Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
USD loses ground further
Information is not investment advice
Ichimoku Kinko Hyo
CAD/JPY: The pair is trading below the cloud. A downward pressure would lead the pair to exit further the cloud, confirming a bearish outlook.
XAG/USD: Silver remains weak and is trading below 23.6% retracement area.
US Market View
U.S. stocks are set to open marginally lower Monday, consolidating near record levels after another positive week. G-7 deal on corporate taxation, Janet Yellen’s view on higher inflation and interest rates, Wall Street edging lower, lower crude prices and hot housing markets. Here's what's moving markets on Monday, June 7th. The Group of Seven advanced nations agreed over the weekend on a minimum global corporate tax of at least 15% as part of a broader deal on how to tax multinational companies such as Amazon. According to the communique after the London meeting, countries where big firms operate would get the right to tax “at least 20%” of profits exceeding a 10% margin. That would apply to “the largest and most profitable multinational enterprises.”
However, these multinational companies are unlikely to take major hits to their stock prices Monday as there are many hurdles still to be climbed before this accord comes into effect.
Focus will now shift to a July meeting of the Group of 20 finance ministers in Italy, as well as long-running talks between about 140 countries at the Organization for Economic Cooperation and Development.
The market focused last week on the U.S. labor market - this week it’s the turn of inflation to take the spotlight. All eyes will be on the May CPI due for release on Thursday, after a much stronger than expected inflation number sparked a selloff last month, as many worried rising price pressures could force the Fed to begin unwinding stimulus earlier than they had previously guided.
The annual CPI figure climbed to 4.2% in April, the sharpest climb since September 2008, as the U.S. economic recovery kicked into gear and energy prices jumped higher. May’s release is expected to show another substantial increase, up 4.7% on the year.One of the earliest beneficiaries of the Covid-19 outbreak was the U.S. housing market. Limited inventories, low interest rates and bidding wars quickly drove prices sky-high.
By some measures, the market is even hotter than it was during the peak prior to the financial crisis, to the extent that some homeowners are now becoming reluctant to sell for fear of getting involved in a bidding war for a replacement, limiting the available stock even more.
Crude oil prices weakened Monday, slipping from fresh multi-year highs as traders banked profits ahead of the restart of talks between Iran and world powers later in the week over a nuclear deal.
USA Key Point
- The AUD is the strongest and the USD is the weakest as NA traders enter for the day.
- Yellen: US economy is transitioning to pre-pandemic state.
- Euro not likely to find much upside from the ECB this week.
- BOE's Bailey: BOE has not made a decision on central bank digital currency.
- Eurozone June Sentix investor confidence 28.1 vs 25.4 expected.
- UK May Halifax house prices +1.3% vs +1.2% m/m expected.
- European equities more tepid to start the day.
- Dollar keeps a touch firmer to start the session.
- Germany April factory orders -0.2% vs +0.5% m/m expected.
This week, there are a few high-probability trade ideas I'd like to recommend to you. Trading these setups, be sure to implement a proper risk management approach.
On Thursday, the 2nd of February, the Bank of England will publish its report concerning interest rates and inflation data for the Eurozone. Professionals and investors anticipate that Andrew Bailey’s lead team of policy makers will likely raise interest rates to 4%; the highest in over a decade, for the tenth time in a row.
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.