For instant updates, follow FCI Markets on Twitter
Intermarket:
• SP Futures 4164 (+0.23%)
• EUSTXX 3998 (+0.33%)
• Crude Oil 62.18 (+0.36%)
• US 10YR 1.63% (-0.13%)
• EurUsd 1.2237 (+0.08%)
• UsdJpy 108.70 (-0.06%)
• DAX 15370 (+0.22%)
Improved US initial jobless and easing inflationary concerns post-FOMC minutes aided market sentiment on Thursday, and the move is continuing into Friday. The SP500 rebounded 1.06% led by tech stocks, while VIX fell to 20.67. 10-year yield dropped to 1.63% . Gold is up. Oil retreated further. USD remains weak. The US Treasury department has detailed the Biden administration’s plans to raise $700bn in additional revenue, including requirement for crypto transfers exceeding $10k to be reported to tax authorities. Cryptos continue to stabilize, Bitcoin up 40% from this week’s lows. Separately, the US is also advocating a global minimum corporate tax of at least 15. Elsewhere, the Israel-Hamas cease-fire has come into force.
Looking ahead: today’s calendar comprises UK retail sales, EU Flash PMIs. ECB’s Lagarde, BOE’s Hauser, and Fed’s Kaplan, Bostic, Barkin and Daly are also speaking today. The Euro-area finance ministers and central bankers are holding an informal meeting today, followed by another meeting on 22 May.
Matters that Matter:
• U.S. Treasury backs off 21% global minimum corporate tax rate, wants at least 15%
• U.S. regulators signal stronger risk, tax oversight for cryptocurrencies
• China crypto players shrug off Beijing’s latest crackdown
• Australia retailers boast solid April sales - preliminary data; MM Pre, 1.1%, 0.5% f’cast, 1.3% prev
• Israel-Hamas truce takes hold after 11 days of fighting
Majors 1-Day View:
USDJPY
Sellers returned on Thursday, prices posting a bearish engulfing. The directional changes in the past 3 sessions suggests weak directional intent. The corrective move lower will continue on a break of 108.56, but buyers may attempt a defence initially. Note that 1.2Bln in option expiries rolls off today between 108.45-60. As such, the call is just cautiously bearish for Friday, and we prefer to sell into rallies. Target levels are at 108.56, 108.33/35, 108.00.
EURUSD
Contrary to Wednesday’s bearish stance, buyers returned on Thursday, recovering all of Wednesday’s losses. Signals have been switching on each of the past 3 sessions, which suggests weak directional intent. The trend continues on a break of 1.2245. However, sellers may attempt a defence initially. As such, our call for today is just cautiously bullish and we prefer to buy dips towards 1.2180/2200. Also note there are 1.9 Bln in option expiries at 1.2150-70 and 1.3 Bln at 1.2200. Targets are to 1.2245, the Jan 7th close at 1.2270 or the 2021 highs at 1.2345.
AUDUSD
AUDUSD remains in a rangebound market type between .7674 and .7890. Wednesday’s 1 Big Fig decline attracted support at the 55 DMA, prices posting an “inside day”. As such, signals for Friday are mixed and we prefer a neutral stance until either .7711 or .7814 are breached.
GBPUSD
Wednesday’s 1 Big Fig decline was entirely recovered on Thursday, as buyers returned from close to 1.4100 round number. As such, signals switch back to a bullish stance for Friday and we prefer to buy cautiously on the open and then on a dip towards 1.4130. Targets are to 1.4221, this year’s high at 1.4248 or even the April 17th 2018 open at 1.4337.
USDCAD
Contrary to Wednesday’s corrective rally, sellers returned from close to Monday’s highs, prices posting a bearish engulfing on Thursday, switching signals to a bearish stance for Friday. The trend continues through 1.2010, but buyers may attempt some defence from 1.2030s initially. As such, the call for today is only cautiously bearish and we prefer to sell into a rally towards 1.2100.
FX Relative ATR Grid
Comment: volatility retreated across the board yesterday, with all action contained on the US Dollar. There were a number of outright range contractions posted across, which suggests a range expansion is to follow.
FX Relative Strength Grid
Comment: the strongest trends are currently EUR (bullish), GBP (bullish), NZD (bearish), USD (bearish). The strongest momentum was seen yesterday in USD (bearish), CHF (bullish), JPY (bearish).