released a new set of business climate indices for March today at 9:00 am BST. Data turned out to be much better than expected. Headline index climbed from 91.1 to 93.3, while a downtick to 91.0 was expected. This was driven by solid beats in both current conditions and expectations subindices. Ifo economists noted that recession in Germany became more unlikely and that proportion of business that want to raise prices has dropped. Around 41% of companies complained about supply bottlenecks in March.​

• German Ifo Business Climate for March: 93.3 vs 91.0 expected (91.1 previously)​
• Current Conditions: 95.4 vs 94.1 expected (93.9 previously)​
• Expectations: 91.2 vs 88.3 expected (88.5 previously)​

Market reaction to the upbeat Ifo data was fairly muted. DE30 barely saw any move while EURUSD moved around 0.1% higher.

EURUSD ticked higher following release of better-than-expected Ifo data. The main currency pair is testing short-term resistance zone marked with 38.2% retracement of a recent upward impulse.​

 

[SOLIDECN]

Economic Calendar​

• European markets set for higher opening​
• CB consumer confidence index, API report on oil stocks​
• Speeches from ECB and BoE heads​

Futures markets are pointing to a slightly higher opening of the European cash session today. Futures on major European blue chips indices trade around 0.5% higher at press time. DAX futures climbed above yesterday's daily highs and trade firmly above 15,300 pts mark. Overall, financial markets look calm this morning and no outsized moves can be spotted. Cryptocurrencies are trading mixed, energy commodities are trading slightly higher and precious metals drop. AUD and NZD are the best performing major currencies while CHF and USD lag the most.

Economic calendar for the day ahead is rather light. Traders will be offered goods trade balance data from the United States for February as well as Conference Board consumer confidence index for March. Oil traders will tune in in the evening for the release of API report on US oil inventories. There is a number of central bankers' speeches scheduled for today, including speeches from BoE Governor Bailey (9:45 am BST) and ECB President Lagarde (2:15 pm BST).​

• 1:00 pm BST - Hungarian National Bank rate decision​
• 1:30 pm BST - US, goods trade balance for February. Expected: -$90.9 billion. Expected: -$91.1 billion​
• 3:00 pm BST - US, Conference Board consumer confidence index for March. Expected: 101.0. Previous: 102.9​
• 3:00 pm BST - US, Richmond manufacturing index for March. Expected: -10.0. Previous: -16.0​
• 9:40 pm BST - API report on US oil inventories. Expected: 0.2 mb. Previous: 3.26 mb​

​

Central bankers' speeches​

• 8:35 am BST - ECB Enria​
• 9:45 am BST - BoE Governor Bailey​
• 8:45 am BST - BoE Ramsden​
• 2:15 pm BST - ECB President Lagarde​
• 3:00 pm BST - Fed Barr​

 

[SOLIDECN]

Markets ignore European PMI revisions​

Revisions of European manufacturing PMI indices for March were released this morning. Spanish reading showed quite noticeable beat but releases from other countries, like France and Germany, were revisions and came in close to flash estimates. As a result, there was no major reaction to those on the market. EURUSD trades mostly flat on the day while European equity markets trade slightly higher on the day.
​

Manufacturing PMIs for March​

• Spain: 51.3 vs 50.1 expected​
• Italy: 51.1 vs 51.0 expected​
• France (final): 47.3 vs 47.7 first release​
• Germany (final): 44.7 vs 44.4 first release​
• Eurozone (final): 47.3 vs 47.1 first release​

While EURUSD has seen nearly no reaction to PMI releases, the pair saw some interesting moves earlier in the day and a pin bar pattern near an important price zone can be spotted on the daily chart.​

 

[SOLIDECN]

German Industrial Production Accelerates​

Industrial production in Germany is accelerating, as evidenced by the latest report by Destatis (Germany's statistics agency). The survey data indicated that production rose 2.0% m/m, compared to an earlier reading of 3.5% and analysts' predictions of a 0.1% decline.

German Industrial Production WDA (Y/Y) Feb: 0.6% (est -2.0%; prev -1.6%).​

 

[SOLIDECN]

3 Markets to Watch​

Investors that will be returning to the markets after Easter holidays and will face a number of top-tier market events in the week ahead. Rate decision from the Bank of Canada, Q1 earnings from major US banks as well as FOMC minutes and US inflation data are highlights in this week's calendar. Be sure to watch GOLD, US500 and USDCAD in the week ahead.

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GOLD​

A number of top-tier data releases from the United States will be offered to investors this week, including CPI for March (Wednesday, 1:30 pm BST), FOMC minutes (Wednesday, 7:00 pm BST) as well as retail sales for March (Friday, 1:30 pm BST). All of those may shed light on what Fed does next - is a 25 bp rate hike in May still in play or will the Fed pause the rate hike cycle? Higher CPI reading and poor retail sales data may see dovish bets in the markets increase. This, in turn, may help gold look towards highs in the $2,060 per ounce area.

​

US500​

Wall Street earnings season for Q1 2023 will begin this Friday with the release of reports from major US banks. JPMorgan, Wells Fargo and Citigroup are set to report their financials before the opening of the Wall Street session on Friday. Beats and misses in results will be company-specific but investors are also likely to be offered hints on an issue with more broad-based implications - impact of recent banking turmoil on the economy, businesses and credit action. Recent data from the Dallas Fed showed signs of a crunch in consumer loans. Confirmation that deterioration in credit action is indeed taking place may deteriorate market moods.

​

USDCAD​

USDCAD will be one of the FX to watch on Wednesday. Not only because US CPI data for March and FOMC minutes will be released but also because the Bank of Canada is set to announce the rate decision at 3:00 pm BST. No cut is expected as the Bank of Canada strongly hinted that the rate hike cycle is over. However, wage growth in Canada remains elevated, which should exert upward pressure on inflation. Having said that, some hawkish remarks may be offered by BoC.​

 

[SOLIDECN]

AUDUSD​

• US indices finished yesterday's trading mostly higher. S&P 500 gained 0.10%, Dow Jones moved 0.3% higher and Russell 2000 rallied 1%. Nasdaq was a laggard and finished flat​
• Indices in Asia-Pacific traded mostly higher today - Nikkei and S&P/ASX 200 gained around 1.2% each, Kospi rallied 1.4% and Nifty 50 traded 0.6% higher​
• Indices from China traded 0.1-0.5% lower​
• DAX futures point to a higher opening of the European cash session today​
• New Bank of Japan Governor Ueda said that a small rate hike would not be a problem for the Japanese financial system. Ueda also said that he agreed with PM Kishida that there is no need to revise government-BoJ joint statement​
• AUD gains after Australia and China reached agreement on barley exports and Australia suspended WTO dispute against China​
• Fed Williams said he expects inflation to get back under 2% by 2025​
• Citigroup expects oil to drop below $70 per barrel amid slower-than-expected demand recovery in China and significant production potential in Iraq and Venezuela​
• Chinese CPI inflation decelerated from 1.0 to 0.7% YoY in March (exp. 1.0% YoY). PPI inflation came in at -2.5% YoY as expected (-1.4% YoY previously)​
• Bitcoin jumps 3% and trades above $30,000 mark for the first time since June 2022​
• Energy commodities trade mixed - oil gains 0.5% while US natural gas prices drop 0.3%​
• Precious metals benefit from USD weakness - gold gains 0.5%, silver trades 0.6% higher and platinum adds 0.4%​
• AUD and EUR are the best performing major currencies while USD and NZD lag the most​

AUDUSD bounced off the 0.6630 support zone and climbed back above the 0.6660 area. Improvement in Australia-China trade relations is driving today's upward move on the pair.​

 

[SOLIDECN]

AUDJPY​

• Indices on Wall Street ended yesterday's session in mixed sentiment. Investor sentiment was weighed down primarily by uncertainty over the US CPI inflation reading scheduled for today, which will be one of the final key clues creating the FOMC's decision at its next meeting in May.​
• The S&P 500 ended trading unchanged on a daily basis. The Dow Jones gained 0.29%, and the Russell 2000 small-cap index gained 0.8%. The Nasdaq index of technology companies was the weakest performer, losing 0.43%.​
• Asia-Pacific indices traded mostly higher - the Nikkei gained 0.6%, the S&P/ASX 200 gained 0.4%, the Kospi gained 0.2% and the Nifty 50 traded 0.15% higher.​
• In the FX market, we are seeing capital outflows to the currencies of the antipodes, namely the New Zealand dollar and the Australian dollar. The EURUSD pair is trading slightly up and testing the resistance zone at 1.093. At the moment, the Japanese yen and the US dollar are experiencing the biggest declines.​
• Federal Reserve and ECB bankers have warned that we may see elevated inflationary pressures all the time, current inflation targets should remain in place, and higher interest rates may be present for an extended period.​
• Wells Fargo warned that the S&P500 index could experience a near 10% correction due to deteriorating economic conditions in the US.​
• Elon Musk stated that Twitter will be a profitable business as early as next quarter.​
• Yields on Chinese 10-year Treasury bonds fell to their lowest levels since November 2022, due to increased expectations of continued interest rate cuts in the country. Yesterday, China reported a sharp decline in inflation growth to 0.7%, compared to an earlier reading of 1%.​
• An index measuring construction activity in China in March reached its highest level in more than a decade.​
• Deutsche Bank analysts expect Bank of Japan Governor Ueda to end the YCC in 2 weeks.​
• Australian weekly consumer confidence surprised on the upside with a reading of 79.3 (previously 78.2).​
• The lower house of the Swiss parliament rejects a CHF 109 billion bailout package for Credit Suisse.​
• Energy commodities are trading at mixed levels this morning. WTI crude oil is gaining 0.21%, while natural gas is off 1.0%.​
• Gold continues its recent upward momentum and is currently breaking out above the 2019 USD level.​
• There is weak sentiment in the cryptocurrency market. Bitcoin is currently losing nearly 1%, and Ethereum is losing 1.5%.​

 

[SOLIDECN]

Gold​

• Wall Street indices rallied over 1% yesterday and USD sank as soft PPI reading boosted hopes that end of high inflation is near​
• S&P 500 gained 1.33%, Dow Jones moved 1.14% higher, Nasdaq rallied 2% and Russell 2000 traded 1.3% higher​
• Indices from Asia-Pacific traded mostly higher today - Nikkei gained 1.2%, S&P/ASX 200 advanced 0.5%, Kospi added 0.4% and Nifty 50 traded 0.1% higher. Indices from China gained as well​
• DAX futures point to a higher opening of the European cash session today​
• Fed Chair Powell and People's Bank of China Governor Yi Gang spoke on the phone on Tuesday and discussed economic and financial situation in the United States and China​
• ECB Nagel said that core inflation remains very high and that another rate hike is coming in May​
• BoJ Governor Ueda said he expects Japanese inflation to drop below 2% in the second half of current fiscal year (April 2023 - March 2024)​
• ECB Wunsch said that considerations for the May meeting are between 25 and 50 basis point rate hike and final decision will depend on April inflation. Wunsch said that market pricing is of ECB terminal rate seems reasonable but it is unlikely that quick rate cuts will follow rate peak​
• Yi Gang, PBoC Governor, expects Chinese GDP growth at around 5% in 2023​
• Reuters reports that London Stock Exchange will offer regulated trading and clearing in Bitcoin futures and options​
• Morgan Stanley's base-case scenario for 2023 is for S&P 500 to end the year at 3,900 pts after painting a cycle low in the 3,000-3,300 pts area​
• New Zealand's manufacturing PMI dropped from 52.0 to 48.1 in March​
• Cryptocurrencies are trading higher - Bitcoin gains 1.7%, Ethereum rallies 5.7% and Dogecoin jumps 4.3%​
• Energy commodities trade slightly higher - oil gains 0.1% while US natural gas prices climb 0.5%​
• CHF and EUR are the best performing major currencies while AUD and USD lag the most​

Gold continues to rally on weak USD. Precious metals is testing $2,050 resistance zone marked with 2020 and 2022 highs.​

 

[SOLIDECN]

EURUSD​

• Indices from Wall Street finished Friday's trading lower after Fed Waller noted that progress on inflation has been slow so far and that Fed may have to go with more than one hike before the end of the cycle​
• However, downbeat moods did not extend into a new week. Indices from Asia-Pacific are trading mostly higher today - Nikkei gains 0.1%, S&P/ASX 200 and Kospi add 0.2% while Nifty 50 trades 1% lower. Indices from China traded up to 1.2% higher​
• DAX futures point to a slightly higher opening of the European cash session today​
• Chinese Defence Minister said during his visit to Russia that China aims to have close communication and to strengthen multilateral coordination with Russian military​
• BoJ Governor Ueda said that while inflation situation in Japan is different that in other parts of the world, all options will be discussed at each policy meeting​
• US Treasury Secretary said that tightening in credit standards following banking turmoil could be a substitute for further Fed rate hikes​
• ECB President Lagarde said that path to global economic recovery is narrow but refrained from hinting whether she supports 25 or 50 basis point rate hike in May​
• Cryptocurrencies are trading mostly lower - Bitcoin drops 1.4%, Ethereum and Ripple trade 1.5% lower while Dogecoin slumps 2%​
• Energy commodities trade mixed - oil drops 0.2% while US natural gas prices climb around 2.5%​
• Precious metals trade mixed - gold gains 0.1% while silver and platinum drop 0.1%​
• AUD and CHF are the best performing major currencies while JPY and NZD lag the most​

EURUSD lost some ground on Friday after hawkish comments from Fed's Waller. While new week was also launched with a move lower, bulls managed to regain ground and are now trying to push the pair back above 1.10 mark.​

 

[SOLIDECN]

EURUSD​

• March 2023 German PPI inflation comes in at 7.5% YoY (forecast: 9.9%; previous: 15.8%)​
• In MoM terms, inflation dynamics fall by -2.6% against expectations of -0.6% and the previous level of -0.3%.​

The EURUSD pair has been subject to increased volatility in recent minutes. First, the ECB's Knot commented that the ECB still has a lot of work to do in terms of fighting inflation and an extension of the rate hike cycle into June and July is possible. On the other hand, the strong fall in PPI inflation somewhat sweetens the tone of the ECB banker's comments.​

 

[SOLIDECN]

Three markets to watch next week​

Traders will get a first glimpse of how US economy performed in January-March period next week as the US GDP report for Q1 2023 is set to be released on Thursday. EUR traders will focus on flash CPI data for April while central banking enthusiasts will tune in for CBRT and BoJ rate decision. Last but not least, US earnings season gathers pace with releases from 4 US mega-techs scheduled for next week. Be sure to watch USDJPY, EURTRY and US100 in the week ahead!

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USDJPY​

Bank of Japan will announce its next monetary policy decision on Friday morning. No change in rates is expected but the meeting will be watched closely nevertheless as it will be the first meeting under new BoJ Governor Ueda. A day earlier at 1:30 pm BST, traders will be offered the flash Q1 GDP release from the United States and it is expected to show growth slowing from 4.4% in Q4 2022 to 4.2% now. Given that US PCE data for March will see daylight on Friday at 1:30 pm BST, USDJPY may be in for a volatile end of the week.

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EURTRY​

EURTRY could be on the move in the second half of the week. The Central Bank of the Republic of Turkey is scheduled to announce the rate decision on Thursday at 12:00 pm BST. The main one-week repo rate is expected to stay unchanged at 8.50%. As scope for a surprise here is rather small, EURTRY may see more moves in response to flash CPI data for April from Europe. German report is set to be released on Friday at 1:00 pm BST and is expected to show a slight slowdown in headline measure.

​

US100​

Earnings season is entering a key week, at least when it comes to releases from the tech sector. Investors will be offered Q1 2023 reports from 4 US mega-techs next week - Alphabet (Tuesday), Microsoft (Tuesday), Meta Platforms (Wednesday) and Amazon (Thursday). All 4 will report results after the close of the Wall Street session. Q1 financials from those 4 and outlook for the coming quarters will be a key driver of Nasdaq-100 (US100) in the week ahead.​

 

[SOLIDECN]

Oil​

• Indices from Asia-Pacific traded lower at the beginning of a new week. Nikkei, S&P/ASX 200 and Nifty 50 traded flat, Kospi dropped 0.9% and indices from China traded 0.3-1.3% lower​
• DAX futures and S&P 500 futures trade slightly lower​
• Russia warned that it will terminate Black Sea grain deal if G7 moves to impose a total ban on exports​
• BoJ Governor Ueda said that inflation forecasts strong and close to 2% for bank to consider changing its yield curve control mechanism​
• Financial Times reports that United States asked South Korea not to increase chip sales to China if chips of US company Micron get banned as part of Chinese investigation​
• Cryptocurrencies traded mostly sideways over the weekend. Small gains can be seen today - Bitcoin gains 0.8%, Ethereum adds 0.3% and Dogecoin jumps 1.2%​
• USD and CHF are the best performing major currencies while AUD and JPY lag the most​
• Precious metals pull back amid USD strengthening. Gold drops 0.2%, silver trades 0.7% lower and platinum plunges 2.3%​
• Energy commodities trade lower as well - oil drops 1.2% while US natural gas prices decline 0.5%​

Brent (OIL) is inches away from closing a bearish price gap triggered by an unexpected OPEC+ output cut.​

 

[SOLIDECN]

AUDUSD​

• Asian shares were mixed on Tuesday, with some markets closed or anticipating holidays.So far, markets do not react in any particular way to the latest development in the U.S. banking sector.​
• Japan's Nikkei 225 (JAP225) is down 0.3% to 29,150 with no trading sessions in Tokyo for the rest of the week due to the Golden Week holidays.​
• EU main indices are expected to open slightly lower in today's trading session, with Germany's DE30 down 0.15% at 16,030 and France's FRA40 down 0.08% at 7,460.​
• US main CFD on indices are trading slightly higher, with US500 futures up 0.11% at 4,184 points and US100 futures up 0.13% at 13,300 points.​
• The Reserve Bank of Australia (RBA) held a policy meeting at 5:30 (BST). Unexpectedly, RBA raised the official cash rate to 3.85%. This came as a surprise to investors who had expected the RBA to keep OCR unchanged.​
• The Australian dollar rose to its highest level in a week due to an unexpected rate hike. In fact, the bank even suggested that there could be more rate increases in the future. AUDUSD is trading 1.2% higher at 0.6706.​
• The Reserve Bank Board of RBA is concerned that predictions of continued high inflation will lead to bigger rises in both prices and wages. RBA also stated that soft landing will be difficult to achieve.​
• Markets are bracing for the U.S. Federal Reserve's upcoming interest rate decision, with oil prices and currencies remaining relatively stable. Oil Brent is trading at $79.4 and is up 0.05%. The US dollar depreciated slightly with EURUSD trading 0.12% higher at 1.0989.​
• Morgan Stanley is reportedly planning to start a new wave of job reductions due to concerns about expenses and the delay in dealmaking recovery due to fears of a recession. Sources suggest that a cut of around 3,000 positions globally by the end of this quarter is discussed.​

The AUDUSD currency pair has risen to its highest level in a week, reaching 0.6704 points after rising from 0.66199 points. Currently, there have been no observed corrections in the price movement.​

 

[SOLIDECN]

Gold prices decline ahead of US inflation data​

Gold prices declined in European trade for the first time in three days but the losses remain limited, as investors await major US inflation data later today to gauge the path ahead for the Federal Reserve's policies. It's likely the Federal Reserve will maintain interest rates unchanged after the Fed directly hinted at pausing its current cycle of policy tightening.

​

Prices Today​

Gold prices declined 0.4% to $2,026 an ounce, with a session-high at $2,038, after rising 0.6% yesterday, the second profit in a row on improving haven demand.

​

The Debt Ceiling Crisis​

The US government must raise its debt ceiling before the end of May or it'll default on its debt, with US Treasury Secretary Janet Yellen directly warning from the possibility of a default. US President Joe Biden continues to talk with US Republicans to raise the debt limit above $31.4 billion, with just a few weeks until the deadline.

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The Federal Reserve​

Fed member Philip Jefferson said the US economy might slow down in a manageable way, with New York Federal Reserve President John Williams saying it's still too early to say whether the Fed has ended its policy tightening cycle.

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Fed Rates​

Current pricing for no change in the Federal Reserve's interest rates at the June 14 meeting stands at 74%, while pricing for a 0.25% rate hike stands at 26%.

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US Inflation​

Now investors await crucial US data to gauge the path ahead for policies, with US consumer prices expected up 5% y/y in April, while core prices expected up 5.5% in April.

​

The SPDR​

Gold holdings at the SPDR Gold Trust fell 2.6 tones yesterday, the first decline in four days to a total of 934.95 tones away from 937.55 tones, the highest since October 2022.​

 

[SOLIDECN]

AUDUSD​

• The Australian Dollar higher volatility is caused by concerns about Chinese data and RBA minutes​
• Chinese data revealed weaker-than-expected industrial production, retail sales, and investment activity​
• The Reserve Bank of Australia (RBA) minutes revealed a divided vote regarding a 25 basis points (bp) rate hike​

The Australian Dollar (AUD) experienced a decline as doubts arose regarding China's economic recovery. The latest statistics unveiled a slowdown in activity, with industrial production growing at 5.6% year-over-year until April, falling short of the forecasted 10.9% and below March's 3.9%. Similarly, retail sales for the same period reached 18.4%, missing the expected 21.9% and the previous 10.6%. The AUDUSD initially tested 0.6700 level due to a weaker US Dollar but finally regained due to growing concerns about China, which is Australia's primary export partner.

In light of the Chinese data, the RBA meeting minutes revealed that the decision to raise rates at the May meeting was delicately balanced. Two options were discussed: keeping the cash rate unchanged or increasing it by 25 basis points. The argument for maintaining rates unchanged was primarily based on the recent decline in inflation, which dropped from 7.8% at the end of December to 7.0% year-on-year until the end of March. On the other hand, the perspective of hiking rates was argument by the possibility of inflation reacceleration, thereby prolonging the period in which CPI remains above the target range of 2-3%. The RBA's current projections indicate that this target will be met by mid-2025.

AUDUSD pair is trading at 0.6685 and the Australian dollar is appreciating. The price was rejected from a resistance zone around 0.6700, as indicated by the marked red zone. Since the beginning of March, the price has been consolidating within a range between 0.6570 and 0.6780. Rejection from the 0.6700 level suggests a potential test of the support line at 0.6640. If the price continues to decline, it could find support at this level.

Traders should closely monitor the price action around the 0.6640 support level to assess whether it holds or breaks. A decisive break below this support level could indicate further downward momentum, potentially targeting lower support areas. Conversely, if the support at 0.6640 holds, the price may attempt to retest the resistance zone around 0.6700.​

 

[SOLIDECN]

Economic Calendar​

• Major index futures in Europe indicate a slightly higher opening
• HIgher-than-expected Q1 GDP readings in Japan
• US housing data in the spotlight

Wednesday's stock market session in Europe is expected to extend mixed sentiments from the previous session. The dollar is slightly appreciating against major currencies, supported by positive US data, particularly in retail sales. Comments from Fed members yesterday emphasized the priority of fighting inflation.

The main index in Japan is rising on the back of positive GDP data. Japan's economy grew at its fastest pace in three quarters, with Q1 GDP growth at 1.6% on an annual basis, surpassing expectations of 0.7%. Goldman Sachs sees promising prospects for the Japanese market due to corporate reforms and easy monetary policy.

There are no significant macroeconomic events in today's calendar apart from US housing data. At 01:30 PM BST, we will receive data on housing permits and housing starts. Additionally, investors may seek hints about the ECB's future monetary policy in speeches by central bank members, scheduled for this morning.

Economic Calendar:​

• 10:00 AM BST - EU, Harmonized Inflation in the Eurozone:
• Expected: 7.0% YoY, Previous: 6.9% YoY

01:30 PM BST - US, Housing Market Data:​

• Permits: Expected: 1,435k, Previous: 1,413k
• Starts: Expected: 1,400k, Previous: 1,420k

Central Bank Speeches:​

• 08:15 AM BST - ECB, De Guindos
• 08:30 AM BST - ECB, Panetta
• 09:00 AM BST - ECB, Centeno
• 10:15 AM BST - UK, Bailey
• 04:15 PM BST - ECB, De Guindos (again)

 

[SOLIDECN]

USDJPY​

• Wall Street indices rallied for another day. S&P 500 gained 0.94%, Dow Jones gained 0.34% and Nasdaq surged 1.51%. Russell 2000 added 0.58%​
• US President Biden said that negotiator teams are making a steady progress on debt ceiling​
• Meanwhile, US Vice President Harriss and White House economic adviser Brainard warned that US debt default could trigger a recession​
• Indices from Asia-Pacific traded mixed today - Nikkei and Kospi gained 0.8%, S&P/ASX 200 moved 0.6% higher, Nifty 50 dropped 0.2% and indices from China traded mostly lower​
• European index futures point to a higher opening of the European cash session today​
• DAX futures (DE30) briefly traded above 16,300 pts and painted fresh record highs earlier today​
• G7 leaders will discuss new sanctions on Russian diamond trade as well as on countries that help Russia circumvent sanctions​
• Reuters reports that Chinese state banks have intervened on the market to support falling yuan​
• Japanese CPI inflation accelerated from 3.2 to 3.5% YoY in April (exp. 3.5% YoY). Core CPI inflation (ex-food) accelerated from 3.1 to 3.4% YoY (exp. 3.4%). So-called core-core CPI inflation (ex-food and energy) accelerated from 3.8 to 4.1% YoY (exp. 3.4% YoY)​
• New Zealand's trade balance for April reached NZ$427 million (exp. -NZ$235 million)​
• Cryptocurrencies are trading mixed - Bitcoin drops 0.3%, Dogecoin trades 0.1% lower, Ripple adds 0.4% and Litecoin rallies 1.5%​
• Energy commodities trade mixed - oil gains 0.7-0.8% while US natural gas prices drop 0.6%​
• Precious metals trade higher - gold gains 0.2%, platinum adds 0.3% while silver and palladium gain 0.6% each​
• AUD and JPY are the best performing major currencies while EUR and GBP lag the most​

Japanese yen is one of the best performing G10 currencies today following a beat in CPI data for April. USDJPY is pulling back and looking towards a test of a recently-broken resistance zone at 138.00.​

 

[SOLIDECN]

Economic Calendar​

• European indices set for flat opening​
• ECB and Fed speakers dominate calendar​
• FOMC minutes later into the week​

Futures markets point to a more or less flat opening of the European cash session today. German DE30 is trading near all-time highs reached on Friday while S&P 500 futures (US500) hover near 4,200 pts area. Energy commodities, base metals and precious metals are pulling back. NZD and EUR are the best performing G10 currencies while AUD and CAD lag the most.

Economic calendar for today is very light when it comes to macro data. There won't be any data releases apart from Polish data pack for April. However, a number of speeches from Fed and ECB members is scheduled so EUR and USD may see some volatility. Things get more interesting later into the week with RBNZ decision and flash PMIs for May on Tuesday, FOMC minutes on Wednesday, CBRT rate decision on Thursday and US PCE data on Friday.​

 

[SOLIDECN]

USDCHF​

Swiss CPI inflation data for May was released this morning at 7:30 am BST. Data came in-line with market expectations and showed a deceleration in headline measure from 2.6% to 2.2% YoY. This is the lowest reading since February 2022. Core gauge slowed from 2.2% to 1.9% YoY, slighly more than expected. As such an outcome was expected, there was no major reaction on CHF market.

USDCHF saw barely any reaction to Swiss CPI print. Pair continues to test a short-term 0.9110 resistance zone.​