Sample Category Title

Short Term Elliott Wave view in FTSE suggests the rally from 4/20 low (7096.6) is unfolding as a zigzag Elliott Wave structure where Minute wave ((a)) ended at 7302.57 and Minute wave ((b)) ended at 7197.28. Subdivision of Minute wave ((a)) is unfolding as an impulse where Minuttte wave (i) ended at 7134.53, Minutte wave (ii) ended at 7104.22, Minutte wave (iii) ended at 7290.82, Minutte wave (iv) ended at 7262.32, and Minutte wave (v) of ((a)) ended at 7302.57. Index has since broken above 7302.57 suggesting Minutte wave ((c)) has started.

Minute wave ((c)) is currently in progress as an ending diagonal where Minutte wave (i) ended at 7280.7, Minutte wave (ii) ended at 7222.81, Minutte wave (iii) ended at 7398.58, and Minutte wave (iv) ended at 7369.23. Index has reached 1.236 extension of the Minute ((a)) – ((b)) and thus minimum requirement has been met for Minor wave 1 to complete and cycle from 4/20 low to end, although a marginal high still can't be ruled out at this stage. Expect Index to correct cycle from 4/20 low soon within Minor wave 2 in 3, 7, or 11 swing before the rally resumes. We don't like selling the proposed pullback and expect buyers to appear again when Minor wave 2 pullback is over in 3, 7, or 11 swing.

FTSE 1 Hour Elliott Wave Chart

Asia Mid-Session Market Update: RBA minutes concerned with rising unemployment and overheating housing market; Risk sentiment briefly dented by reports of Trump intelligence gaffe with Russian diplomats

US Session Highlights

(US) MAY EMPIRE MANUFACTURING: -1.0 V +7.3E; new orders -4.4 v +7 m/m

(US) MAY NAHB HOUSING MARKET INDEX: 70 V 68E (second-highest reading since financial downturn)

Stocks opened the week upbeat on higher commodity and oil prices, with the S&P touching a new all-time high, before closing lower, but up on the day. Indices were led by mining and energy stocks. The two outperforming sectors of the S&P were Energy and Materials, gaining 0.8% and 0.9% respectively.

US markets on close: Dow +0.4%, S&P500 +0.5%, Nasdaq +0.5%

Best Sector in S&P500: Materials

Worst Sector in S&P500: Telecom

Biggest gainers: FTR +6.6%; QRVO +5.5%; NVDA +5.0%

Biggest losers: SWN -4.3%; URBN -3.1%; VIAB -2.5%

At the close: VIX 10.4 (flat); Treasuries: 2-yr 1.30% (flat), 10-yr 2.34% (flat), 30-yr 3.01% (+1bps)

US movers afterhours

AKBA Akebia and Vifor Pharma announce license agreement to provide Vadadustat to Fresenius Medical Care in the U.S. Upon FDA Approval; Vifor makes $50M investment in AKBA at $14/shr ; +16.2% afterhours

VOXX Reports Q4 $0.00 v $0.06e, R$167.4M v $167.7M y/y -9.8% afterhours

TEAR Reports Q1 -$0.82 v -$0.75e, R$6.7M v $7.0Me; -15.0% afterhours

Key economic data

(AU) AUSTRALIA APR NEW MOTOR VEHICLE SALES M/M: 0.3% V 1.9% PRIOR; Y/Y: 0.1% V -3.0% PRIOR

Asia Session Notable Observations, Speakers and Press

Asian equities mixed despite the more pronounced gains on Wall St as political risk in the shape of a Trump intelligence gaffe during his meeting with Russian diplomats last week sparked calls for Congressional inquiry. JPY traded slightly firmer and US equity futures slightly softer in early Asian hours. Australia miners and AUD faring better as precipitous decline in iron ore appears to have abated in spite of more disappointing economic data out of China this weekend. Economic calendar and FX volatility otherwise compressed. RBA policy meeting minutes produced a very minor upside ripple, reiterating concern over inflation but also inserting property price sensitivity and risk into its analysis.
Politics

(RU) Pres Trump reportedly revealed highly classified intelligence information on ISIS threat to Russian Foreign Min last week that intelligence agency partners had not given permission to share - press

China

(CN) China MoF 5-yr bond suspended from trading after abnormal fluctuations

(CN) Fitch: China economy to remain stable this year - press

Australia/New Zealand

(AU) Reserve Bank of Australia (RBA) May 2nd Meeting Minutes:

Maintaining the current accommodative stance of monetary policy would be consistent with achieving sustainable growth and the inflation target over time

Developments in the labor and housing markets warrant careful monitoring. Recently announced supervisory measures designed to help mitigate household credit risks, and recent mortgage rate increases, will take some time to fully assess their impact.

(AU) Australia Trade Min Ciobo: FTA talks with Hong Kong may boost service exports

Q1 inflation data had generally increased confidence that underlying inflation would pick up to around 2% by early 2018.

Asian Equity Indices/Futures (00:00ET)

Nikkei +0.2%, Hang Seng -0.3%, Shanghai Composite -0.3%, ASX200 +0.1%, Kospi +0.1%

Equity Futures: S&P500 -0.1%; Nasdaq flat, Dax -0.1%, FTSE100 -0.2%

FX ranges/Commodities/Fixed Income (00:00ET)

EUR 1.0975-1.0990 JPY 113.40-113.80; AUD 0.7405-0.7430; NZD 0.6875-0.6905

June Gold +0.4% at 1,234/oz; June Crude Oil +0.4% at $49.06/brl; July Copper -0.4% at $2.53/lb

(US) EIA forecasts June total shale regions oil production at 5.40M bpd, +122K bbd m/m (vs +109K bpd rise in May)

iShares Silver Trust ETF daily holdings rise to 10,605 tonnes from 10,532 tonnes prior (2nd straight increase)

(CN) PBOC to inject combined CNY190B v CNY80B prior in 7-day and 14-day reverse repos

(CN) PBOC SETS YUAN MID POINT AT 6.8790 V 6.8852 PRIOR (4th consecutive firmer setting, strongest Yuan fix since Apr 24th)

(JP) Japan MoF sells ¥1.99T in 0.1% 5-year JGB bonds; avg yield -0.117% v -0.160% prior; bid-to-cover 3.59x v 3.28x prior

Asia equities notable movers

Australia

Fortescue (FMG) +2.5%, Rio Tinto 0.8%; Iron ore rebounds

BHP +0.4%; Elliott Mgt makes new case for review of petroleum business

Japan

Sharp (6502.JP) -7.6%; Sharp may acquire 10-20% of Toshiba's memory unit in a joint bid with Hon Hai - Nikkei

Mizuho (8411.JP) -1.8%; Reports FY17/17

Hong Kong

China Shenhua Energy (1088) +1.1%; Apr coal output

Phoenix TV (2008) -1.6%; Q1 result

Paradise Ent (1180) -2.4%; Q1 result

Cathay Pacific (293) -3.0%; Removed from MSCI HK

For the 24 hours to 23:00 GMT, the AUD rose 0.26% against the USD and closed at 0.7419.

LME Copper prices rose 1.2% or $66.0/MT to $5586.0/MT. Aluminium prices rose 1.0% or $19.5/MT to $1899.5/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7408, with the AUD trading 0.15% lower against the USD from yesterday’s close.

According to minutes of the Reserve Bank of Australia’s (RBA) recent meeting, policy makers noted that both the labour and housing markets in Australia warranted 'careful monitoring.' Also, policymakers reiterated views that interest rates will stay at record low for the foreseeable future.

The pair is expected to find support at 0.7379, and a fall through could take it to the next support level of 0.7351. The pair is expected to find its first resistance at 0.7441, and a rise through could take it to the next resistance level of 0.7475.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the EUR rose 0.49% against the USD and closed at 1.0979.

On the data front, Italy's final consumer price index rose 1.9% on an annual basis in April, compared to a gain of 1.8% recorded in the preliminary print. In the prior month, the CPI had recorded a rise of 1.4%.

In the US, data indicated that the housing market index unexpectedly advanced to a level of 70.0 in May, pointing towards strengthening housing market. compared to market expectations for the index to remain steady at 68.0. On the contrary, the nation's New York Empire State manufacturing index surprisingly fell to a seven-month low level of -1.0 in May, defying investor consensus for an advance to a level of 7.5. In the previous month, the index had registered a reading of 5.2.

In the Asian session, at GMT0300, the pair is trading at 1.0988, with the EUR trading 0.08% higher against the USD from yesterday's close.

The pair is expected to find support at 1.0945, and a fall through could take it to the next support level of 1.0902. The pair is expected to find its first resistance at 1.1010, and a rise through could take it to the next resistance level of 1.1032.

Moving ahead, market participants await the release of ZEW survey of economic sentiment for May, across the Euro-zone along with the Euro-zone's flash 1Q GDP numbers and trade balance figures for March, slated to release in a few hours. Moreover, the US housing starts, building permits, industrial as well as manufacturing production, all for April, scheduled to release later in the day, will pique significant amount of investor attention.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP rose 0.09% against the USD and closed at 1.2898.

In the Asian session, at GMT0300, the pair is trading at 1.2908, with the GBP trading 0.08% higher against the USD from yesterday's close.

The pair is expected to find support at 1.2877, and a fall through could take it to the next support level of 1.2845. The pair is expected to find its first resistance at 1.2940, and a rise through could take it to the next resistance level of 1.2971.

Trading trend in the Pound today is expected to be determined by the release of Britain's consumer price index data for April, slated in a few hours.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD rose 0.25% against the JPY and closed at 113.63.

On the data front, Japan's preliminary machine tool orders climbed 34.7% on an annual basis in April, after recording a rise of 22.8% in the prior month.

In the Asian session, at GMT0300, the pair is trading at 113.42, with the USD trading 0.18% lower against the JPY from yesterday's close.

Earlier in the session, the nation's tertiary industry index surprisingly dropped 0.2% on a monthly basis in March, compared to a gain of 0.2% in the preceding month, while markets expected for a gain of 0.1%.

The pair is expected to find support at 113.15, and a fall through could take it to the next support level of 112.88. The pair is expected to find its first resistance at 113.77, and a rise through could take it to the next resistance level of 114.12.

Going ahead, traders would focus on Japan's industrial production for March, slated to release tomorrow.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages

For the 24 hours to 23:00 GMT, the USD declined 0.56% against the CHF and closed at 0.9958.

On the economic front, Switzerland’s producer and import prices unexpectedly dropped 0.2% on a monthly basis in April, compared to market expectations for a flat reading. The index had climbed 0.1% in the prior month.

In the Asian session, at GMT0300, the pair is trading at 0.9953, with the USD trading slightly lower against the CHF from yesterday’s close.

The pair is expected to find support at 0.9930, and a fall through could take it to the next support level of 0.9907. The pair is expected to find its first resistance at 0.9997, and a rise through could take it to the next resistance level of 1.0041.

With no economic releases in Switzerland today, investor sentiment would be governed by global macroeconomic news.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.55% against the CAD and closed at 1.3629.

Macroeconomic data showed that Canada's existing home sales slid 1.7% on a monthly basis in April, following a rise of 1.1% in the previous month.

In the Asian session, at GMT0300, the pair is trading at 1.3634, with the USD trading a tad higher against the CAD from yesterday's close.

The pair is expected to find support at 1.3585, and a fall through could take it to the next support level of 1.3536. The pair is expected to find its first resistance at 1.3696, and a rise through could take it to the next resistance level of 1.3758.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving averages.

The RBA minutes for the May meeting contained little news but reiterated policymakers' the importance of the property market and the labor market conditions in its policy decision. The stance to leave the monetary policy unchanged was obviously due to the perceived uncertain outlook in these two areas. As noted in the concluding statement in the minutes, 'the board continued to judge that developments in the labour and housing markets warranted careful monitoring'.

Policymakers began the discussion on domestic economic developments on inflation. The noted that the March quarter inflation data had 'generally increased confidence in the forecast that underlying inflation would pick up to around +2% by early 2018. Indeed, the upside surprise in the first quarter inflation data is encouraging. Headline CPI, at +2.1% y/y, reached the RBA's target for the first time since 2014. Core inflation also accelerated to 1.8% y/y. The members added that 'subdued growth in labour costs and strong competition in the retail sector had continued to have a dampening effect on aggregate inflation'. Policymakers remained confident that 'growth in domestic output was still expected to pick up to be a little above 3% by 1Q18, as 'the drag from declining mining investment waned and as resource exports continued to pick up'. However, they cautioned that "a fall in housing prices could also weigh on consumption growth'.

On the job market, the RBA shrugged off the recent rise of the unemployment rate to +5.9%, suggesting that it would 'decline gradually over the forecast period'. The minutes unveiled a detailed discussion of the increasing proportion of part-time workers. Policymakers judged that 'labour market deregulation, technological change and the shift towards a more service-based economy' are the key reasons for this phenomenon. They believed that 'the distinction between full-time and part-time work had become less important in assessing labour market conditions'.

On the housing market, RBA acknowledged that housing prices had been weak in Perth, where 'population growth had fallen significantly following the end of the mining investment boom'. They also noted that the 'large increase in supply in the inner-city Melbourne and Brisbane apartment markets had weighed on prices, particularly in the case of Brisbane'. Despite all these, the central bank suggested that 'growth in housing prices had remained brisk in Sydney and Melbourne, where population growth had been relatively strong'. On Monday, National Bureau of Statistics unveiled that lending for residential real estate fell -0.5% in March, following a revised -0.8% drop in the previous month. Home loans to investors as a proportion of total loans slipped -1.25 percentage points to 48%.

Global Markets:

• Asian stock markets: Nikkei up 0.15 %, Shanghai Composite fell 0.35 %, Hang Seng lost 0.20 %, ASX 200 gained 0.20 %
• Commodities: Gold at $1234 (+0.35 %), Silver at $16.70 (+0.35 %), WTI Oil at $49.05 (+0.40 %), Brent Oil at $52.00 (+0.40 %)
• Rates: US 10-year yield at 2.33, UK 10-year yield at 1.15, German 10-year yield at 0.42

News & Data

• Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 109.4 (prior 112.3)
• Australia New Motor Vehicle Sales (YoY) Apr: 0.1%, Prior (-3.00%)
• Australia New Motor Vehicle Sales (MoM) Apr: 0.3%, Prior (1.90%)
• RBA: Judged steady rates consistent with achieving sustainable growth and inflation target
• RBA: Developments in labour and housing markets warrant 'careful monitoring'
• RBA: Housing credit growth continue to outpace income rise, suggesting higher risks associated with household balance sheets
• RBA: Low wage growth, strong retail competition continues to have 'dampening effect' on aggregate inflation
• RBA: A rise in A$ would complicate economic adjustment
• Asian stocks set to rise on U.S. cues; oil higher – RTRS

Markets Update:

The US Dollar came slightly under pressure following a report that US President Trump told the Russian Foreign Minister confidential information at their last meeting. USD/JPY fell from 113.75 to a low of 113.40. Meanwhile, the Euro is extending gains and reached 1.0990. The charts are looking increasingly bullish. Should EUR/USD break back above 1.10, a rally towards 1.11 seems likely.

The Pound had a mixed performance in the past days. The recent Bank of England meeting is still weighing on the currency. Heavy resistance is seen ahead of the 1.30 level, but GBP/USD has been able to stay bid for now. Support is seen at 1.2880 and 1.2840.

AUD/USD remains weak. Resistance ahead of 0.7450 proved to be strong yesterday, and the pair retraced the recent gains in Asia. A break back below 0.74 would signal a retest of 0.7340 support.

Upcoming Events:

• 09:00 BST – Italian GDP
• 09:30 BST – UK GDP
• 10:00 BST – German ZEW Economic Sentiment
• 10:00 BST – Euro Zone GDP
• 10:00 BST – Euro Zone ZEW Economic Sentiment
• 13:30 BST – US Housing Starts
• 13:30 BST – US Building Permits
• 14:15 BST – US Industrial Production
• 14:15 BST – US Manufacturing Production