Short recap
Asia mixed
Europe opening highe but correcting
Risk on or Risk off now?
ECB sees higher grow, lower inflation (2017-19), risks balanced
No further rate cuts but also no change in policy, no taper talk at all
Trump survived Comey’s testimony as nothing was revealed
North Korea playing with fire again
US labor market keeps shrinking
Equities
ECB’s very dovish stance to further support EZ equities (rates lower for longer)
ECB boosting peripheral assets on the back of some bubbles in the core
Especially peripheral financials to benefit
Deutsche Bank can not share information about Trump’s financial dealings/ties with Russia
Credit Suisse to say thank you 1.5k employees in London
Julius Bear hit by soccer bribery issue
EU banking to face consolidation as the weaker institutions (due to negative ECB rates)
Will be target by their stronger peers (case of Santander acquiring Banco Popular)
UK financials to suffer on elections outcome/Brexit talks
Bonds
10-yr Trys yield at 2.19% - slowly moving higher
10-yr Bund yield at 0.25% - slowly moving lower on very dovish ECB, no rush to tighten policy at all
UK yields moving higher on after election mess
DXY
Lately seen too much dovishness about FOMC what may change with Comey off the table
Support at 96.44 (38.2% Fibo)
Resistance at 97.85 (50% Fibo)
EURUSD
Very dovish ECB to keep pressure on EUR
But had no impact on EUR yesterday likely due to capital flows to EU assets
Mega-option expiries today to anchor-bracket (according to Reuters):
1.1100 E8.7 bln, 1.1150-60 2.64 bln, 1.1185 1 bln, 1.1200-10 1.56 bln
Also 1.1220-25 1.4 bln, 1.1250 4.07 bln, 1.1270-75 714 mln, 1.1300 1.17 bln
Resistance at 1.1200, 1.1227 (10 DMA), 1.1284, then 1.1300
Support at 1.1180 (23.6% Fibo)
Likely to focus on 1.1114 (38.2% Fibo) ahead of 1.1062 (50% Fibo) and 1.1009/00 level (61.8% Fibo)
USDJPY
Heavy resistance at 110.47 (200 DMA), 110.50 (61.8% Fibo)
Support at 109.60 (76.4% Fibo), then at 108.12
Decent support from options around 110.00 area (USD 2.38 bln expiring)
GBPUSD
Upside limited on election results and Brexit talks
Brexit talks are messy but after elections will be very messy
Putting further pressure along with a massive current account deficit on GBP
In other words 1.2500 and even 1.2000 can be reached easily
Support at 1.2688 (38.2% Fibo), 1.2618 (100 DMA) and 1.2576 (200 DMA)
…but getting the soft Brexit will be GBP positive
EURGBP
0.8850 in sight
Gold
Resistance at 1286 (76.4% Fibo)
Support at 1255 (61.8% Fibo) and descending trendline
Upcoming Data/Events
ECB’s Linde (1030 GMT)
June 11/18 – French Legislative (Parliamentary) elections(a big question mark for Macron to gain majority)
June 13/14 – FOMC meeting – China PPI correlated to PCE, lower number having any implications for Fed next week?
Lower PPI means reflation trade is fading away
June 15/16 – EcoFin meeting to discuss Greece
Should you have any questions feel free to contact me anytime.
Good luck Champs!
Mr Hawk
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