May 8, 2017 - Market Update

Short recap

Asia higher

Europe opening in red

FR elections – Macron winning over Le Pen (66/34)

The margin of victory was important ahead of Legislative (Parliamentary) elections

Macro some pro-business policies at EU level as well, closer integration, common budget

What may go against Merkel’s vision

But what about cooperation of Macron/Schulz (two EU lovers) as Mitterand/Kohl were?

Fed’s Williams – balance sheet reduction should start in 2017

Considering balance sheet as monetary policy tool

Equities

Linde-Praxair deal getting more difficult

Frankfurt to welcome five largest US investment banks due to Brexit

Bonds

FR-GE spread at 42 bps, some stability

Seen some weakness in IT bonds

Back to old theme of viability of EU project

10-yr Trys yield at 2.37%

10-yr Bund yield at 0.42%

EURUSD

Higher to 1.1024 on Macron but gave up the gains to trade range bound again

Price action was not about Macron victory but the loss of Le Pen (relief)

Strong resistance at 1.1020 (descending trendline on daily chart)

Rising peripheral spreads can bring more doubts about long-term viability of EU project

US-GE yield spread showing EURUSD should be lower

Some buyers sitting at 1.0950, if broken can move to 1.0875

Risk-off capital flows into EU equities may have some impact

Levels: 1.0900, 1.0850, 1.0830 (200 DMA) – here likely to bottom

Gold (daily) – saw some short covering

June rate hike not priced in fully

Resistance at 1255, unlikely to be broken

Data

CA: Housing data would be of high interest on the back if real estate bubble issues in Canada

Fed’s Bullard speaking at 1235 GMT

Fed’s Mester speaking at 1245 GMT

Upcoming

Wed – ECB’s Draghi speaking

Fri – US CPI

May 25 – OPEC/Non-OPEC meeting

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

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

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

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Apr 24, 2017 - Market Update

Short recap

Europe higher

Markets need to digest the move and get ready for ECB and Trump policies (tax, Obamacare)

FR elections 2^nd round – Macron/Le Pen

Prediction Macron winning over Le Pen 60/40 (seems to be sufficient margin not to have a nasty surprise)

Will see whether French are also as serious about rejecting nationalism and far-right ideas as Dutch were

Would be a strong signal to the world in the light of Trump/Brexit like efforts

US tax reform details to be revealed this week

Obamacare on the table on Wed again

South Korea joining a military drill lead by US

Fitch downgraded Italy to BBB (one grade), outlook stable

European stocks to benefit, capital flow to come back

Positive on Value stocks and banks

British Telecom taking accounting scandal in Italy seriously

Credit Suisse looking at capital increase

Not only banks and financial companies relocating out of London

But also EU’s pharma regulatory office too

Valeant ready to launch psoriasis treatment, likely in 2^nd half of 2017

Canadian oil sands still facing tough times on low prices of oil

As the capital intensive extraction is not attractive

Earnings season

This week will be busy, so let’s warm up a bit with:

Teck Resources – should benefit from rising coal prices and expected rebound in demand for steel

T-Mobile US, Halliburton, Whirlpool, Kimberly-Clark reporting among others

Bonds

FR elections relief reflected in higher yields

But majority of the move already priced in

GE-FR spread below 50 but still not down to normal levels

As market sees risks of Macron gaining majority in Parliamentary elections to support his policies

US yields – what will be the reaction if Trump delivers?

Are EU yields going to move up as well?

10-yr Trys yield at 2.32%

10-yr Bund yield at 0.33% (jumped from 0.20% level)

EURUSD

Short term – relief

Long term – situation in Italy, rising spreads

FR – Parliamentary elections (majority for Macron – a big question)

Support - 1.0840/50 – strong area with (200 DMA at 1.0836)

Resistance - 1.0933 (61.8% Fibo) on daily chart

Some sell levels coming around 1.1000

EURUSD weekly

Would like to bring to your attention that EURUSD didn’t get through the resistance (High 1999 at 1.0915) decisively

USDJPY – support 109.86 (23.6% Fibo)

Resistance 110.94 (38.2% Fibo)

DXY – below 99.26 (61.8% Fibo)

But supported by declining trendline

200 DMA at 99.00

Commodities

Gold – staying neutral under longs liquidation

Support 1272 (descending trendline)

200 DMA at 1252

Data

Kashkari (Fed) speaking at 1530 GMT

Upcoming:

Apr 27 – ECB meeting – Draghi will be in the spotlight defending the QE continuation with taper may be around mid-2018

Will need to talk down the taper at an earlier stage

Would correspond to three year cycle as Fed had

Apr 29 – EU Summit to sign off the Brexit negotiations guidelines

May 7 – French presidential elections 2^nd round (Macron/Le Pen – 60/40)

May 25 – OPEC/Non-OPEC meeting

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

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

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

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Apr 21, 2017 – French elections – timeline and EURUSD levels

I guess all of us are getting ready for Sunday/Monday night, so let’s have a look at certain times:

1800 GMT – First exit polls

1900 GMT – First projections based on votes counted

2000 GMT – Various estimates for 2^nd round when substantial part of the votes is counted

2100 GMT – Should have more clarity and if not, would need to wait until midnight when most of the votes are counted

Some Exit polls should be available from midday but in Belgium Swiss media only.

EURUSD levels in case of 1^st round results:

Macron-Fillon (Le Pen eliminated) - EUR may enjoy gapping up close to 1.1000 level and then, it is a sell…

…or wait for a rally towards 1.1000 if Sunday opens lower and then sell

Macron-Le Pen – widely expected outcome with some traders seeing EURUSD staying within 1.07/0800 range but we after initial volatility still see a relief rally towards 1.1000 on the back of 2^nd round expectations and then, again selling the rallies. Crucial to any surprise (especially to negative one) will be by what margin Macron will win over Le Pen as the market may get nervous in case of a close-close win.

Le Pen-Melenchon – let’s get ready for swift moves and sell any kind of bounce to target parity, 0.96/9400 and may be 0.9000, followed by a big buy after summer holidays. This scenario is  very unlikely but…we already have Brexit and Trump here.

In case of Le Pen surprising and winning the 1^st round, by what margin she wins will be important. In case of a close win, market will manage but a decisive win 30%+ vote can make many traders very nervous ahead of May 7 vote. Still in case Le Pen becoming a president, the French have a chance to block some of her policies via Legislative (Parliamentary) elections taking place on Jun 11 and Jun 18, 2017.

Next elections to watch are in Germany on Sep 24, 2017.

Followed by Italian elections not later than May 23, 2018 as the current parliamentary term expires on Mar 15, 2018.

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

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

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Mar 20, 2017 - Market Update

Short recap

Asia mixed after last week

EU markets opening lower

G20 take away:

Free trade short of support

Mnuchin to correct imbalances – but the simple message to US is: “Consume less, Save more”

End of globalization trends? Or end of US on globalization map?

Merkel and Abe showed strong support for free trade on Sunday (after G20)

G20 outcome is negative for stocks

FOMC feelings still present in the market

Positive on EU stocks (if French elections positive) but higher EUR is a risk

US stocks negative view, may be playing with put options going to Q2

Deutsche Bank to issue news shares worth of EUR bln as a part of strategy shift

Swiss Re to focus more on tailor made solutions to generate more profits out of the deals

Tesla raised USD 1.2 bln to fund its activities, especially Model 3 and battery production

The proof that investors are still interested to participate at Tesla story via shares or convertible notes

Sinopec close to buying refinery from Chevron in South Africa (USD 1 bln)

Bombardier still struggling to handle the deal with Toronto Transportation Agency worth of CAD 770 mln

Oil – speculative shorts double while longs were cut (COT report)

May be pointing to new weakening cycle in oil as US shale production keeps rising

Critical levels: WTI USD 51.15 and Brent USD 48

Gold – also experienced net long positioning cut by almost the half (COT report) going to FOMC last week

Risk to upside move higher on weaker USD, geopolitical risks and huge demand from India

Levels: 1238 (61.8% Fibo), then targeting last high at 1263

USD close to key support levels, trading below 100 DMA

DXY 99.26 (61.8% Fibo), H+S, descending support line around 98.90

Few Fed speakers this week with Yellen (Thu) can clarify the FOMC stance
Important event for USD will be Obamacare repeal vote on Thursday
If passed, likely USD supportive - a sign of Trump having support for his further policies

EURUSD not clearly ready to break 1.0800/50 on political risks ahead of French elections

But market keeps pricing out the risk of Le Pen win despite her advances in the polls

Security question back on the table after shooting at the airport in Paris

10-yr Trys yield at 2.49%, failed to break clearly 2.60% level again

Back to 2.30%-2.50/60% range

Bund yields rising at short end while longer end is unchanged

10 bps rise in EZ rates by Jan 2018 is already priced in

Visco (ECB) – rising rates and terminating QE can be closely linked

Data

EZ: Labour Cost Index – expected to go higher

US: Chicago Fed National Activity Index – expected to go higher

France – election debate tonight

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

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

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