Monday’s Asian trading needed to see Europe and the US reaction before getting too carried away and that is probably what we saw today. With all core indices seen making strong progress we saw another good day for the Nikkei (+1.1%), a healthy 1.3% return for the Hang Seng and KOSPI whilst the Shanghai and ASX gained around +0.25%. China continues to lag due mainly to the exodus of investment flows. Increased regulations on Chinese banks is halting the usual money flow to external managers and has even reversed. Over the past few days the flow has stopped which is having a negative impact on domestic bond prices, which hit their highest yields in over two years. Domestic banks are to return reports on their businesses by June 12, so the conclusion many traders are making is that the leveraged being used was too excessive and so are liquidating positions ahead of the reporting deadline. Late in US trading we see the JPY trading above 111.

Another positive day for all core European indices with gains across the board of around +0.15%. Having had the euphoria following Sundays voting, the stage is now set for the run-off to be held Sunday May 7th. A more pressing matter concerns the ECB rate decision to be announced Thursday, but markets will be eager to listen to the press conference as questions tend to draw more detail than the prepared remarks. Late in US trading the Euro and GBP appear to be struggling with todays gains so will be interesting to see where we close on the Monthly’s. Gold has lost another $10+ in todays trading but so have other safe-havens assets as we watch yields rise in the bond markets.

The NASDAQ was the talk of the day today breaking the psychological 6K barrier but not forgetting the Russell also trading at contract highs. Many are now questioning valuations especially given that corporates have curtailed their buy-backs which could also be a reflection upon absolute levels. Corporate earnings are supporting recent moves but with the added momentum of imminent tax reforms ahead of Friday – so, could this be the start of something more substantive! We also saw supportive economic data in the form of Home Price Index beating expectations by 0.01% to release at 5.8%.

2’s closed 1.27% (+4bp), 10’s at 2.33% (+6bp), Bunds at 0.37% (+5bp) which closes the US/Germany spread at +196bp (+1bp). France closed 0.89% (+7bp), Italy closed 2.25% (+8bp), Greece 6.26% (-2bp), Turkey 10.34% (+5bp), Portugal 3.55% (+3bp) and finally UK Gilts at 1.08% (+3bp).

Investment and financial consultancy services are offered on behalf of Armstrong Economics. PEI does NOT provide personal guided advice for any individuals regardless of residency or nationality. PEI provides forecasting based upon objective computer models in most leading financial centers worldwide through its affiliates and/or representative arrangements. The information provided is believed to be reliable, however accuracy and completeness are not guaranteed. This information is offered to professional investors and institutions. PEI does trade on a proprietary basis in selected markets around the world. PEI accepts NO managed accounts on behalf of any individuals no matter the country of residence or origin. PEI predominantly engages in hedging contracts and currency overlay business on behalf of business and institutions. Individuals seeking to use the forecasting services of PEI should seek the advice of professionals, as appropriate, regarding the evaluation of any specific information, opinion, advice or other content relative to their personal financial investment situation. Keep in mind that a forecast in the local currency of that instrument may prove to be correct but a swing in the underlying currency can make that same forecast dangerous to someone investing in a different currency.

Recommended Content


Recommended Content

Editors’ Picks

GBP/USD bulls retain control near 1.3300 mark, highest since March 2022

GBP/USD bulls retain control near 1.3300 mark, highest since March 2022

The GBP/USD pair trades with a positive bias for the third straight day on Friday and hovers around the 1.3300 mark during the Asian session, just below its highest level since March 2022 touched the previous day.

GBP/USD News
USD/JPY pops and drops on BoJ's expected hold

USD/JPY pops and drops on BoJ's expected hold

USD/JPY reverses a knee-jerk spike to 142.80 and returns to the red below 142.50 after the Bank of Japan announced on Friday that it maintained the short-term rate target in the range of 0.15%-0.25%, as widely expected. Governor Ueda's press conference is next in focus.  

USD/JPY News
Gold consolidates weekly gains, with sight on $2,600 and beyond

Gold consolidates weekly gains, with sight on $2,600 and beyond

Gold price is looking to build on the previous day’s rebound early Friday, consolidating weekly gains amid the overnight weakness in the US Dollar alongside the US Treasury bond yields. Traders now await the speeches from US Federal Reserve monetary policymakers for fresh hints on the central bank’s path forward on interest rates.

Gold News
Shiba Inu is poised for a rally as price action and on-chain metrics signal bullish momentum

Shiba Inu is poised for a rally as price action and on-chain metrics signal bullish momentum

Shiba Inu remains strong on Friday after breaking above a symmetrical triangle pattern on Thursday. This breakout signals bullish momentum, further bolstered by a rise in daily new transactions that suggests a potential rally in the coming days.

Read more
Bank of Japan set to keep rates on hold after July’s hike shocked markets

Bank of Japan set to keep rates on hold after July’s hike shocked markets

The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session. 

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures