Tin tức thì trường

eFXdata reports that MUFG Research discusses its reaction to yesterday' drastic upside surprise in US CPI print for the month of April.

"There were upside risks heading into this inflation print and we were yesterday deliberating market responses to a 0.3% m/m core CPI print versus a 0.4% print. So the 0.9% m/m gain was a complete shocker and way off the scales."

"The problem is that the expectations of the extent of this transitory jump in inflation have now shifted and this will result in two developments. Firstly, greater doubt over the long-term consequences – if the jump is now going to be considerably higher than expected, the longer-term implications will be more uncertain. Secondly, market participants’ faith in the communications of the Fed will be considerably less predictable."

"Still, we do not see this as a reason for a fundamental re-assessment of our core view."

• U.S. recovery has outpaced most of the world
• Housing is booming and consumer confidence is skyrocketing
• I'm hopeful we're on the brink of completing the recovery
• Question of how to unclog the labor market is going to be critical to recovery
• Expectations, business outlook, not pointing to persistent, multi-year jump in inflation
• Supply constraints could limit potential upside in overall growth

• Economy had been stabilizing; however, vitality of market entities had not fully recovered
• Growing uncertainties over rising inflation and property prices, and tensions with U.S., Australia and other nations that could affect grain and energy imports; those problems can impact economic stability, so we should pay close attention
• Small and medium enterprises, as well as self-employed businesses, are suffering from rising costs, which means there is heavy pressure on employment
• It will not be easy to achieve this year's employment target

FXStreet reports that Mazen Issa, Senior FX Strategist at TD Securities, remains focused on the USD/CAD pair, which has shown a significant amount of resilience this week. The 1.2130/50 area represents a cluster of technical significance that could signal a short squeeze if broken - failure to do so could return focus to the downside.

“The 1.2130/50 area represents an intersection of two trendlines. The first is trend resistance established from the April 21st, 2021 high, while the other is trend support established from the Sep 2020 and Mar 2021 lows. The combination of the technical thresholds suggests that USD/CAD could be in for a short squeeze towards 1.2250/60.”

“The daily and weekly RSIs suggest that USD/CAD is oversold, but price action has been rather resilient.” 

“We are inclined to respect price action from here; failure to breach the 1.2130/50 pivot this week is likely to return focus back to the downside."

U.S. stock-index futures rose on Thursday, as equites tried to rebound after Wednesday’s sell-off, supported by better-than-expected weekly jobless claims, which helped offset inflation fears, fueled by April’s PPI report.

Global Stocks:

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

Microsoft (MSFT) initiated with a Buy at Rosenblatt; target $301

Cisco (CSCO) initiated with a Buy at MKM Partners; target $61

Deere (DE) downgraded to Market Perform from Outperform at BMO Capital Markets; target $400

NIKE (NKE) resumed with a Neutral at BofA Securities; target $150

The Labor Department reported on Thursday the U.S. producer-price index (PPI) rose 0.6 percent m-o-m in April, following an unrevised 1.0 percent m-o-m increase in March.

For the 12 months through April, the PPI climbed 6.2 percent after an unrevised 4.2percent surge in the previous month. That was the largest increase since 12-month data were first calculated in November 2010. 

Economists had forecast the headline PPI would increase 0.3 percent m-o-m last month and 5.9 percent over the past 12 months.

According to the report, about two-thirds of the April advance in the final demand index can be traced to a 0.6-percent m-o-m gain in prices for final demand services. The index for final demand goods also rose 0.6 percent m-o-m.

Excluding volatile prices for food and energy, the PPI went up 0.7 percent m-o-m and jumped 4.1 percent over 12 months (the largest advance since 12-month data were first calculated in August 2014). Economists had forecast gains of 0.4 percent m-o-m and 3.7 percent y-o-y.

The data from the Labor Department revealed on Thursday the number of applications for unemployment decreased more than forecast last week, hitting a fresh pandemic-era low.

According to the report, the initial claims for unemployment benefits declined by 34,000 to 473,000 for the week ended May 8. This was the lowest reading since March 2020.

Economists had expected 490,000 new claims last week.

Claims for the prior week were revised upwardly to 507,000 from the initial estimate of 498,000.

Meanwhile, the four-week moving average of jobless claims fell to 534,000 from a revised 562,250 in the previous week.

Continuing claims rose to 3,655,000 from a revised 3,700,000 in the previous week.

FXStreet notes that the USD’s status as a safe haven is not straightforward and is currently being complicated by various aspects connected with the reflation trade. In the coming months, economists at Rabobank expect the direction of yields and in particular real yields to set the tone for the USD. 

“Today the market will be focussed on the US PPI inflation print as well as on the comments from Fed officials. Another round of reassurances that inflation is transient could lead to a modestly softer USD near-term.” 

“Given that the reflation debate will remain in center stage in the coming months, there is plenty of reason to suspect scope for volatility for the USD and pockets of support on the back of inflation-related uncertainty in the coming months.”

FXStreet reports that USD/JPY has successfully held its uptrend from January and with its near-term downtrend broken, analysts at Credit Suisse look for a break above 109.95/97 for strength back to test the 110.97 March high.

“We look for a break above resistance at 109.95/97 to keep the immediate risk higher for strength back to the late March high and potential downtrend from February 2020 at 110.84/97."

“Whilst a fresh rejection from the 110.97 March high should be expected, above in due course can open the door to a test of much important resistance at 111.96/112.40, beyond which would raise the prospect of a much more significant base.” 

“Support moves to 109.48 initially, then 109.27/22, which we now look to try and hold."

Alibaba (BABA) reported Q4 FY 2021 earnings of RMB10.32 per share (versus RMB9.20 per share in Q4 FY 2020), missing analysts’ consensus estimate of RMB13.28 per share.

The company’s quarterly revenues amounted to RMB187.395 bln (+63.9% y/y), beating analysts’ consensus estimate of RMB180.669 bln.

The company also issued upside guidance for FY 2022, projecting revenues of RMB930 bln versus analysts’ consensus estimate of RMB925.63 bln.

BABA fell to $211.98 (-3.60%) in pre-market trading.

USD continued to strengthen against most of its major rivals in the European session on Thursday as an unexpectedly large increase in the U.S. consumer prices in April heightened worries that an acceleration in inflation could force the U.S. Federal Reserve to pull back on its monetary stimulus and hike interest rates that are near zero.

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, edged up 0.1% to 90.79.

The Labor Department reported on Wednesday the U.S. consumer price index (CPI) rose 0.8 percent m/m in April. Over the last 12 months, the CPI climbed 4.2 percent y/y. This was the highest reading since September 2008. Economists had forecast the CPI to increase 0.2 percent m/m and 3.6 percent y/y in the 12-month period.

However, the Fed officials continue to reassure markets that any surge in inflation will be temporary. The Fed's vice chairman Richard Clarida said on Wednesday that a climb in inflation to above 2% is due to transitory factors and a moderating is expected later this year, but added that the central bank "would not hesitate to act” if necessary to bring inflation down to its "2% longer-run goal."

FXStreet notes that the Canadian dollar has risen 3.2% against the U.S. dollar over the past month. The earlier than expected hawkish shift by the Bank of Canada has forced economists at ING to upgrade the profile for USD/CAD, and they now expect a move below 1.20 in the third quarter, with downside room – aided by a weak USD – extending to 1.16 by year-end.

“We expect the market to keep rewarding currencies (like CAD) with less dovish central banks to the detriment of currencies (like USD) which have been left unprotected by their central banks and are now at the mercy of rising inflation.”

“A strong economic rebound in the US and dormant Federal Reserve, despite spikes in inflation, are an ideal combination for CAD.”

“We expect USD/CAD to start trading sustainably below 1.20 by the third quarter and we target 1.16 in the fourth quarter.”

FXStreet reports that EUR/JPY weakness has been well supported above its 13-day exponential average to leave the spotlight firmly back on 132.55 - the 78.6% retracement of the 2018/2020 bear trend. Economists at Credit Suisse look for a clear break above here for a test of price resistance from the key highs of April and September 2018 at 133.13/49.

“A closing break above the 78.6% retracement of the entire 2018/2020 bear trend at 132.55 can bring the brief consolidation to an end to reinforce the broader uptrend, with resistance seen next at the September 2018 highs at 133.12/13, potentially as far as the 133.49 high of April 2018, with another temporary cap expected for now in this 133.13/49 zone.” 

“We eventually see scope for a move to the 137.50 2018 high.” 

“Near-term support moves to 132.23/13, below which can see a fall back to 131.99, but with 131.67 now ideally holding further weakness.”

FXStreet reports that economists at Westpac had been holding out for an opportunity to sell above 110 – however, this move has further to go near term with a retest of the March high at 110.97 on the cards.

“The combination of an enormous downside surprise for Wall Street economists on the April Nonfarm payrolls report followed by a just as enormous upside surprise on the April CPI report emphasizes that the near term outlook for the US$ remains super clouded.” 

“It’s pretty obvious that we have witnessed another ‘gotcha’ moment for the growing number of ‘inflationistas’ out there. And it’s hard not to see the market running with this theme for the foreseeable future.”

“Last week we argued for a push back to the 109.50/110 level before considering selling. Clearly, the risks is that this move extends further with a likely break above the previous high at 110.97 on the cards.”

FXStreet reports that EUR/USD has suffered a sharp setback and the Credit Suisse analyst team suggests that below 1.2058/52, the pair would warn of a retest of key price and retracement support at 1.1999/86.

“Beneath 1.2058/52 would be seen marking a break to clear the way for a test of what we see as more important support at 1.1999/86 – the early May low and 38.2% retracement of the March/May rally.” 

“Only below 1.1999/86 would warn of a more important top (and a possible even larger ‘head & shoulders’ top for further weakness to the 200-day average at 1.1954 initially, then 1.1943/42.”

“Resistance is seen at 1.2110/14 initially, with a break above 1.2152 needed to reassert an upward bias for strength back to 1.2182/85."

FXStreet reports that in the view of economists at Westpac, medium-term DXY bear trend is still intact.

“DXY appears to have found a near term base just above 90, the dramatic upside surprise on the April CPI throwing it a lifeline. But even though DXY seems primed for a bounce within prevailing ranges (89-93), conviction levels are understandably low given the wild swings in marquee US data in recent days.”

“While the near term DXY outlook is more encouraging, the medium-term bear trend is still intact. Eurozone’s reopening metrics are looking more upbeat by the day and the EC is poised to commence joint bond issuance under the region’s post-pandemic Recovery Fund in July.”

CNBC reports that the American Chamber of Commerce in China said in a report that many U.S. companies in China are still finding it harder to operate in the country compared with their Chinese counterparts in the U.S..

“AmCham China’s members face longstanding structural challenges in the China market that conspire to tilt the playing field against (foreign-invested enterprises) and foreign investors,” the report said.

“Two-thirds of members say they would consider increasing their investments in China if markets were open on a par with those in the US, a slight increase on last year,” the authors wrote.

Foreign businesses in China must often work with a local partner and face many limits on local investment, while Chinese companies can operate in the U.S. with far fewer restrictions.

The following are some industries in which American companies operate at a disadvantage in China, according to the report:

Health care services — Foreign investment in medical institutions in China cannot exceed 70%. In comparison, no such cap exists in the U.S.

Cloud computing — Foreign firms cannot invest more than 50% in cloud services businesses. There are no such restrictions in the U.S.

Movies — The Chinese government sets film release dates and requires that 75% of revenue remains with Chinese film production companies. In the U.S., Chinese companies can distribute films without restrictions and set their own release dates.

FXStreet reports that Westpac said that EUR gains are likely to face the resistance of the ECB. 

“The EU published its quarterly economic forecasts this week with lifts in growth for both 2021 and 2022 from their Winter profile (4.2% from 3.7% and 4.4% from 3.7% respectively). The uplift is due to the now successful regional covid vaccine rollout and expectations for easing of the majority of COVID-19restrictions during H2 2021. ECB officials have also stressed the flexibility of PEPP purchases, the pace of which was increased into the current quarter and now looks set to slow into mid-year.”

“Although EUR/USD looks set to breach its recent range (1.17-1.22) resistance, ECB officials are likely to voice concern in order to dampen moves above 1.22.”

Reuters reports that according to the report from Office for National Statistics (ONS), spending on British credit and debit cards in the week to May 6 was 106% of its February 2020 level, up from 99% a week earlier as consumers spent more on travel, eating out and other activities that are being freed up from coronavirus rules.

Other figures showed a net 7% of 34,940 firms surveyed by the ONS reported an increase in turnover in March compared with March 2020.

The proportion of the workforce on the government's job-protecting furlough scheme was 11% in the period between April 19 and May 2, down from a previous reading of 13%, the ONS said.

RTTNews reports that monthly survey results from the Royal Institution of Chartered Surveyors, or RICS, showed that UK house prices climbed notably in April as the increase in demand increasingly outstripped supply.

The house price balance rose to 75 percent in April from 62 percent in March. All regions showed sharp pick-up in house price inflation.

A headline net balance of +44 percent of contributors cited a pick-up in buyer enquiries in April, which was virtually unchanged from a reading of +43 percent a month ago.

The balance for newly agreed sales advanced to +34 percent, but down from +48 percent in March.

Looking ahead, near term sales expectations remained comfortably positive at the national level, posting a net balance of +23 percent.

The market will undoubtedly cool as the rush to buy during the stamp duty holiday eases, Andrew Wishart, an economist at Capital Economics, said.

But with mortgage rates low and the economy recovering quickly, the recent increases in house prices are not likely to be reversed, the economist noted.

Reuters reports that New Zealand Prime Minister Jacinda Ardern said on Thursday her government will explore more travel "bubbles" and lead trade delegations later this year to re-connect with a post-pandemic world after more than a year of border closures.

Tough lockdowns and its geographical location has helped New Zealand eliminate the novel coronavirus within its borders, but left the country of 5 million isolated from the rest of the world.

Ardern said New Zealand started rebuilding contact by opening quarantine-free travel with neighbouring Australia and the South Pacific's Cook Islands, and is considering more such travel bubble options.

More than 70,000 people landed in New Zealand from Australia since the travel bubble opened last month, and over 57,000 have travelled the other way, Ardern said.

She, however, noted that vaccine roll out in New Zealand is incomplete and the number of countries it could safely open up to is also limited.

Ardern said she will lead a trade and promotional delegation to Australia in early July, and will also look to lead delegations into Europe, the United States, China and the wider Asia-Pacific.

FXStreet reports that economists at Westpac discuss NZD/USD prospects.

“As long as 0.7100 holds, we will remain bullish, targeting 0.7500 multi-month. The Budget will show a dramatic improvement in NZ’s fiscal position compared to the Half-Year Update. Tax revenue and the operating balance tracks will show large upward revisions, and with a sharply lower debt track, Treasury will pare back bond issuance plans. While banking some of this upside surprise, the Government has also indicated that it will dial up its spending and investment plans, thereby maintaining its stimulatory settings.”

eFXdata reports that CitiFX Technicals discuss EUR/USD prospects.

"EURUSD posted a bullish outside week last Friday, akin to what happened in the week ending 27 Nov. 2020. Subsequent price action saw the EUR enjoy a rally of almost 400 points," Citi notes. 

"US 10 year real yields are falling as nominal yields continue to follow a similar path to that seen in 1993- 1994 and 1998-2000 (suggesting that we now see a period of range trading)," Citi adds.

FXStreet reports that the technical analysis team currently expects a consolidation for the DAX, while the year-end is seen at 15,500-16,000.

“The attractive DAX dividend yield of 2.9%, the 9% rise of DAX 2021 earnings expectations and the powerful 13% eurozone M1 money growth are key bull trends why the DAX might rise to 16,000 until the Q2 DAX earnings season in August 2021, after a short-term DAX consolidation in May and June. We expect the DAX to trade lower at 14,200 index points at the end of 2021.”

“Due to the overbought technical situation a consolidation is now under way. The technical target for end of 2021 remains unchanged at 15,500 to 16,000 points.”

During today's Asian trading, the US dollar declined moderately against the euro and the australian dollar and was almost unchanged against the yen.

The ICE index, which tracks the dollar's performance against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona), fell 0.06%.

The dollar index retreated from the 10-week lows it touched earlier this week, amid heightened investor demand for the U.S. currency amid concerns that greater-than-expected price pressures could force the Federal Reserve to tighten monetary policy sooner than current forecasts suggest.

Consumer prices in the United States jumped 4.2% in April compared to the same month last year, according to data from the Ministry of Labor of the country, published on Wednesday. Thus, inflation accelerated from 2.6% in March and reached the highest rate in more than 12 years-since September 2008. Analysts had forecast a 3.6% rise.

Meanwhile, the European Commission yesterday improved its forecasts for GDP growth in the euro area for 2021 and 2022, thanks to an increase in the rate of vaccination against COVID-19 and the lifting of quarantine restrictions. According to the new forecast of the regulator, the euro zone economy will grow by 4.3% this year, and by 4.4% next year. The February forecast called for a 3.8% increase in GDP in both 2021 and 2022.

FXStreet reports that economists at Capital Economics don’t expect the recent weakness in the US dollar to persist.

“We suspect that, rather than risk appetite, relative yields will continue to be the key driver of the US dollar over the next couple of years. We think they will ultimately lead to a stronger dollar.”

“As far as risk appetite is concerned, we don’t think it will wane much more, given the rosy outlook for economic growth. Nonetheless, most measures of global risk premia are now at, or below, pre-pandemic levels, so we don’t think appetite for risk will recover a lot either.”

“In the US, where the vaccine rollout has been particularly rapid, and fiscal support particularly large, we suspect prospects for growth and inflation are among the best in the developed world. This, we suspect, will ultimately result in US yields beginning to rise again. Our expectation is that this will drive the US dollar generally higher.”

EUR/USD

Resistance levels (open interest**, contracts)

$1.2195 (2404)

$1.2164 (2732)

$1.2140 (508)

Price at time of writing this review: $1.2090

Support levels (open interest**, contracts):

$1.2043 (753)

$1.2023 (976)

$1.1997 (3761)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date June, 4 is 60529 contracts (according to data from May, 12) with the maximum number of contracts with strike price $1,2200 (4334);

GBP/USD

$1.4214 (958)

$1.4184 (2380)

$1.4136 (1080)

Price at time of writing this review: $1.4049

Support levels (open interest**, contracts):

$1.3977 (349)

$1.3925 (241)

$1.3893 (320)

Comments:

- Overall open interest on the CALL options with the expiration date June, 4 is 21760 contracts, with the maximum number of contracts with strike price $1,5000 (2696);

- Overall open interest on the PUT options with the expiration date June, 4 is 20668 contracts, with the maximum number of contracts with strike price $1,3100 (3931);

- The ratio of PUT/CALL was 0.95 versus 0.88 from the previous trading day according to data from May, 12

* - 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.

Bloomberg reports that estimates for two of the most widely followed economic reports this month -- the consumer price index and the jobs report -- have missed the actual figures by a long shot. 

The unprecedented nature of the pandemic has made forecasting difficult for economists. The recent employment surprise was the biggest downside miss, while the price index was the biggest upside miss in records dating back to 1996. It’s not the first time during Covid-19 this has happened: Economists also struggled to accurately forecast a sudden improvement in employment data last year, for example.

Economists say their models aren’t designed to incorporate massive shifts like those stemming from businesses rapidly reopening or supply chain constraints. High-frequency data and anecdotal evidence provide additional insight but it’s not an exact science.

“Economic models are awful at predicting turning points,” said Michael Gapen, chief U.S. economist at Barclays Plc. “They’re great at picking the trend, and the pandemic is a series of turning points.”

There are also not a lot of periods in history to compare to the pandemic. The business cycle that most closely resembles the current moment is World War II when there were massive shortages in some goods and people were restrained from buying certain items, Gapen said.

Reuters reports that Bank of Japan Governor Haruhiko Kuroda there was no change to the central bank's stance of buying exchange-traded funds (ETF) "boldly" when necessary.

"We don't have any automatic, set rule in buying ETFs, such as doing so when stock prices fall by a certain amount in several days. It's an operational decision we make based on market developments at the time," Kuroda told.