Market Commentary
Markets have been trading with subdued momentum since the start of the session ahead of the ECB rate decision and the subsequent press conference.
HSBC China Services PMI came in at 50.7 in May - down from 51.4 in April - the weakest rate of services activity growth since the HSBC survey commenced. The weaker print was off-set to a degree by the Composite PMI which came in at 50.2 vs. prev. 49.5. HSBC justified the higher composite reading by the slower pace of contraction in the manufacturing activity and the relatively buoyant services activity offsetting the de-cline in manufacturing. Despite positive short-term dynamics in the services sector, the broader trends in mfg. and services have been fairly somber so far in 2014.
European equity markets endured a strong and broad push to the upside in the last 20 minutes, with no particular reason driving the rally. US equity index futures are also being dragged higher on correlation.
BoE left the benchmark rate unchanged at 50bp. ECB cut the main refinancing rate and deposit rate by 10bp. In addition, the marginal lending facility rate has been cut to 40bp.
Intraday Strategy: E-mini S&P
E-mini S&P set yet another all-time high in yesterday’s session and is extending higher as I type, driven by the rally in EU equities fol-lowing the ECB rate decision.
The main caveat to buying pullbacks in equities today will be the outcome of ECB’s press conference which commences at 1:30 PM.
Intraday Strategy: DAX
The DAX rallied to test the high of the year set earlier in the week just ahead of the ECB rate decision. Expectations of further policy measures being announced at the press conference are currently providing a bid tone to the EU equity space.
Intraday Strategy: EUR/USD
The EUR/USD continued to trade within this week’s range in yes-terday’s session, with subdued momentum ahead of ECB’s rate decision. The currency pair spiked 0.4% following the rate decision itself but has by now pared the earlier gains following a comment highlighting that further policy measures will be unveiled later - this is nor a common theme for ECB to pre-commit at all. This makes the press conference ever more important.
We decided not to commit to an intraday strategy for the EUR/USD for this session, taking into account the upcoming ECB press con-ference, heightened volatility and limited predictability of short-term direction in price action.
Technical Analysis: Nasdaq and DJIA
Technical Analysis: Bund and US 10-year T-note Futures
Technical Analysis: GBP/USD and USD/JPY
City Trading & Investment Ltd are an incorporated entity registered in England & Wales. Company registration number is 08677745. Registered address: 37th Floor, One Canada Square, Canary Wharf, London, E14 5AB. Trading futures contracts on margin carries a high level of risk and may not be suitable for all investors. This excessive leverage can work against you at a significant capital cost. Before deciding to trade futures products you should carefully consider your investment objectives, level of experience and risk appetite. It is possible that you may lose some or all of your initial capital/investment and, there-fore, you should not invest money or financial assets that you cannot afford to lose. You should be aware of all of the risks associated with futures trading and trading financial instruments in general. You should seek advice from an independent financial advisor.
Any opinions, news, research, analyses, prices or other information contained in these reports is provided as general market commentary and is for educational purposes only. The content does not constitute investment advice in any shape or form. City Trading & Investment will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information. The content of this report do not constitute an offer to sell or solicitation of an offer to buy any securities or financial instruments. Furthermore, the content of this report does not constitute advice or a recommendation with respect to such securities or other financial instruments or investments.
The content on this report is subject to change at any time without notice, and is provided for the sole purpose of assisting the educational appetite of traders. City Trading & Investment has taken reasonable measures to ensure the accuracy of the information within this report; however, it does not guarantee accuracy and will not accept liability for any loss or damage which may arise directly or indirectly from the content of the report or from your inability to access the report, or for any delay in or failure of the transmission or the receipt of this report. Furthermore, no part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of City Trading & Investment Ltd.
This report is not intended for distribution or use by any person in any country where such distribution or use would be contrary to local law or regulation. None of the services or investments referred to in this report are available to persons residing in any country where the provision of such services or investments would be contrary to local law or regulation. It is the responsibility of the readers of this report to ascertain the terms of and comply with any local law or regulation to which they are subject.
Investment asset valuations and pricing can go up and down. Investment price fluctuations can be violent and can result in the loss of some or all of your initial investment/capital. The financial assets referred to in this research and the potential income or losses from them may also fluctuate violently as described. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Certain transactions, including those involving futures, options, and other derivatives, give rise to substantial risk and are not suitable for all investors.
Recommended Content
Editors’ Picks
AUD/USD holds above 0.6500 in thin trading
The Australian Dollar managed to recover ground against its American rival after AUD/USD fell to 0.6484. The upbeat tone of Wall Street underpinned the Aussie despite broad US Dollar strength and tepid Australian data.
EUR/USD comfortable below 1.0800 lower lows at sight
The EUR/USD pair lost ground on Thursday and settled near a fresh March low of 1.0774. Strong US data and hawkish Fed speakers comments lead the way ahead of the release of the US PCE Price Index on Friday.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays near 4.2% after upbeat US data and makes it difficult for XAU/USD to gather further bullish momentum.
Google starts indexing Bitcoin addresses
Bitcoin address data is live on Google search results after users realized on Thursday that the tech giant started indexing Bitcoin blockchain data. However, mixed reactions have followed the tech giant's reversed stance on the cryptocurrency.
A Hollywood ending for fourth quarter GDP
The latest revisions put Q4 GDP at 3.4%, the second fastest quarterly growth rate in two years. Much of the upside was attributable to stronger consumer spending, yet fresh profits data affirmed it was a good quarter for the bottom line as well with profits up by the most since the Q2-2022.