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The FTSE rally has slipped in the Friday session. Currently, the index is trading at 7,334, down 0.53% on the day. On the release front, today’s key events are the May retail sales reports. Core retail sales are projected to climb to 0.5%, after a weak gain of 0.1% a month earlier. Retail sales are expected to rebound to 0.7%, after a reading of -0.2% in April. The week winds up with the UoM Consumer Sentiment report, which is expected to fall to 98.1, after an outstanding reading of 102.4 in the previous release.

Dismal news from Broadcom, the giant Singapore chipmaker, has sent global equities lower on Friday. Broadcom has forecast a hit of some $2 billion to revenue, another casualty in the bitter trade war between the U.S. and China. The negative news has hurt technology stocks and the FTSE is in red territory. As well, Chinese industrial output was unexpectedly soft, dropping to its lowest level since 2002. The indicator gained 5.0% in May on an annualized basis, well off the forecast of 5.5%.

Will U.S. consumer spending data meet the high expectations? Inflation numbers for May were soft, but the markets are counting on better news from consumer spending. Retail sales and core retail sales are expected to rebound in May, and these numbers could play a crucial role in the Federal Reserve’s forward guidance for rates. The markets are prepared for rate cuts in the second half of the year. The CME Group has set the odds of a July cut at 62% and another cut in September at 55%. Lower interest rates make the U.S. dollar less attractive to investors, which could be good news for equities.

In this technical blog, we are going to take a look at the past performance of 4 hour Elliott Wave Charts of S&P 500 Futures (ES_F), which we presented to members at elliottwave-forecast.com. In which, the cycle from 12/26/2018 low ( $$2315.27) unfolded in an impulse structure & showed a higher high sequence in bigger time frame charts called for further upside. Also, it’s important to note that the ES_F was having green right side tag pointing higher favored members to look for buying opportunity at the blue box areas in 3, 7 or 11 swings. We will explain the ideas & structure below:

ES_F 4 Hour Elliott Wave Chart From 5/20/2019

ES_F 4 hour Elliott Wave Chart from 5/20/2019 update, in which the cycle from 12/26/2018 low ended at $2961.25 high. Down from there, the index corrected that cycle as zigzag structure & was expected to find buyers at $2728-$2625 100%-161.8% Fibonacci extension area of (A)-(B) into the direction of the right side tag. Afterward, the index was expected to resume the upside or it was expected that minimum 3 wave reaction higher should take place. Therefore, we advised members not to sell it and keep buying the dips in 3, 7 or 11 swings into the direction of right side tag.

ES_F 4 Hour Elliott Wave Chart From 6/09/2019

ES_F 4 hour Chart from a Weekend update, in which index managed to reach blue box area at $2728-$2625 & made the reaction higher as expected. Allowing members to go risk-free in the trade (stop loss at entry level) in this recent reaction higher from blue box area.

Notes/Observations

• Safe-haven flows continue to percolate as Persian Gulf tensions simmer
• China May Industrial Production data hits a 17-year low (YoY: 5.0% v 5.4%e); Retail Sales rebounds YoY: 8.6% v 8.1%e); concerns that China would need to introduce more fiscal stimulus to ensure 2019's GDP growth

Asia:

• Hong Kong lawmakers said to be open to extending extradition bill debate

Europe/Mideast:

• European Finance Ministers (Eurogroup) reportedly plan easier restructuring of euro zone sovereign bonds with maturities longer than 1-year, starting in 2022

Americas:

• President Trump tweet: While I very much appreciate Japan PM Abe going to Iran to meet with Ayatollah Ali Khamenei, I personally feel that it is too soon to even think about making a deal. They are not ready, and neither are we! - White House Econ Adviser Kudlow reiterated USMCA could provide as much as 0.5% to GDP when fully implemented. USMCA had a more powerful impact on the economy than trade issues with China

Energy:

• US Sec of State Pompeo stated that Iran was responsible for recent tanker attacks as the country continued to actively work to interrupt flow of oil. Unprovoked attacks were part of campaign to escalate tension because they wanted US sanctions to be lifted
• US Navy Destroyer USS Mason heading to Gulf of Oman to scene of attacks on oil tankers
• Iran Mission to UN rejected US claims as "unfounded" regarding the Gulf of Oman tanker attacks
• Saudi Energy Min: international community must take responsibility and protect international shipping lanes

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.48% at 378.49, FTSE -0.28% at 7,347.84, DAX -0.65% at 12,090.02, CAC-40 -0.26% at 5,361.76, IBEX-35 -0.48% at 9,203.00, FTSE MIB -0.32% at 20,564.50, SMI +0.14% at 9,852.3, S&P 500 Futures -0.24%]
• Market Focal Points/Key Themes: European Indices trade mostly lower following continued political tensions after the attack in the Persian Gulf. Asian Indices were mainly lower while US index futures also trade lower. The Nasdaq underperforms after a Revenue miss from Broadcom weighed on the tech sector with shares of AMS, Dialogue Semi and Infineon among the names declining in sympathy. On the earnings front Sthree trades high after a 9% rise in Net fees; GL Events also gains after raising its outlook, with Prysmian another riser after affirming its outlook. In other news Transgene declines following a rights issue; Kier group falls over 15% on talk some credit insurers are withdrawing cover protecting suppliers, while Faron Pharma gains following the final results from its YODA study. Looking ahead notable earners include Cheetah Mobile and China Online Education.

Equities

• Consumer discretionary: Ascential [ASCL.UK] -2% (trading update), Sthree [STHR.UK] +1.5% (trading update), Straumann [STMN.CH] -2% (abandons collaboration)
• Healthcare: Faron Pharmaceuticals [FARN.UK] +22% (study update)
• Industrials: KIER Group [KIE.UK] -13% (proposed divestment), Grippo Sias [SIS.IT] -3%, ASTM [AT.IT] +3% (merger)
• Technology: Infineon [IFX.DE] -2%, Dialog Semiconductor [DLG.DE] -2%, AMS [AMS.CH] -6.5%, STMicroelectronics [STM.FR] -3% (Broadcom earnings)

Speakers

• ECB's Draghi letter to EU parliament: Overall effect of our monetary policy on bank profitability had so far been broadly neutral
• France Fin Min La Maire: EU Ministers agreed to Euro Zone budget. Budget accord to help the region face crisis. Euro Area budget reform still had a long way to go
• Eurogroup chief Centeno commented that Euro Zone budget size to be determined by EU Leaders later in 2019 as more work was needed to define sources for financing
• Italy Dep PM Salvini (League): 2020 Budget must have substantial tax cuts. Reiterated that EU fiscal rules outdated EU finance ministers (EcoFin) commented ahead of meeting in Luxembourg
• EU's Moscovici: Welcomed the commitments from Italy PM Conte and Fin Min Tria but would need more than commitments from Italy. Stressed that the Italian numbers must add up for 2019 and 2020
• EU's Dombrovskis: More work was needed on funding for Euro budget. Up to Italy to correct its fiscal trajectory
• Italy Fin Min Tria: Mini-bots were a bad idea
• Poland Central Bank's Osiatynski reiterated MPC view that would not raise interest rates in 2019 but saw a chance for a 2020 hike. Saw inflation acceleration but remaining within target
• Turkey Foreign Min Cavusoglu stated that was ready to retaliate to any US sanctions over its purchase of the Russian S-400 missile-defense system
• National Bureau of Statistics (NBS) spokesperson Fu Linghui: Month-to-month data fluctuations is normal; external uncertainties are increasing
• IEA Monthly Oil Report cut its 2019 global oil demand growth forecast from 1.3M bpd to 1.2Mbpd and set 2020 global oil demand growth at 1.4M bpd. Maintained 2019 Non-Opec supply growth at 1.9M bpd and set 2020 Non-Opec supply growth at 2.3M bpd

Currencies/Fixed Income

• USD: The US Dollar index futures traded sideways with very little volatility as the market looks to next week's FOMC meeting where we could see a bit of movement.
• EUR: The Euro traded lower below 1.13 as the EU stressed the need for Italy to follow the rules regarding fiscal policy. We see the upside levels in the region of 1.1340 and the downside in the region of 1.1120. Next week is a fairly quiet week for the Euro until the end of the week when we have flash PMI figures or we could see further comments regarding EU and Italy come out.
• GBP: The cable traded lower as the first round of voting in the Parliament for the Tory leadership began with Boris taking the most votes and Jeremy Hunt took second place with 43. This was as expected, but in the next few weeks things could get shook up a bit if Boris Johnson loses votes to hunt. To the upside we see levels in the 1.2750 region and to the downside we have 1.26 handle. Next week could see some volatility as we have BOE and CPI economic indicators due out.

Economic Data

• (NL) Netherlands Apr Trade Balance: €4.2B v €5.3B prior
• (NL) Netherlands Apr Retail Sales Y/Y: 4.7% v 1.1% prior
• (FI) Finland May CPI M/M: -0.2%e v +0.6% prior; Y/Y: 1.2% v 1.5% prior
• (FI) Finland Apr Current Account Balance: -€4.2B v -€0.2B prior
• (FI) Finland Apr GDP Indicator WDA Y/Y: 2.8% v 0.9% prior
• (DE) Germany May Wholesale Price Index: M/M: 0.3% v 0.6% prior; Y/Y: 1.6% v 2.1% prior
• (IN) India May Wholesale Prices (WPI) Y/Y: 2.5% v 3.0%e
• (FR) France May Final CPI M/M: 0.1% v 0.2%e; Y/Y: 0.9% v 1.0%e; CPI Ex-Tobacco Index: 103.86 v 103.76 prior
• (FR) France May Final CPI EU Harmonized M/M: 0.1% v 0.2%e; Y/Y: 1.0% v 1.1%e
• (TR) Turkey Apr Current Account Balance: -$1.3B v -$1.5Be
• (CN) China May Industrial Production Y/Y: 5.0% v 5.4%e (weakest reading since 2002); Industrial Production YTD Y/Y: 6.0% v 6.1%e
• (CN) China May Retail Sales Y/Y: 8.6% v 8.1%e; Retail Sales YTD Y/Y: 8.1% v 8.0%e
• (CN) China May Fixed Urban Assets Y/Y: 5.6% v 6.1%e
• (CN) China May YTD Surveyed Jobless Rate: 5.0% v 5.0% prior
• (CN) China May YTD Property Investment Y/Y: 11.2% v 11.9% prior
• (SE) Sweden May CPI M/M: 0.3% v 0.1%e; Y/Y: 2.2% v 2.0%e; CPI Level: # v 334.11 prior
• (SE) Sweden May CPIF M/M: 0.3% v 0.1%e; Y/Y: 2.1% v 1.9%e
• (SE) Sweden May CPIF M/M: 0.3% v 0.1%e; Y/Y: 1.7% v 1.5%e
• (RU) Russia Narrow Money Supply w/e Jun 7th (RUB): 10.34T v 10.24T prior
• (PL) Poland May Final CPI M/M: 0.2% v 0.2%e; Y/Y: 2.4% v 2.3%e
• (IT) Italy Apr Industrial Sales M/M: -1.0%% v +0.4% prior; Y/Y: -0.7% v +1.3% prior
• (IT) Italy Apr Industrial Orders M/M: -2.4% v +2.1% prior; Y/Y: -0.2% v -3.8% prior
• (HK) Hong Kong Q1 Industrial Production Y/Y: 1.4% v 1.2% prior
• (HK) Hong Kong Q1 PPI Y/Y: 0.8% v 0.3% prior
• (IS) Iceland May International Reserves (ISK): 767B v 756B prior
• (IT) Italy May Final CPI M/M: 0.0 v 0.1% prelim; Y/Y: 0.8% v 0.9% prelim; CPI Index (Ex-tobacco): 102.7 v 102.6 prior
• (IT) Italy May Final CPI EU Harmonized M/M: No est v 0.1% prelim; Y/Y: 0.9%e v 0.9% prelim

Fixed Income Issuance

• None seen

Looking Ahead

• (UK) Economic and Financial Dialogue (EFD) between UK and China in London
• 05:30 (IN) India to sell combined INR170B in 2021, 2026, 2033, 2039 and 2059 bonds
• 06:00 (IE) Ireland Apr Trade Balance: No est v €4.1B prior
• 06:00 (PT) Poland May Final CPI M/M: No est v 0.1% prelim; Y/Y: No est v 0.5% prior
• 06:00 (PT) Poland May Final CPI EU Harmonized M/M: No est v 0.3% prelim; Y/Y: No est v 0.4% prior
• 06:00 (UK) DMO to sell €5.0B in 1-month, 3-month and 6-month bills £0.5B, £1.5B and £2.5B respectively)
• 06:30 (RU) Russia Central Bank (CBR) Interest Rate Decision: Expected to cut Key 1-Week Auction Rate by 25bps to 7.50%
• 07:00 (IL) Israel May CPI M/M: 0.5%e v 0.3% prior; Y/Y: 1.3%e v 1.3% prior
• 07:00 (BR) Brazil Jun FGV Inflation IGP-10 M/M: 0.4%e v 0.7% prior
• 07:30 (TR) Turkey Central Bank TCMB Survey of Expectations Next 12 Months: No est v 15.5% prior
• 07:30 (IN) India Weekly Forex Reserves w/e Jun 7th: No est v $421.9B prior
• 08:00 (IS) Iceland May Unemployment Rate: No est v 3.7% prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:00 (RU) Russia Central Bank (CBR) Gov Nabiullina post rate decision press conference
• 08:00 (IN) India announces upcoming bill issuance (held on Wed)
• 08:00 (ES) Spain Debt Agency (Tesoro) a announces upcoming issuance
• 08:30 (UK) May Advance Retail Sales M/M: +0.6%e v -0.2% prior; Retail Sales (Ex-auto) M/M: 0.4% v 0.1% prior; Retail Sales (Ex-auto/gas): +0.4%e v -0.2% prior; Retail Sales Control Group: 0.4%e v 0.0% prior
• 08:55 (UK) BOE Gov Carney in London
• 09:00 (CA) Canada May Existing Home Sales M/M: No est v 3.6% prior
• 09:00 (BE) Belgium Apr Trade Balance: No est v -€0.6B prior
• 09:15 (US) May Industrial Production M/M: +0.2%e v -0.5% prior; Capacity Utilization: 78.0%e v 77.9% prior; Manufacturing Production: +0.2%e v -0.5% prior
• 10:00 (US) Jun Preliminary University of Michigan Confidence: 98.0e v 100.0 prior
• 10:00 (US) Apr Business Inventories: 0.5%e v 0.0% prior
• 11:00 (CO) Colombia Apr Industrial Production Y/Y: 2.0%e v 3.2% prior
• 11:00 (CO) Colombia Apr Retail Sales Y/Y: 4.7%e v 5.3% prior
• 11:00 (EU) Potential sovereign ratings after European close (Moody's on Norway)
• 13:00 (US) Weekly Baker Hughes Rig Count

ECB President Mario Draghi sent separate letters to four Members of the European Parliaments today, explaining the impact of the central bank's monetary policy. There Draghi noted the "overall effect" of ECB's monetary policy on bank profitability has so far been "broadly neutral". The negative impact on banks' net interest margins has been offset by an improvement in the economic outlook that has led to an "increase in the total volume of loans" and, moreover," improved credit quality", which has reduced provisioning costs. Though, he also pledged to carefully monitor the overall effects of negative interest rates.

Draghi also said lending to non-financial corporations (NFCs) "recovered significantly" since the ECB introduced its non-standard monetary policy measures. And overall, the non-standard measures "have contributed to a more uniform transmission of monetary policy to bank lending rates across euro area countries and firm sizes."

Moreover, taking into account both financial and macroeconomic effects, ECB research finds that "lower-income households have been among the main beneficiaries of the ECB's non-standard monetary policy measures, through their positive impact on growth and employment creation."

The Australian dollar extends steep five-day fall and probes below 0.6900 handle on Friday, pressured by fears of another RBA rate cut next month.

Weaker than expected Chinese IP added to negative outlook, as markets await for release of US retail sales data (May 0.7% f/c vs -0.2% prev) which would further depress Aussie on strong release, but also hit doves advocating Fed rate cut on FOMC policy meeting next week.

Technical picture remains negative on rising bearish momentum and multiple bear-crosses of daily MA’s in bearish configuration.

Bears focus key support at 0.6864 base, break of which would signal extension of bear-leg from 0.7205 (17 Apr high), interrupted by 0.6864/0.7022 correction).

Broken 20SMA (0.6931) is expected to cap upticks and keep bears intact.

Res: 0.6901, 0.6931, 0.6940, 0.6957
Sup: 0.6892, 0.6881, 0.6864, 0.6800

EURAUD is extending its gains over the last couple of weeks, recording a fresh more than five-month high around 1.6350. Thus, the short-term picture thus seems to be strongly positive, as the RSI is hovering in the overbought territory and the MACD is strengthening its momentum above trigger line.

A break above above the ascending channel could increase speculation for more upside pressure towards the 1.6590 resistance level. If the bulls pierce the latter too, attention would turn to 1.6662.

A potential pullback in the market may meet initial support near 1.6260. Another downside break would open the way for the 20-day simple moving average (SMA) currently at 1.6180 and near the blue Kijun-sen line. Next, the price could reach the 40-day SMA around 1.6090 before resting near the 1.6050 support level.

Summarizing, the medium-term picture is bullish as the pair has been trading higher over the last six months

The US dollar does not show clear dynamics against the basket of major currencies. The US dollar index closed yesterday with a slight increase (+0.03%). Traders have taken a wait-and-see attitude before the upcoming Fed meeting, which will be held next week on Wednesday. Earlier this week, Fed Chairman Jerome Powell said that the Central Bank was ready to support the economic growth in the United States. Investors believe that the Fed is going to reduce the base interest rate at the next meetings amid slowing inflation and increasing tensions in trade relations.

The Australian dollar is getting cheaper due to the assumptions of financial market participants that the Reserve Bank of Australia will be forced to reduce the rate to support the economy. Yesterday, weak data on the unemployment rate of Australia were published: the figure counted to 5.2% in May and was worse than the forecasted value of 5.1%.

Weak economic data from China have been published today. Thus, the industrial production grew by only 5.0% in May, while experts expected 5.4%. The unemployment rate counted to 5.0%.

The "black gold" prices continue to rise after substantial growth the day before due to increased tensions in the Middle East. Yesterday, two tankers were attacked in the Gulf of Oman. There are suggestions that it could be a torpedo attack, which resulted in explosions and fire on ships. At the moment, futures for the WTI crude oil are testing the mark of $52.00 per barrel.

Market Indicators

• Yesterday, the bullish sentiment was observed in the US stock market: #SPY (+0.41%), #DIA (+0.43%), #QQQ (+0.59%).
• The 10-year US government bonds yield has been declining. Currently, the indicator is at the level of 2.06-2.07%.

The news feed on 2019.06.14:

• Retail sales in the US at 15:30 (GMT+3:00).

The DAX has posted considerable losses on Friday. Currently, the index is at 12,096, down 0.60% on the day. On the fundamentals front, there are no major German or eurozone events. In the U.S., today’s highlights are the May retail sales reports. Core retail sales are projected to climb to 0.5%, after a weak gain of 0.1% a month earlier. Retail sales are expected to rebound to 0.7%, after a reading of -0.2% in April. The week winds up with the UoM Consumer Sentiment report, which is expected to fall to 98.1, after an outstanding reading of 102.4 in the previous release.

Broadcom, the gigantic Singapore chipmaker, has dragged down European stocks on Friday. Broadcom has forecast a hit of some $2 billion to revenue, another casualty in the bitter trade war between the U.S. and China. The negative news has hurt technology stocks, and the tecDAX, which tracks the 30 largest technology companies in Germany, is down 1.1% on Friday. The DAX is also trading lower.

All eyes are on U.S. consumer spending data. Inflation numbers for May were soft, but the markets are counting on better news from consumer spending data. Retail sales and core retail sales are expected to rebound in May, and these numbers could play a crucial role in the Federal Reserve’s forward guidance for rates. The markets are prepared for a rate cut, possibly two, in the second half of the year. The CME Group has set the odds of a July cut at 62% and another cut in September at 55%. Lower interest rates make the U.S. dollar less attractive to investors, so some headwinds could be ahead for the greenback

The British pound has continued to slip lower against the US dollar during the European trading session, with the pair testing towards its key weekly trading low. If the GBPUSD pair fails to bounce from current levels, further losses toward the 1.2610 level appear possible. Overall, the release of US retail sales this afternoon are likely to have a substantial impact on the GBPUSD pair.

The GBPUSD pair is only bullish while trading above the 1.2700 level, key resistance is located at the 1.2710 and 1.2750 levels.

The GBPUSD pair is heavily bearish while trading below the 1.2655 level, key support is found at the 1.2630 and 1.2610 levels.

The US dollar has come under increasing pressure against the Japanese yen due to the worsening geopolitical situation between Iran and the United States. The USDJPY pair could suffer a technical meltdown if bulls force price under the 107.70 support level. Traders are now awaiting the release of important monthly retail sales data from the United States economy.

The USDJPY pair is bearish while trading below the 108.44 level, key support remains at the 107.70 and 107.05 levels.

If the USDJPY pair trades above the 108.44 level, key technical resistance is found at the 108.64 and 108.80 levels.