June 15, 2017 - Market Update

Short recap

Asia lower

Europe opening lower

FOMC – more hawkish than expected

Inflation expectations adjusted but Yellen sees a good ground for prices to keep rising

Likely start to taper in Sep, another rate hike in Dec

Some may ask why Fed doesn’t want inflation to overshoot

Trump under investigation for obstruction of justice

Looks like they are still trying to find something on him or is he really such a mess…?

ECB’s Nowotny questioning 2% inflation target as tons of money still not pushing prices to the target

Equities

Nokia entering the router market, where Juniper and Cisco do well, by launching the fastest network chips

Rosneft going offshore

Private equity eager investors pump USD 7 bln to new fund from Goldman Sachs

Bank of America sees opportunities in international cash management

US banks eying Saudi’s market as Morgan Stanley and Citi are there, and Goldman Sachs applying for a license

Looks like few reforms, upcoming Aramco IPO, Trump’s visit can make Saudi Arabia an investment destination

Google reached an agreement with Indonesia over future tax payments (I like this one…who wouldn’t like to cap the upcoming tax bill)

Thomson Reuters launching a set up to offer its data flow via blockchain technology

So the firms can use Ethereum and Corda based trading systems with Reuters data

US financials, especially life insurers, to benefit from rising rates

While utilities, telcos and real estate on short term negative side

Resources stocks to offer an interesting value

In particular energy but need some credit events and cleaning within the space

Canadian Natural Resources, AltaGas, Roxgold can be looked at

Bonds

10-yr Trys yield at 2.14% - yield development is crucial for further direction of EURUSD and USDJPY

10-yr Bund yield at 0.23%

EURUSD

What’s next? 1.0500 again or 1.1500? …asked the questions yesterday but today too…

Consolidation lower after FOMC is on the cards

Resistance at 1.1231 (10 DMA) with sellers sitting around

Then 1.1300 (based on FOMC price action)

Support at 1.1200, 1.1180 (23.6% Fibo) and 1.1120 (38.2% Fibo) but strong at 1.1013 (61.8% Fibo)

USDJPY

Bids sitting between 109-109.50

Offers seen going to 110.00

With decent options expiring today and tomorrow at this level

Crucial resistance at 110.50 (61.8% Fibo) and 110.61 (200 DMA)

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

Upcoming Data/Events

Basel Committee concluding meeting over bank rules

ECB’s Draghi and Coeure at Eurogroup meeting

Greece – any resolution? Again at least temporary?

Fri – Fed’s Kaplan speaking

June 18 – French Legislative (Parliamentary) elections

June 19 – Brexit talks starting ?

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

Good luck Champs!

Mr Hawk

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