Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
Risk keeps more buoyant to kick start June trading
Information is not investment advice
XAU/USD: Gold facing a further consolidation above 23.6% retracement area. Bulls have returned recently.
Ichimoku Kinko Hyo
NZD/JPY: The pair is trading below the cloud. A downward pressure would lead the pair to exit further the cloud, confirming a bearish outlook.
US Market View
U.S. stocks are seen opening higher Tuesday, continuing the strong tone seen at the end of last month, amid growing optimism over the country’s economic recovery. Confidence is growing about the strength of the country’s economic improvement as the country’s reopening accelerates, based on a ramped up vaccination program. More than half the U.S. population has now received at least one dose of a Covid vaccination, according to CDC data posted Sunday, while there were just over 12,000 new cases on Saturday, the lowest since March 2020.
Crude oil prices were sharply higher Tuesday, with the international benchmark Brent topping $70 a barrel, amid optimism over the outlook for demand growth as the global economy recovers ahead of a meeting of major producers.
Europe may have been hit hard by the Covid-19 pandemic, not helped by the slow ramp up of its vaccination program, but the latest data suggests the region’s recovery is well underway. Eurozone manufacturing activity expanded at a record pace in May, as IHS Markit's final Manufacturing Purchasing Managers' Index rose to 63 in May from April's 62.9, above an initial 62.8 "flash" estimate and the highest reading since the survey began in June 1997.
China’s May factory activity grew at the fastest pace in 2021 so far, and Europe quickly followed suit, with EU activity expanding at a record pace in May (see below), suggesting that the economic recovery in the world’s largest consumers of oil was well on track. Confidence is growing about the strength of global economic improvement, helped by first-time jobless claims in the U.S., the largest economy in the world, falling to a new pandemic low last week. This puts Friday’s employment report for May firmly in focus, as investors expect this to show that the unexpected weakness seen in April was a one-off, when just 266,000 jobs were created, far short of the one million or so expected. The economy is expected to have added 650,000 new jobs in May, but the economy is still more than 8 million jobs short of where it was before the pandemic.
While Friday’s May jobs report will be the key economic indicator released this week, and could well set the market tone for June, May’s ISM manufacturing release, due at 10 AM ET (1500 GMT) will also be studied very carefully. While the employment recovery is crucial in determining Fed policy, markets have also been rattled by the recent jumps in the central bank’s other mandate - inflation.
USA Key Point
- June seasonals: USD/CHF set up for softness.
- Eurozone April unemployment rate 8.0% vs 8.1% expected.
- Eurozone May preliminary CPI +2.0% vs +1.9% y/y expecte
- Cable switches lower as dollar stands its groun
- UK May final manufacturing PMI 65.6 vs 66.1 prelim.
- Oil climbs to highest level since October 2018 ahead of OPEC+ meeting.
- Eurozone May final manufacturing PMI 63.1 vs 62.8 prelim.
- Germany May unemployment change -15.0k vs -9.0k expected.
- Germany May final manufacturing PMI 64.4 vs 64.0 prelim.
- France May final manufacturing PMI 59.4 vs 59.2 prelim.
Italy May manufacturing PMI 62.3 vs 62.1 expect
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.
Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.
Last year was tough for the Japanese yen. USDJPY gained more than 30% over 2022, striking above 150 in October. While anticipation of slower Fed rate hikes pulled the pair below the 130 level at the start of 2023, the speculations over the destiny of BOJ’s yield control policy grabbed the attention of the Japanese assets in the middle of January. What lies ahead for traders of the Japanese yen?