May 17, 2017 - Market Update

Short recap

Asia in red on Trump mess

Europe opening lower

Trump to face tough scrutiny from Congress on meeting with Lavrov and sharing sensitive info

What would happen if Donald Trump were impeached?  link

European Court of Justice ruling – EU-UK trade deal doesn’t need to be ratified by all 38 EU’s national and local parliaments

Confirming the qualified majority vote of EU member states as sufficient

Kuroda – BoJ to continue the stimulus firmly

Atlanta Fed rising Q2 GDP forecast to 4.1%

Equities

UK gov to sell the remainder in Lloyds

Chinese Shanghai Pharmaceutical interested in Stada Arzneimittel

Yahoo planning a USD 3 bln share buyback ahead of merger with Verizon

Ford planning job cuts of white-collars

Delphi to work with BMW and Intel on autonomy driving project

JPMorgan shareholders not happy with Dimon advising Trump

KKR buying Q-Park (USD 2.2 bln)

Nasdaq offers enhanced data service based on robot intelligence

BGC launching e-platform to trade US Trys in June

NYSE planning a 350-microsecond delay on all in/outgoing orders

To use the similar set up at IEX Group does

Nasdaq printed new highs, helped by techs

As already mentioned stocks being resilient to global geopolitical and security risks

With VIX closing at 10.65

Earnings

Home Depot doing well as the revival in US real estate market goes on

And people keep refurbishing their dwellings

Cisco to report another decline in revenue as the company is striving to refocus from traditional activities to security, Internet of Things and cloud

Others reporting: Target, Tencent, Alibaba

Bonds

10-yr Trys yield at 2.30% - at critical support level, June hike still in place

10-yr Bund yield at 0.41% - Bunds jumped at EU opening pushing the yields lower

Greece readying for July bond issue if agreement with lenders in place

DXY 

Market is getting distracted from growth agenda by Trump mess and we may face delays in reforms

But US economy is in a good shape, earnings growing, labour market tightening…etc.

EURUSD

Cross supported by EZ data, Macron, Merkel, capital inflows, US politics/Trump mess

Having positive correlation with risk, FR-GE spread narrowing

50 & 100 DMA may break through 200 DMA soon (overall technical picture remains bullish)

May have a potential toward 1.1300 and 1.1500

But 1.1000 needs to hold, next 1.1130/40 and 1.1250

Some traders still sceptical about further move higher

Seems that the spot is getting way ahead of yields

Bund yields lagging the move, need to catch up to validify the move

Option expiries may keep the cross close to 1.1100

EURUSD weekly chart - facing the resistance

Upcoming

UK: Labour Market Report

EZ: Inflation data

Thu

ECB’s Draghi, Mersch, Nowotny, Lautenschlaeger speaking

Fed’s Mester speaking

Fri

ECB’s Constancio speaking

Fed’s Bullard speaking

Iran elections - impact on security and oil production

May 25 – OPEC/Non-OPEC meeting

June 8 – ECB meeting

June 8 – UK elections

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

June 13/14 – FOMC meeting – market pricing rate hike above 74% (CME) and 97% (Bloomberg)

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

Good luck Champs!

Mr Hawk

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