June 5, 2017 - Market Update

Short recap

Asia mixed

Europe opening higher

Saudi Arabia, Egypt and Bahrain cutting diplomatic ties with Qatar over support of Iran (Islamic Brotherhood and Hamas)

Pushing oil more than 1% higher

All of that coming after Trump’s visit and security threats (banning travellers or notebooks on the planes)

Russia sees oil down to USD 40

UK – attacks and risk of no majority government increasing

It may weight on GBP as UK heads towards weaker government mandate

ECB’s Visco – Italy down most in 10 years

High debt because of low growth but still the average Italian household is wealthier the German one

Fed on track for June hike after weaker Friday’s NFPs but further hikes in question

Unless we see a pick up in inflation and Trump coming with positive fiscal news

Trump to come up with Dodd Frank revamp on Tuesday

But the reality is he doesn’t have enough votes in Congress to push it through

Equities

Investindustrial and Alibaba likely to submit a join bid for The Body Shop from L’Oreal

Blackstone selling Logicor to China Investment Corp (EUR 12.25 bln)

KKR raised USD 9.3 bln in new Asia buyout fund

Exxon misleadig about climate change impact of its business

Pfizer to hike prices of some drugs in US by 20%

Goldman Sachs eying to trade Saudis stocks

Home Capital to face regulators on June 26

Bonds

10-yr Trys yield at 2.17%% (2.16% critical level, on Friday closed below 200 DMA)

10-yr Bund yield at 0.27%

EURUSD

Resistance at 1.1284, 1.1300 (big level), 1.1355/65and 1.14/15/1600 range

Should see lots of hesitation ahead of 1.1300

Support at 1.1213 (10 DMA), 1.1200 and 1.1179 (23.6% Fibo)

New trading range 1.1000-1.1500 ?

Morgan Stanley switching from end year 0.97 level for EURUSD to 1.1800

On strong data, political stability, valuations and equity market inflows

A very nice switch…

USDJPY

US yields taking the cross lower

Support at 200 DMA at 110.34, 110.10 (Ichimoku) and 109.60 (76.4% Fibo)

Bids sitting ahead of 110.00, with stops below

Resistance at 110.50 (61.8% Fibo), heavy level

New trading range 108.00-112.00 ?

GBPJPY - With GBP under pressure and strong JPY double whammy  possible here... looking for lower levels

AUDJPY - Are bears controlling the market?

Weekly Commodity: Oil and Sugar under pressure, Grains in a vacuum Link 

Upcoming Data/Events

June 8 – ECB meeting – Draghi being alone but inflation data from US and JP suggesting ECB to carry on with ultra-loose stimulus

ECB likely to adjust the risk to economy wording but no change to asset purchases

June 8 – UK elections including Scotland, if SNP/Sturgeon wins the independence referendum likely to follow

June 8 - Former FBI director James Comey to testify before Senate

June 11/18 – French Legislative (Parliamentary) elections (a big question mark for Macron to gain majority)

June 13/14 – FOMC meeting – Jun hike probability at 95%, Sep at 28% and Dec at 40%. After Friday’s NFPs Sep hike may be skipped if data doesn’t come strong.

June 15/16 – EcoFin meeting to discuss Greece

Should you have any questions feel free to contact me anytime.

Good luck Champs!

Mr Hawk

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