June 12, 2017 - Market Update

Short recap

Asia lower taking clues from Nasdaq and its heavy weights

Europe opening lower

FR parliamentary elections – Macron’s party winning a huge majority in Lower House

What will make the reform package likely to happen

Traditional parties dying , Le Pen heavily down

China opening to foreign investors more, to cut restrictions on FDI

While reports of falsified provincial economic data

Fitch, Moody’s, S&P – no changes in UK rating but keep negative outlook

GBP waiting for clues

All points to softer Brexit as May’s coalition partner doesn’t want to have a border controls and customs union with Ireland

UK employers not really prepared for possible immigration changes

Equities

Apple – new iPhone may be lagging the download speed against its rivals

Elliott Advisors increasing the share in Akzo Nobel to 5%, becoming the largest shareholder

SoftBank entering the field of robotics by buying the business from Alphabet

EU to investigate Qualcomm-NXP (USD 38 bln)

NASDAQ sold off, driven by Apple (iPhone upgrade issue) and NVIDIA (casino stock label)

Investors may be caught by surprise as the volatility in techs is extremely low

Bonds

10-yr Trys yield at 2.22%

10-yr Bund yield at 0.25%

DXY

Should FOMC keeps hawkish wording, USD to benefit

If not, USD sell off to be small and short

Support at 96.44 (61.8% Fibo)

Resistance at 97.85 (50% Fibo), followed by 99.26 (38.2% Fibo)

EURUSD

Resistance at 1.1200, 1.1231 (10 DMA), 1.1284, then 1.1300

Support at 1.1180 (23.6% Fibo)

Lots of options expiring today within the range of 1.11-1.1200

So the trading should be contained here as we wait for FOMC

COT report – speculative longs in EUR increased by 1k to 74k, largest long positioning since 2007

USDJPY

Yields to lead the game ahead/after FOMC

Crucial resistance at 110.50 (200 DMA and 61.8% Fibo)

Support at 109.60 (76.4% Fibo), then at 108.12

Gold

Double top

Resistance at 1276 (23.6% Fibo)

Support at 1264 (38.2% Fibo), 1255 (50.0% Fibo)

Eventually, 1245 (61.8% Fibo) depending on how hawkish FOMC wording will be

COT report - saw long liquidation ahead of FOMC

Upcoming Data/Events

Tue – US Attorney General to testify before Congress over Comey and meeting with Russians

Tue/Wed – FOMC meeting

Dovish hike priced in

Market can get surprised if Fed keeps talking hawkish

Forward guidance critical (Yellen holds a press conference)

Economic projections to be released

Thu/Fri – EcoFin meeting to discuss Greece

Fri – Fed’s Kaplan speaking

June 18 – French Legislative (Parliamentary) elections

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

Good luck Champs!

Mr Hawk

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