In general, the financial markets are a little mixed today. European stocks are slightly red, while US futures are down. But losses are very limited. Bulls are still in overwhelming control. In the foreign exchange markets, Swiss Franc is falling sharply as the recent unstable trade continues. Dollar attempted a rebound earlier today but quickly lost steam. Commodity currencies are included in consolidations and are awaiting the next step in the risk markets.
Technically rebounds EUR / CHF sharply after withdrawing support from 1.0578 minor support. near-term prospects remain cautiously bullish and 1,0662 resistance violations will target the 1.0710 cluster resistance zone.
The gold recovery lost momentum after hitting 1753.81 and weakening again. We are in favor of the case that price action from 1765.25 would eventually correct the entire increase from 1451.16. Break of 1725.00 less support will confirm our view and target 38.2% retracement of 1451.16 to 1765.25 at 1,645.26.
In Europe, the FTSE is currently down to -0.39%. DAX has fallen -0.98%. CAC is down -0.77%. The German 10-year yield is -0.021 down to -0.486. Earlier in Asia, Nikkei fell -0.21%. Hong Kong HSI fell -0.49%. China Shanghai SSE fell -0.55%. Singapore Strait Times fell -0.26%. Japan’s 10-year JGB dividend fell from -0.0023 to 0.000.
U.S. original unemployment claims dropped to $ 2.4 million, continued claims increased to $ 25 million
The US’s first unemployed claims fell -249k to 2438k in the week ending May 16. Four-week moving average of initial claims fell -501k to 3042k. Continued claims rose 2525k to 25073k in the week ending May 9. Four-week moving average of continued claims rose 2314k to 22002k.
The Philadelphia Fed Manufacturing Business Outlook rose to -43.1 in May, up from the April 40-year low of -56.6. 58% of companies reported declining activity compared to 15% reporting increase.
From Canada, ADP employment fell -226.7k in April. New house price index rose 0.0% mother in April.
The UK PMI composite rose to 28.9, looking a frustratingly slow recovery
UK PMI Manufacturing rose to 40.6 in May, up from 32.6, above expectations of 33.5. PMI Services rose to 27.8, up from 13.4, also above expectations to 22.1. PMI Composite rose to 28.9, up from 13.8.
Chris Williamson, Chief Business Economist at IHS Markit, said: “The UK seems to be seeing a frustratingly slow recovery given the likely slower pace of opening economy compared to other countries that have seen fewer COVIDs. 19 cases. Virus-related constraints, widespread job insecurity and weak demand will be exacerbated by growing business uncertainty regarding Brexit. We consistently expect GDP to fall by almost 12% by 2020. While quarterly decline rates appear to reach approx. 20% in the second quarter, the recovery will be measured this year and not months. “
Eurozone PMI composition rose to 30.5, still pointing to -10% Q2 GDP contraction
Eurozone PMI manufacturing rose to 35.4, up from 18.1, expected to be 38.0. PMI Services rose to 28.7, up from 12.0, above expectations to 23.9. PMI Composite rose to 30.5, up from 13.6.
Chris Williamson, Chief Business Economist at IHS Markit said: “GDP in the second quarter is still declining at an unprecedented rate, declining by approx. 10% compared to the first quarter, but the increase in PMI raises expectations that the downturn will continue to moderate, with the restrictions on locking being further lifted towards the summer. “
“A further concern is that demand is likely to remain extremely weak for a longer period, which puts additional pressure on companies to make more aggressive job cuts as public job retention schemes expire. We therefore expect GDP to fall by almost 9% by 2020 and for a full recovery to take several years. “
Germany’s PMI production rose to 36.8 in May, up from 34.5, but expected expectations of 40.0. PMI Services dropped sharply to 31.4, up from 16.2, and expected 26.0. PMI Composite rose to 31.4, up from 17.4.
France’s PMI manufacturing improved to 40.3 in May, up from 31.5, above expectations to 40.3. PMI services in particular fell to 29.4, up from 10.2, just missing the 30.0 expectation. PMI Composite rose to 30.5, up sharply from 11.1.
RBA Lowe: Extremely unlikely to use negative rates
RBA Governor Philip Lowe said together that “restoring trust on the health front is a prerequisite for a strong improvement. “We might get a vaccine, we might get antiviral medication, but it’s also possible that we don’t. So we drive an incredible amount of work on the scientists’ work. “
Looking ahead, “an obvious source of uncertainty is the pace at which the various constraints are eased. Another source of uncertainty is the level of confidence people have for their future, both in terms of their health and their own finances.
He added that the central bank was willing to scale up bond purchases if necessary. However, it was “unusually unlikely that interest rates would be reduced to negative.
Australia’s CBA PMI composite was recovered to 26.4, May should mark the low
The Australia CBA PMI Composite rose to 26.4 in May, up from 21.7. PMI Services improved from 19.5 to 25.5. However, PMI Manufacturing fell from 44.1 to 42.8.
CBA chief Australian economist Gareth Aird said: “May should mark the low of PMIs and we would expect activity to be lifted from here on a monthly basis. The company’s views on the financial outlook have improved and the promise of confidence is welcomed. That said, it will take a long time for the activity to return to the pre-COVID-19 level. And deflationary pressures highlight the huge amount of slack we have in the economy now. “
RBNZ Ha: Does not lower OCR until next March as the banking system is not ready
The New Zealand Dollar is trying to extend this week’s recovery as the chance of RBNZ negative rates fades. RBNZ chief economist Yuong Ha said in a webinar that he did not expect interest rates to be lowered further from the current level of 0.25% this year.
“We expect to keep it there for the next 12 months until March next year,” he said. “We do not plan to take it lower at this point, simply because the banking system is not ready for lower OCR rates at the moment. We have given the banking system until the end of the year to be ready, so that the possibility is for monetary policy committees in a year’s time. “
Although he also noted that the MPC has “the ability to continue to monitor, revise, re-evaluate and re-evaluate our decisions and the effectiveness of our decisions and do what it takes to get us back to our medium term goals.”
Separately, Westpac also revised their forecast and expects RBNZ to lower OCR to -0.50% in April 2021, rather than November 2020. It said the timing of negative interest rates “would depend on how long it takes for commercial banks to stay operationally ready for a negative OCR ”. Since RBNZ has asked commercial banks to prepare for negative OCR by December 1 of this year, a negative OCT ”will be operationally possible from the beginning of 2021.
Japan’s exports declined most for a decade in April
In the off-season, Japan’s exports fell -21.9% yoy in April to JPY 5.2T. This is the worst decline since 2008. Exports to the US fell by a massive -37.8% y / y, the worst since 2009. Exports to China fell -4.1% yy. Imports fell -7.2% yyyy to JPY 6.1T. Trade surplus came in at JPY 930B. In seasonally adjusted terms, exports fell -10.4% mother to JPY 5.2T, while imports rose 0.2% mother to 6.2 tons. The trade deficit expands to JPY -1.0T.
Japanese PMIs: Potential hit for Q2 could be as large as 20% over the previous year
PMI Manufacturing fell to 31.7 in May, down from 34.7. PMI Services recovered to 25.3, up from 21.5. PMI Composite recovered to 27.4, up from 25.8.
Joe Hayes, an economist at IHS Markit, said: “Declining demand for goods is catching up with the manufacturing sector… Taking data from April and May together indicates that GDP is falling at an annual rate of over 10% and the economy is going to contract for a third third quarter. The potential hit for Q2 could be as big as 20% over the previous year. “Furthermore,” manufacturing sector damage may continue to worsen as global trade conditions deteriorate and global economic recovery is slow “.
USD / CHF Mid-Term Outlook
Daily pivots: (S1) 0.9618; (P) 0.9668; (R1) 0.9697; More …
USD / CHF recovers again after hitting 0.96388 and intraday bias becomes neutral. The overall outlook remains unchanged, with the 0.9901 correction pattern still in progress. Another fall cannot be ruled out and breaches of 0.9638 will target 0.9588 support and below. But the downside must be contained with the 61.8% retracement from 0.9181 to 0.9901 at 0.9456 to rebound. On the upside, breaches of 0.9784 resistance will target a 0.9901 high test.
In the bigger picture, decline from 1.0237 is seen as the third part of the pattern from 1.0342 (low in 2016). It could have ended at 1 p.m. 0.9181 after hitting 0.9186 key support (low 2018). Break of 0.9901 will extend the rebound mold 0.9181 to 1.0023 resistance. After all, in the medium term, trading is likely to continue between 0.9181 / 1.0237 for a longer period.
Updating economic indicators
|23:00||AUD||CBA Manufacturing PMI May P||42.8||44.1|
|23:00||AUD||CBA Services PMI May P||25.5||19.5|
|23:50||JPY||Trade Balance (JPY) Apr||-1.00T||-0.78T||-0.19T||-0.38T|
|00:30||JPY||Jibun Bank Manufacturing PMI May P||38.4||41.9|
|07:15||EUR||France Production PMI May P||40.3||36||31.5|
|07:15||EUR||France Services PMI May P||29.4||30||10.2|
|07:30||EUR||Germany Manufacture PMI May P||36.8||40||34.5|
|07:30||EUR||Germany Services PMI May P||31.4||26||16.2|
|08:00||EUR||Eurozone Manufacturing PMI May P||39.5||38||33.4|
|08:00||EUR||Eurozone Services PMI May P||28.7||23.9||12|
|half past eight||British pound||Manufacturing PMI May P||40.6||33.5||32.6|
|half past eight||British pound||Services PMI May P||27.8||22.1||13.4|
|10:00||British pound||CBI Industrial order expectations May||-62||-50||-56|
|half past one||CAD||New house price index M / M Apr||0.00%||-0.10%||0.30%|
|half past one||CAD||ADP Employment Change Apr||-226.7K||-177.3K|
|half past one||USD||Initial unemployment claims (May 15)||2438K||2400K||2981K||2687K|
|half past one||USD||Philadelphia Fed Manufacturing Survey May||-43.1||-40||-56.6|
|13:45||USD||Manufacturing PMI May P||38||36.1|
|13:45||USD||Services PMI May P||30||26.7|
|14:00||USD||Existing home sales Apr||4.30M||5.27M|
|14:30||USD||Natural gas storage||83B||103B|