June 28, 2017 - Market Update (Draghi's reflation & Yellen's “no new financial crisis in our lifetime” words, Cyber attacks - a new era to come? Bonds, equities down - a new risk off combination? JPY a perfect summer carry trade)

Short recap

Asia down inspired by US session after another delay of healthcare bill vote

Europe opening lower

World coping with another cyber attack – a new era to come?

Draghi replaced deflationary forces by reflationary ones and pushed EUR higher

Sounds like woo-doo to me when we talk about “forces”…

But overall his speech was in line with dovish policy. More link  

Yellen was out with “no new financial crisis in our lifetime” comment, meaning as long as she is alive. More link

Healthcare reform vote delayed as Republicans score a goal to their own net

Bonds and equities on defensive overall yesterday what makes an interesting risk off combination

Carry trades to suffer, thus EM and high yield DM not to do well if current setup continues

Equities

Techs, biotechs and EM bleeding

Nestle to buy back CHF 20 bln worth of shares over 3 years

Option traders looking at AstraZeneca from a short side as the market positions itself for lung cancer trial results

Alphabet hit by EUR 2.4 bln fine from EU for abusive behaviour in search engine

Not effecting long term business as the fine is just 3% of cash/1.5 month of cash flow

Facebook at 2 bln user mark, doubling since 2012

Syngenta (owned by Chinese) interested in Bayer assets that need to be sold

As a part of Monsanto takeover deal

Bonds

10-yr Trys yield at 2.22% vs 2.14% yesterday

10-yr Bund yield at 0.39% vs 0.25% yesterday

DXY

Support 95.90, then 94.70 (61.8% Fibo)

Resistance 96.44 (50.0% Fibo)

EURUSD

Market was caught by surprise with Draghi’s reflationary forces comment

What was also confirmed by price action

If we see the 1.1295/1300 holding, we are likely marching through 1.1400

But the historical supply range comes towards 1.1500 (check the weekly chart)

Central bankers to drive the show today too

Support at 1.1366, 1.1300

Resistance at 1.1400, 1.1415/30, 1.1464, 1.1500

Weekly chart (Source: Saxo Bank)

Daily chart (Source: Saxo Bank)

USDJPY

Dip buying as a strategy? As some may see carry trade going to summer pushing JPY lower

Exporters holding sell orders at 112.50

Bids towards 112.00, more below

Support 111.80 (100 DMA) and then 111.50 with USD 2.5 bln option expiring

Resistance 112.24 (61.8% Fibo), 113.05 (76.4% Fibo)

Data/Events

Fed’s Williams (0730 GMT)

Central bankers meeting in Portugal:

ECB’s Mersch (0900 GMT), Lautenschlager (1045 GMT), Constancio (1130 GMT), Draghi (1330 GMT),

BoE’s Carney (1330 GMT)

BoJ’s Kuroda (1330 GMT)

BoC’s Poloz (1330 GMT)

Thu

Fed’s Bullard (1700 GMT)

US Trade deficit report to be released – what accusations can we expect?

July 7/8 – G20 meeting – will Trump meet with Putin?

July 20 – ECB meeting

July 26 – FOMC meeting

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

Good luck Champs!

Mr Hawk

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