Market Brief

Crude oil extended gained in New York yesterday as easing supply glut takes the front stage after months of oversupply worries. The US gauge, the West Texas intermediate, rose as high as $49.35 a barrel, while the international gauge, the Brent crude, tested the $49.26 threshold. We expect crude oil prices to continue climbing higher in response to months of almost no investment in oil and gas. It will take an extended period of time to return to a normal, which would favour further crude oil strength.

In the FX market, the US dollar wiped out yesterday’s gains with the dollar index, a measure of the greenback against a basket of currencies, falling 0.20% to 95.48 after hitting 95.78. Among the G10 complex, the Australian dollar rose the most against the US dollar, rising 0.30% and returning above the 0.72 threshold. Over the past few weeks, the Aussie suffered from a strengthening US, bolstered by increasing Fed rate hike expectations but also enhanced by the collapse of iron ore prices. Indeed, the most liquid future contracts on the Dalian commodity exchange are down more than 30% since the end of April as it slid from roughly 500 CNY/metric tons to 342 CNY/metric tons this morning. Further weakness of the Australian cannot be ruled out as we anticipate iron ore prices to continue to adjust to the downside; however we also expect the greenback to reverse momentum as the market will start to price out a June rate hike, which would provide support to AUD/USD.

The New Zealand dollar, was also better bid after the country’s trade surplus surprised massively to the upside. Exports rose to NZ$4.30bn, beating expectations of NZ$4.08bn and previous month’s reading of NZ$4.20. Simultaneously, imports rose NZ$4.01bn versus NZ$3.98bn median forecast, unchanged compared to March’s data. All in all, the trade surplus printed at NZ$292mn versus NZ$25mn consensus, while previous month’s reading was upwardly revised to NZ$189mn from NZ$117mn first estimate. NZD/USD surged 0.18% in Tokyo, hitting 0.6764.

EUR/USD remained under pressure as it failed to reverse clearly the negative momentum in spite of the dollar rally that is losing steam. The currency pair tested the 1.1144 support (low from March 24th) but was able to hold ground above it. We continue to expect the single currency to reverse momentum, especially against the USD. All the more so as the Eurozone finance minister and the IMF secured a deal on the Greek debt early this morning. It should therefore allow financial markets to spend a relax summer, clear of Greek worries. The market will now focus on the Brexit story, however, according to the latest polls, a Brexit is almost out of the table.

Snap Shot


 
Global Indexes Current Level % Change
Nikkei 225 Index 16757.35 1.57
Hang Seng Index 20353.97 2.64
Shanghai Index 2816.522 -0.18
FTSE futures 6254 0.6
DAX futures 10178 1.06
SMI Futures 8167 0.39
S&P future 2082.7 0.37

 
Global Indexes Current Level % Change
Gold 1224.93 -0.19
Silver 16.27 0.33
VIX 14.42 -8.85
Crude wti 49.33 1.46
USD Index 95.51 -0.07

 
Today's Calendar Estimates Previous Country/GMT
SP Apr PPI MoM - 0,70% EUR/07:00
SP Apr PPI YoY - -5,40% EUR/07:00
EC ECB Governing Council member Villeroy Speaks in Madrid - - EUR/07:00
GE May IFO Business Climate 106,8 106,6 EUR/08:00
GE May IFO Current Assessment 113,3 113,2 EUR/08:00
GE May IFO Expectations 100,8 100,4 EUR/08:00
BZ May 23 FIPE CPI - Weekly 0,46% 0,41% BRL/08:00
IT Mar Industrial Sales MoM - 0,10% EUR/08:00
IT Mar Industrial Sales WDA YoY - -0,20% EUR/08:00
IT Mar Industrial Orders MoM - 0,70% EUR/08:00
IT Mar Industrial Orders NSA YoY - 3,80% EUR/08:00
SZ May Credit Suisse ZEW Survey Expectations - 11,5 CHF/09:00
EC ECB Governing Council member Klaas Knot Speaks in Madrid - - EUR/09:00
UK BOE FPC Member Martin Taylor Speaks in London - - GBP/10:30
UK ECB's Constancio Speaks at Workshop in London - - GBP/10:30
EC ECB Executive Board member Peter Praet Speaks in Madrid - - EUR/10:30
US May 20 MBA Mortgage Applications - -1,60% USD/11:00
BZ May FGV Construction Costs MoM 0,36% 0,41% BRL/11:00
TU May Real Sector Confidence SA - 105,7 TRY/11:30
TU May Real Sector Confidence NSA - 110,1 TRY/11:30
TU May Capacity Utilization - 75,30% TRY/11:30
US Apr Advance Goods Trade Balance -$60.0b -$56.9b USD/12:30
US 1Q House Price Purchase Index QoQ - 1,40% USD/13:00
US Mar FHFA House Price Index MoM 0,50% 0,40% USD/13:00
RU May 23 CPI Weekly YTD - 2,80% RUB/13:00
RU May 23 CPI WoW - 0,10% RUB/13:00
US Fed's Harker Speaks at Forum in Philadelphia - - USD/13:00
BZ Apr Outstanding Loans MoM - -0,70% BRL/13:30
BZ Apr Total Outstanding Loans - 3161b BRL/13:30
BZ Apr Personal Loan Default Rate - 6,20% BRL/13:30
US May P Markit US Services PMI 53 52,8 USD/13:45
US May P Markit US Composite PMI - 52,4 USD/13:45
CA May 25 Bank of Canada Rate Decision 0,50% 0,50% CAD/14:00
US May 20 DOE U.S. Crude Oil Inventories -2000k 1310k USD/14:30
US May 20 DOE Cushing OK Crude Inventory -450k 461k USD/14:30
BZ Currency Flows Weekly - - BRL/15:30
US Fed's Kashkari Speaks on Energy and Monetary Policy in ND - - USD/15:40
FR Apr Total Jobseekers 3535.5k 3531.0k EUR/16:00
FR Apr Jobseekers Net Change 4,5 -60 EUR/16:00
US Fed's Kaplan Speaks at Greater Houston Partnership - - USD/17:30
BZ Apr Formal Job Creation Total -62500 -118776 BRL/19:00
SK May Consumer Confidence - 101 KRW/21:00
IN Apr Eight Infrastructure Industries - 6,40% INR/22:00
AU SURVEY: Private Capital Expenditure 2016-17 A$86.7B - - AUD/22:00

Currency Tech

EURUSD
R 2: 1.1479
R 1: 1.1349
CURRENT: 1.1152
S 1: 1.1058
S 2: 1.0822

GBPUSD
R 2: 1.4770
R 1: 1.4663
CURRENT: 1.4604
S 1: 1.4404
S 2: 1.4300

USDJPY
R 2: 111.91
R 1: 110.59
CURRENT: 109.89
S 1: 108.23
S 2: 106.25

USDCHF
R 2: 1.0257
R 1: 1.0093
CURRENT: 0.9915
S 1: 0.9751
S 2: 0.9652

  • S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot

This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.

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