May 20, 2016 - Pooling®,VDAX®, VDAX-NEW® and Xetra® are registered trademarks of DBAG. All MSCI indexes are service
A Eurex publication focused on European financial markets, produced by MNl
Morning Briefing May 20th 2016 The calendar is quieter Friday, although there is likely to be raft of headlines form Sendai Japan as G7 finance ministers and central bankers gather. The European data calendar gets underway at 0600GMT, with the publication of the April PPI data. At 0700GMT, the Spanish services survey and industrial orders data will cross the wires. At 0800GMT, the ECB will publish the EMU current account data.
Across the Atlantic, the Canadian retail sales data will be released, along with the Canadian April CPI data. In the US, at 1300GMT, Federal Reserve Governor Daniel Tarullo will deliver a speech about insurance company supervision and regulation, in Washington. At 1400GMT, the BLS State Employment data and the NAR existing home sales numbers will cross the wires.
In the UK, the CBI will publish the May industrial Trends survey.
Global Economic Trading Calendar
The pace of existing home sales is expected to post a further gain to a 5.41million annual rate in April after rebounding in March. The pending home sales index rose 1.4% in March and was up 2.9% unadjusted from a year earlier, suggesting existing home sales will in the coming months. The NY Fed's latest GDP Nowcast will be published at 1515GMT.
Markets FOREX: In the absence of any significant economic data or scheduled events, the Asia-Pacific session had a quiet end to a busy week. Currency markets were becalmed and held within very narrow ranges, Tokyo-fix related demand saw dollar-yen climb from Y109.85 to Y110.09 before easing to around Y110.00 post-fix with little or no interest seen thereafter. It last trades at Y110.04. Aussie-dollar climbed from $0.7221 to $0.7243 on mild short-covering supported by firmer crude futures and was last at $0.7234. Meanwhile, euro-dollar was anchored to $1.1200, but did manage to eke out a $1.1196 to $1.1210 range and was last at $1.1207. US INDEX FUTURES: US stock index futures are trading with a small risk on bid as crude oil rallies in Asia, while iron ore and steel futures are also posting small gains in early trade. Currently the Dec'15 e-mini S&P futures are trading up 3.50 points at 2,042.25, the Dec'15 e-mini Nasdaq futures are trading up points at 10.75 points at 4,328.00, while the Dec'15 e-mini Dow futures are trading up 29 points at 17,444. US STOCKS: US stocks remain on the ropes Thursday afternoon, albeit off the lows of the day, weighed by the prospects of a
June or July Fed hike. In the final hour of trading, the DJIA is down 0.56% at 17,429, the Nasdaq Composite down 0.61% at 4,710 and the S&P 500 down 0.46% at 2,038. The S&P 500 posted a 2016 high of 2,111.05 April 20 and then succumbed to profit-taking as global investors began to fret various event risks. The S&P 500 is well below its 55-day moving average (at 2,053.20 currently) and the earlier low of 2,025.91 was the lowest level since March 24, when the index bottomed at 2,022.49 (March 17 low 2,022.16). Beyond that, larger support is seen at the 200-day moving average, currently at 2,011.29. The index will need to clear 2,085 (May 10 high 2,084.87), for a retest of the April 2728 highs near 2,100. US TSY FLOWS: After Thursday saw more than $6 bln in 5's and 10's trade during before the London open and close to $10 bln in total, today's session has been the complete opposite, with 5's and 10's trading some $1.3b bln so far in very quiet trade. That said sources report that there has been somewhat decent Asian commercial bank buying of 10's as well as Asian bank buying, while there has also been some 5's/30's steepener interest from fast money. Cash 10's have eased 1bp to last trade at 1.8382%, with total volumes for the session around ~$2 bln so far.
JAPAN STOCKS: Japanese stocks have had a quiet morning session as investors continue to digest the prospects of higher US rates, with the G-7 meeting also keeping trade quiet. The Nikkei has closed for lunch up 0.19% or 30.99 points at 16,677.65, while the Topix is up 0.23% or 3.04 points at 1,339.60.
GOLD: Spot gold last up $0.18 at $1254.88 per ounce, in a $1254.29 to $1259.39 range so far this morning in Asia, in quiet trade with the post-FOMC Minutes flush out largely reversed on Thursday. Resistance still exists from $1280 to $1300, and today sees the USD mixed against the majors as the market continues to digest the Fed's next likely move. OIL: WTI crude oil futures for Jul'16 delivery last up $0.54 at $49.21 per barrel, after a $48.67 to $49.29 range in Asia today, on solid volume as the contract moves towards spot. No major news, just a re-focus on falling production levels in the US despite a rise in stockpiles from Wednesday's data. Still plenty of resistance above, firstly at the recent contract high of $49.56 but more generally around the $50/$54 area but crude is making solid inroads into solid resistance.
Technical Analysis BUND: (M16) 55-DMA Supporting *RES 4: 164.84 Bollinger band top *RES 3: 164.75 Low Feb 23 now resistance (continuation) *RES 2: 164.60 High Apr 11 *RES 1: 163.96 High Apr 18 *PREVIOUS CLOSE: 163.59 *SUP 1: 163.06 55-DMA *SUP 2: 162.67 Low May 4 *SUP 3: 161.84 Low May 2 *SUP 4: 161.77 100-DMA *COMMENTARY: The 55-DMA confirmed significance as support Thursday with M16 having bounced from this level on the first attempt to break lower. Bears continue to look for a close below 162.67 to confirm a break and shift focus to 161.46-84 where the 100-DMA is noted. Bulls continue to look for a close above 163.96 to ease pressure on key supports and shift focus back to the 164.60-84 region. A correcting O/B slow stochastic is still adding weight to the bearish case.
EUROSTOXX: Immediate Focus On 2860.32-2893.63 *RES 4: 3148.93 Alternating daily support/resistance *RES 3: 3067.61 Alternating daily support/resistance *RES 2: 3012.54 21-DMA *RES 1: 2992.80 100-DMA *PREVIOUS CLOSE: 2919.22 *SUP 1: 2893.63 Low May 6 *SUP 2: 2860.32 Monthly Low Apr 7 *SUP 3: 2844.86 Bollinger band base *SUP 4: 2786.21 Low Feb 15 *COMMENTARY: Despite daily studies correcting from O/S levels, bulls have been unable to take out key DMAs 2992.803012.54. Bulls now look for a close above the 55-DMA to ease bearish pressure and above 3067.61 to shift immediate focus back to the 200-DMA. While the 100-DMA caps, immediate bearish focus remains on a break of the 2860.32-2893.63 region that targets a retest of 2016 lows.
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