CFD Markets News and Forecasts — 08-06-2020

FXStreet reports that analysts at Credit Suisse suggest that below 0.8874/64, the EUR/GBP pair can see the uptrend broken with next support at 0.8845/43.

“The completion of a bearish ‘outside day’ on Friday leaves EUR/GBP seeing a retest of key support from the ‘neckline’ to its April base and uptrend from February at 0.8874/64. A break below here would suggest we are seeing a more important turn lower with support then seen next at the 55-day average at 0.8845/43. Beneath here would then see a top confirmed also to clear the way for further weakness with support seen next at 0.8818 – the 61.8% retracement of the April/May rally – then 0.8760/51.” 

“Above 0.8920/30 is needed to ease the pressure off the uptrend with resistance then seen next at 0.8952, then 0.8989.”

• Confident good solution will be found on German court ruling on ECB's bond-buying programme
• ECB will provide any help needed on German rolling

• Economic activity has collapsed

• Covid 19 pandemic and measures to contain the spread of the virus, have caused an unprecedented contraction of economic activity in the euro area
• Financial conditions are still tighter today then at the outset of the Covid 19 pandemic
• ECB's decisions will make sure that higher borrowing needs by fiscal authorities associated with the necessary fiscal response to the crisis, will not translate into materially higher interest rates for the private sector
• ECB's crisis related measures are temporary, targeted and proportionate
• ECB continually monitors the proportionality of its instruments
• We remain fully committed to our mandate

FXStreet reports that strategists at TD Securities apprise that the deal agreed by the OPEC+ to extend production cuts will speed market stabilization as the demand is recovering. 

“OPEC+ agreed to extend its historic 9.6m bpd cut for another month, before production curtailments begin to slowly taper. The agreement is for 100k bpd lower than the prior deal, because Mexico will end its supply constraints.”

“While this agreement was broadly expected, it will help accelerate the Great Rebalancing as we expect the combination of market-driven declines, OPEC+ cuts and demand normalization will push the global crude market into a deep deficit this quarter and next.” 

“Libya's output has been deeply disrupted by the civil war over the past months, but the country's largest field will slowly begin resuming production following a brokered deal between rival factions. It will take months for the field to return to full capacity, but Libya's return will eventually bring more barrels on the market.” 

“The key risk for energy markets remains a resumption of production growth in the US shale patch, as prices sharply recover closer towards break-even levels.”

U.S. stock-index futures rose on Monday, building on the previous week’s sharp gains, as an unexpected rebound in jobs in May bolstered hopes for faster economic recovery from the coronavirus downturn. 

Global Stocks:

• It is our intention to reopen nonessential retail from June 15, but it is clear such reopening is conditional
• Government does not want to open pubs, bars, restaurants and cafés as soon as it can safely, following roadmap which sees reopening from July 4
• Government has talked about the possibility of air bridges and work is ongoing

(company / ticker / price / change ($/%) / volume)

Boeing (BA) initiated with a Buy at Seaport Global Securities; target $277

Amazon (AMZN) target raised to $3300 from $2700 at RBC Capital Mkts

The Canada Mortgage and Housing Corp. (CMHC) reported on Monday the seasonally adjusted annual rate of housing starts was at 193,453 units in May, up 16.2 percent from un upwardly revised 166,477 units in April (originally 166,415 units).

Economists had forecast an annual pace of 155,000 for May.

According to the report, urban starts rose 13.8 percent m-o-m last month to 181,122 units, as multiple urban starts climbed by 12.3 percent m-o-m to 135,859 units, while single-detached urban starts increased by 18.6 percent m-o-m 45,263 units. At the same time, rural starts were estimated at a seasonally adjusted annual rate of 12,331 units, up 68.6 percent m-o-m.

EUR traded mixed against most other major currencies in the European session on Monday, consolidating after a strong rally last week, which was fueled by the latest decision by the European Central Bank (ECB) to nearly double its pandemic emergency purchase program. 

While EUR rose slightly against GBP and USD, it eased off against the rest of major rivals. 

The ECB announced last Thursday that its governing council had decided to increase the Pandemic Emergency Purchase Program (PEPP) by EUR600 billion to EUR1.35 trillion, while extending purchase into the summer of 2021. The announced increase in the size of the PEPP exceeded economists’ expectations of around EUR500 billion.

The EU's single currency was also weighed down slightly by Germany's industrial production data for April. Destatis reported the German industrial production tumbled 17.9 percent m-o-m in April after a revised 8.9 percent m-o-m drop in March, impacted by coronavirus containment measures. That was the steepest monthly fall since the series began in January 1991. Economists had forecast a decline of 16.8 percent m-o-m. In y-o-y terms, the German industrial output plunged 25.3 percent in April, following an 11.3 percent decrease in the previous month. This was the biggest decline on record as well.

Meanwhile, a report from Sentix revealed that the euro area economic sentiment improved in June as the relaxation of measures to combat the pandemic is also bringing economic activity to life. The headline Sentix investor confidence index rose to -24.8 in June from -41.8 in May. Assessment of current conditions advanced from May and expectations jumped to the best value since March 2015.

Investors are now awaiting the remarks of the ECB President Christine Lagarde, who is set to speak at the European Parliament at 13:45 GMT. Last week, Lagarde said the Eurozone’s economy was expected to show an “unprecedented” contraction in the second quarter but was seen to rebound in the third quarter. 

FXStreet reports that economists at the National Bank of Canada maintain its 2020 GDP forecasts for the US and Canada as the first half collapse will not be offset by the rebound in the second quarter.

“While the US economy remains in a delicate situation, with the second quarter witnessing the largest contraction of GDP and employment since the Great Depression, diminished financial stress courtesy of prompt action by the Fed allows for optimism about a second half rebound. But because of a disastrous first half of the year, the annual rate of economic growth is still shaping up to be the worst in the post-war era. We are leaving unchanged our forecast of -6% for 2020 US GDP growth.”  

“While a rebound is likely in the second half of 2020 as more of the economy reopens and firms rebuild inventories, that won’t make up for the first half collapse in economic activity, leaving Canada with the worst annual GDP contraction on records. And that despite unprecedented fiscal and monetary policy stimulus. We are for now leaving unchanged our forecast of -7.1% for Canada’s 2020 GDP growth.”

FXStreet reports that the Credit Suisse analyst team apprises that an important medium-term base is now seen in place with next resistance looming at 125.13/23.

“EUR/JPY has established a medium-term base above major resistance at 122.52/123.31– the high for the year from January, 38.2% retracement of the entire 2018/2020 bear trend and July 2019 high - to mark a medium-term change of trend higher.”

“A pullback is looked for, but with weakness seen as corrective with resistance above 124.44 seen next at 124.70, then 125.13/23 – the back of the broken uptrend from 2012. We would look for this to cap at first, but with a break looked for in due course with resistance next at the 50% retracement of the fall from 2018 at 125.94. Big picture though, the ‘measured base objective’ is seen set significantly higher at 133.75.” 

“Support is seen at 123.29 initially, below which can see a retracement lower, but with good support seen starting at 122.78 and stretching down to the ‘neckline’ to the base at 122.52.”

• Sees economy shrinking 16%-21.8% in Q2 this year
• Expects economy to grow 7.7%-9.1% in 2021 and 2.1%-2.4% in 2022 in most likely scenarios
• Sees economy shrinking up to 15.1% in 2020 in case of new Covid-19 outbreaks requiring additional, strict lockdowns
• Sees unemployment in 2020 rising to 18.1%-19.6% before recovering to 17.1%-17.4% in 2022
• Sees EU-Harmonized inflation at -0.1% to -0.2% in 2020, at 1.3% to 1.2% in 2021, at 1.6% to 1.5% in 2022, in most likely scenarios

• Deeper voluntary cuts by gulf OPEC have served their purpose
• Voluntary oil cuts were for one month only

EUR/USD to test the 1.1495 March high on a break of 1.1367 – Credit Suisse

FXStreet reports that EUR/USD strength has been capped as expected for now at the 1.1367/77 major barrier but analysts at Credit Suisse expect an eventual break which would lead the 1.1495 March high.

“We look for a correction/consolidation to the strong rally of the past two weeks. Support is seen at 1.1278 initially, below which should add weight to this view with support next at 1.1263/58, then the 38.2% retracement of the rally from late May and price support at 1.1194/84. We look for this latter area to then ideally hold and for a fresh move higher to emerge.” 

“Bigger picture, the completion of a base for the EUR EER suggests to us weakness if seen will be corrective and post a pullback we look for a clear break above 1.1367/84, which can then expose the key 1.1495 March high for the year. Whilst this should clearly be respected, a closing break would see the completion of a medium-term bullish reversal, with just initial resistance then seen at 1.1571/96.”

FXStreet reports that according to analysts at Nordea, the scope for higher EUR/USD remains intact over the next 4-5 months if the ‘Next Generation EU’ debt deal eventually comes into fruition. 

“If money printing manages to re-fuel the reflationary optimism, then it doesn’t matter if more EURs are printed. The EUR/USD picks up when interest rates and inflation expectations are broadly on the rise. Relative spreads are of minor relevance.”

“More money printing is a short-term positive for the EUR as it glues together the EUR-construction (again). We see a scope for a move towards 1.17-1.20 once we get closer to the signing of the ‘Next Generation EU’ debt deal, but that is a story for H2-2020. Remember, that Germany takes over the EU presidency from July and six months forward.”

FXStreet reports that analysts at TD Securities note that as traders liquidate long positions, hopes of inflation and the Fed keeping rates at 0% may mark a good entry point due to the recent dips in gold prices.

“Speculative participation in gold continues to dwindle as surging risk appetite saps interest from the market, with traders liquidating long positions and adding shorts.” 

“Safe-haven flows likely reversed course amid fiery equity markets fueled by unprecedented stimulus liquidity and improving economic sentiment as economies reopen. The extremely bullish May jobs data and 10yr treasury yields nearing 1% likely prompted further liquidations to end the week.”

“If this is indeed the beginning of a V-shaped recovery, this recent dip in gold represents an ideal entry point as it signals the end of deflationary concerns and the beginning of increasing inflation expectations, which along with a Fed keeping rates at 0, keeps real rates suppressed into deeper negative territory.”

FXStreet reports that a close above the 200-day average at 1.2681 would mark a significant break higher with next resistance at 1.2726/31, the Credit Suisse analyst team apprise.

“With USD itself expected to stay under pressure we look for a close above the 200-day average at 1.2681 to suggest we are seeing a more significant turn higher, with resistance seen next at the February low and high of last week at 1.2726/31, then the potential downtrend from December 2019, today seen at 1.2865, which we would expect to cap at first.” 

“Big picture though, we suspect this could eventually lead to a challenge on medium-term resistance at 1.3200.” 

“Support moves to 1.2681/75 initially, with a move back below 1.2661 needed to ease the immediate upside bias with support then seen at 1.2619, then the low from Friday at 1.2583.”

Reuters reports that Australia said on Monday China remains unresponsive to its weeks-long pleas to ease tensions between the two trading partners that escalated after Canberra called for an international enquiry into the origins of the novel coronavirus.

Australia has insisted the call for an independent investigation into the pandemic, which it says most likely originated in a wildlife market in the Chinese city of Wuhan, was not politically targeted at Beijing.

China accused Australia of playing “petty tricks” and the Chinese ambassador to Australia said Chinese consumers could boycott Australian products if Australia pursued the inquiry.

China has also since suspended beef imports from four of Australia’s largest meat processors and imposed hefty tariffs on barley, although both sides say that is unrelated to the latest spat.

Australian Trade Minister Simon Birmingham, who has been requesting discussions with Chinese counterpart for weeks, said Beijing has been ignoring Canberra’s pleas.

“Unfortunately, our requests for a discussion have so far been met negatively,” Birmingham told Australian Broadcasting Corp radio on Monday. “That’s disappointing.”

China did not deny Birmingham’s specific comments on trade, but said diplomatic channels are open between the two countries.

China is Australia’s biggest export market. Relations have been strained amid Australian accusations of Chinese meddling in domestic affairs and concern about what Australia sees as China’s growing regional influence.

FXStreet reports that EUR/USD last week rallied to its initial target at 1.1334, the 200-week ma and Karen Jones, Team Head FICC Technical Analysis Research at Commerzbank, expects some consolidation around this level before a test of the 1.1495 March high.

“We would not be at all surprised to see some near-tem consolidation around the 200-week ma at 1.1334 ahead of gains to the 1.1495 March peak.” 

“Longer-term target is the 1.1862 2008-2020 resistance line.”

“Dips are indicated to hold in the 1.1250/1.1170 band ahead of further gains to 1.1570, the 2019 high then 1.1815/22, the 61.8% retracement of the move down from the 2018 peak.”

CNBC reports that Brent crude needs to work through its oversupply issues before it can punch through its current price range of between $40 and $50 per barrel, according to Thom Payne, director at Westwood Global Energy Group.

That’s despite the latest agreement by the Organization of the Petroleum Exporting Countries and its oil-producing allies to extend a historic oil production cut until the end of July. 

The alliance cut production by 9.7 million barrels per day at the start of May 1, and the cuts — which have helped push up crude prices in the last two months — was initially set to decline on July 1.

“If you take February to May, you’ve got an average built position, oversupply of 40 million barrels a day. So we’ve effectively built about 2 billion barrels of additional storage,” Payne told CNBC’s “Street Signs” on Monday.

“We definitely need to drain that before we can see prices move materially above that kind of ($40 to $50) price structure,” Payne said.

His comments came after the group, known collectively as OPEC+, on Saturday agreed to extend its record oil production cut for another month as it seeks to balance the global oil market.

Looking ahead, Payne said: “What’s likely to happen is that the oil markets move to a net draw or undersupply position by around July, August of this year.” This would be “very supportive” of the current $40-50 per barrel price range for Brent, he added. That’s assuming that the demand scenario plays out in line with the general consensus and OPEC achieves 100% compliance — a feat Payne admits is “probably a little bit optimistic.”

According to the report from Sentix, the signs are pointing to a global economic upturn. This is not too difficult after such a serious standstill of the real economy as we experienced in April. This is why the sentix economic indices also show a mixed picture. On the positive side, expectations are rising sharply. The economy is waking up from its deep sleep. But the road to normality is long. The situation values are still deep red and thus continue to indicate a recessionary environment. The question now is how strong and how far the global economy can recover. 

The relaxation of measures to combat the pandemic is also bringing economic activity to life. But the road out of recession is a long one. In Euroland, the situation values are just rising from -73 to -61.5 points. But the upswing out of the valley of tears has definitely begun and should continue for the time being. In fact, the momentum is actually increasing. Expectations are rising sharply by 24.8 points to the +21.8 mark. This is the best value since November 2017, and the overall index is improving accordingly strongly to -24.8 points.

For the eurozone, investors expect that within a year, just over 50% of the slump can be made up. This means that in a year's time we would still be noticeably below the pre-crisis level. And this despite all the stimulus measures, the fiscal packages and monetary easing. An upswing has begun, but a real trend reversal is not yet assured.

FXStreet reports that Howie Lee, an economist at OCBC Bank, has been repeating the selling pressure on gold would only surface towards the end of the second quarter and the US NFP has triggered such a move. The $1600 level is the price expected for the yellow metal by the third quarter.

“With almost three weeks left to the end of Q2, the exceptional US jobs report has sent gold tumbling below the $1700/oz level, closing at $1685/oz last Friday. Our bearish call on gold looks vindicated, even if it was previously contrarian to the general bullish gold views in the market.”

“We think prices might end at $1600/oz by Q3, although intensifying US-China tensions might provide support to falling prices.”

Bloomberg reports that Morgan Stanley strategists added a bet on a steeper Treasury yield curve, seeing the potential for a “regime shift” in the wake of a rapidly improving U.S. economy.

“In the blink of an eye, that seems about how quickly the economic narrative has tilted in favor of a V-shaped recovery versus a slow and prolonged one,” Guneet Dhingra, head of U.S. interest-rates strategy in New York, wrote in a June 5 note. History suggests that, after a period when 30-year yields led longer-dated rates higher, it’s time for 10-year rates to become the key driver, he wrote.

The bank added a bet on the spread between three-year and 10-year yields widening to their existing so-called steepener trade call -- a wager on five-year, 30-year spreads. That’s after the unexpected surge in U.S. payrolls in May.

“If upcoming data confirms the strong improvement in the labor market in May, curve steepening could continue as strategic trade,” Dhingra wrote.

Ten-year yields jumped by almost a quarter percentage point last week as bond investors came closer to their equity colleagues’ enthusiasm about the U.S. economy reopening. The increases have raised discussion about whether the Federal Reserve might adopt the kind of caps that its counterparts in Japan and Australia have adopted for sections of the yield curve.

Morgan Stanley hypothesized that the Fed might “look to push back” against market pricing after another 25 to 30 basis points of gains in 10-year yields. The yield was around 0.9% as of 7 a.m. in London Monday.

Still, the Wall Street bank doesn’t anticipate that the Fed will adopt yield-curve control or some other form of explicit forward guidance at Wednesday’s policy meeting. Morgan Stanley economists see a shift to a monthly quantitative easing target, of $80 billion. The Fed is also likely to “maintain optionality,” or keep its room for maneuver, on QE going forward, the analysts wrote.

An announcement in line with these expectations isn’t likely to provoke much of a reaction in Treasuries, the bank’s strategists said.

FXStreet reports that USD/CNH could weaken to the 7.0400 area in the next weeks, suggested FX Strategists at UOB Group.

24-hour view: “We expected USD to ‘trade at a lower range’ last Friday and the subsequent sharp and rapid drop came as a surprise (USD dropped to a low of 7.0679). The rapid drop appears to be running ahead of itself and further sustained weakness is unlikely, at least for today. From here, USD is more likely to consolidate and trade between 7.0600 and 7.1000.”

Next 1-3 weeks: “Our latest narrative was from last Wednesday (03 Jun, spot at 7.1050) wherein ‘a daily closing below 7.0850 could signal the start of a deeper decline in USD’. USD plummeted last Friday (05 Jun) and closed on a weak note at 7.0685. While oversold shorter-term conditions could lead to a couple of days of consolidation first, barring a move above 7.1210 (‘strong resistance’ level), USD could weaken further to 7.0400 in the coming days.”

CNBC reports that China’s economy is improving and could register “very impressive” growth — but the U.S. is the biggest risk that could derail that recovery, a Deutsche Bank economist said on Monday.

Much of the global economy is still reeling from lockdown measures imposed to contain the coronavirus pandemic. Restrictions that include workplace closures and stay-at-home orders significantly cut down economic activity worldwide — dampening any prospects for growth this year.

But China, where the coronavirus first emerged, is often cited as one of the few economies that could still grow. The Chinese recovery is “going to look very impressive” with a growth of 5%-6% quarter on quarter in April-June, following a contraction in the previous three months, said Michael Spencer, Deutsche Bank’s chief economist and head of research for Asia Pacific.

 “The domestic demand part of the Chinese economy has recovered well,” he told CNBC.

Spencer said “a broad range of indicators” — such as auto and property sales — are “returning to normal” in China. The country’s exports have also been better than expected, but could get “a lot worse” in the next few months given the economic weakness in China’s major export destinations, he added.

The biggest risk to the Chinese — and global — economy is the U.S., according to the economist. He explained that the U.S. is reopening “too soon” from lockdown measures, which could trigger another wave of infections and further rounds of restrictions.

That would leave the U.S. economy struggling, in spite of a surprise jump in employment gains, added Spencer.

The US dollar fell against the Australian and New Zealand dollars, as well as against the pound after increasing hopes for economic recovery and reducing demand for safe assets due to an unexpected improvement in the uS labor market indicators.

The yuan was subdued after data indicated a less-than-expected drop in exports from China - the world's second largest economy - in May. Overseas shipments in May fell 3.3% from a year earlier, after a surprising 3.5% gain in April, customs data showed on Sunday. While exports fared slightly better than expected, imports tumbled 16.7% compared with a year earlier, worsening from a 14.2% decline the previous month and marking the sharpest decline since January 2016. It had been expected to fall 9.7% in May. 

The euro also traded without any obvious dynamics. The single currency gained support after the European Central Bank reported last week that it was increasing its bond purchases to help the bloc's weakest economies. The ECB on Thursday decided to increase the volume of the Pandemic Emergency Purchase program (PEPP) by 600 billion euros to 1.350 trillion euros. The Central Bank also kept the base interest rate on loans at zero, and the deposit rate at -0.5%. According to the ECB forecast, the Euro zone economy will shrink by 8.7% this year.

FXStreet reports that FX Strategists at UOB Group do not rule out further upside in Cable to the 1.2800 area in the next weeks.

24-hour view: “We expected GBP to strengthen last Friday but held the view that the ‘major 1.2700 level is unlikely to come into the picture for today’. The subsequent advance in GBP exceeded our expectation as it soared to a high of 1.2730. While the rally is overbought, upward momentum remains strong and from here, there is room for GBP to test 1.2760 first before a pullback can be expected (next resistance is at 1.2800). Support is at 1.2660 followed by 1.2625.”

Next 1-3 weeks: “We have held a positive view in GBP since early last week. We detected a slowdown in momentum and indicated last Friday (05 Jun, spot at 1.2595) that ‘upward momentum has slowed a tad but a move to 1.2700 is still a distinct possibility’. That said, the subsequent strong surge that quickly blast past 1.2700 was not exactly expected (GBP surged to 1.2730 last Friday). Upward momentum has received a boost and from here, further GBP strength to 1.2800 would not be surprising. Only a break of 1.2560 (‘strong support’ level was at 1.2480 last Friday) would indicate the positive phase in GBP has run its course.”

eFXdata reports that Nordea Research discusses its expectations for this week's FOMC policy meeting.

"There will be no rate changes at this week’s FOMC meeting. The Fed has clearly dismissed the idea of going to negative (NIRP) while also stating that the target range will remain unchanged “until the economy has weathered recent events and is on track to achieve maximum employment and price stability”  These goals are Fed miles off from achieving at the moment," Nordea notes. 

"Overall, we think there are many tough questions to be answered at next week’s meeting. Whether the Fed wants to answer them all is doubtful. The state of the economy is so fragile that the Fed probably sees the risks/uncertainty of introducing (unconventional) forward guidance now as too big. Instead, Powell will likely reiterate his words from last time that the Fed is ready to do more if needed and that this “more” may for now be linked to the liquidity and credit facilities," Nordea adds. 

According to provisional data of the Federal Statistical Office (Destatis), the production in Germany decreased significantly again in April 2020 because of the coronavirus pandemic, after a marked decrease had been observed already in March. In April 2020, production in industry was down by 17.9% on the previous month on a price, seasonally and calendar adjusted basis. Economists had expected a 16.8% decrease. The calendar adjusted year-on-year decrease was as much as 25.3%. This is the largest decline since the beginning of the time series in January 1991.

In April 2020, production in industry excluding energy and construction was down by 22.1%. Within industry, the production of intermediate goods decreased by 13.8% and the production of consumer goods by 8.7%. The production of capital goods showed a decrease by 35.3%. A sharp drop was recorded by the automotive industry (-74.6%). Outside industry, energy production was down by 7.2% in March 2020 and the production in construction decreased by 4.1%.

In March 2020, the corrected figure shows the production in industry a decrease of 8.9% from (primary -9.2%) from February 2020.

• The total number of cases worldwide has topped 7 million, while global deaths surpassed 402,000 — just as some countries are ease social restriction measures to restart battered economies.

• In South Korea, there has been a recent uptick in the number of new cases after movement restrictions were relaxed. They have been traced to nightclubs, religious gatherings and a logistics center.

• In the U.S., White House health advisor Dr. Anthony Fauci has said the coronavirus outbreak in the U.S. appears to be going in “the right direction” despite a few “blips.” 

• All 50 states eased some quarantine restrictions ahead of the Memorial Day holiday on May 25, and crowds of people, some without masks, have been seen at protests in recent weeks. U.S. cases are just now starting to rise as research shows that it can take anywhere from five to 12 days for people to show symptoms from the coronavirus.

• U.S. cases: More than 1.94 million

• U.S. deaths: At least 110,503

Reuters reports that China’s exports contracted in May as global coronavirus lockdowns continued to devastate demand, while a sharper-than-expected fall in imports pointed to mounting pressure on manufacturers as global growth stalls.

The somber trade readings for the world’s second-biggest economy could pile pressure on policymakers to roll out more support for a sector that is critical to the livelihoods of more than 180 million workers. Total trade accounts for about a third of the economy.

Overseas shipments in May fell 3.3% from a year earlier, after a surprising 3.5% gain in April, customs data showed on Sunday. That compared with a 7% drop forecast in a Reuters poll.

While exports fared slightly better than expected, imports tumbled 16.7% compared with a year earlier, worsening from a 14.2% decline the previous month and marking the sharpest decline since January 2016. It had been expected to fall 9.7% in May. 

“Exports benefited from the ASEAN (Association of Southeast Asian Nations) market and exchange rate depreciation, while imports were affected by insufficient domestic demand and commodity price declines,” said Wang Jun, chief economist of Zhongyuan Bank.

As a result, China posted a record trade surplus of $62.93 billion last month, the highest since Reuters started tracking the series in 1981, compared with the poll’s forecast for a $39 billion surplus and $45.34 billion surplus in April.

China’s trade surplus with the United States widened to $27.89 billion in May, Reuters calculation based on customs data showed. 

This comes as Sino-U.S. tensions are again on the rise, though sources say President Donald Trump has little choice but to stick with a Phase 1 trade deal for now.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1452 (1064)

$1.1421 (1437)

$1.1395 (1677)

Price at time of writing this review: $1.1287

Support levels (open interest**, contracts):

$1.1224 (947)

$1.1196 (640)

$1.1162 (443)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date July, 2 is 40095 contracts (according to data from June, 6) with the maximum number of contracts with strike price $1,0800 (1881);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2809 (958)

$1.2767 (554)

$1.2737 (461)

Price at time of writing this review: $1.2704

Support levels (open interest**, contracts):

$1.2566 (198)

$1.2539 (518)

$1.2508 (717)

Comments:

- Overall open interest on the CALL options with the expiration date July, 2 is 12054 contracts, with the maximum number of contracts with strike price $1,2900 (1246);

- Overall open interest on the PUT options with the expiration date July, 2 is 13265 contracts, with the maximum number of contracts with strike price $1,2550 (1125);

- The ratio of PUT/CALL was 1.10 versus 1.30 from the previous trading day according to data from June, 6

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.