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The CFTC Commitments of Traders report in the week ended June 4 shows bets for US dollar dropped on bog long and short sides. NET LENGTH in USD Index dropped -864 contracts to 26 234. Both speculative long and short positions decreased during the week. Traders continued to trim their bets on USD as they awaited the FOMC meeting scheduled on June 19. The market has heightened hopes for a Fed rate cut later this year. As of last Friday, the market believed that there is one in four chance of a rate cut next week, up from 10% a month ago. There is over 80% chance that there would be two rate cuts by end-2019. All other major currencies stayed in NET SHORT positions.

Concerning European currencies, NET SHORT for EUR futures declined -12 140 contracts to 87 551. Note that the reporting period preceded the June ECB meeting. ECB turned out less dovish than the market had anticipated, we believe NET SHORT for the single currency to trim further in the coming as traders might find it difficult to sell it aggressively. NET SHORT for GBP futures, however, rose +15 766 contracts to 47 762. Speculative long positions fell -9 798 contracts while speculative shorts rose +5 968 contracts for the week.

On safe-haven currencies, Net SHORT for CHF futures gained +1 390 contracts to 36 065. NET SHORT for JPY futures declined -11 188 contracts to 44 3889 during the week. Speculative long positions gained +1 634 contracts while shorts plunged -9 554 contracts. On commodity currencies, NET SHORT for AUD futures dropped -3 102 contracts to 63 291. Speculative long positions dropped -2 349 contracts while shorts fell -5 451 contracts. The market had well- expected RBA's rate cut last week. Separately, NET SHORT for NZD gained +4 248 contracts to 20 396 contracts last week. NET SHORT for CAD futures added +2 336 contracts to 41 759.

Wall Street advances as Trump delays Mexico tariffs

Wall Street indices look set for gains today after US Prsident Trump announced late Friday that he would suspend the Mexico tariffs that were due to be imposed today. G-20 warned of escalating hazards from trade and geopolitical tensions. The weak US jobs report on Friday raised expectations of a shift to an easing bias from the Fed.

US30USD Daily Chart

The US30 index looks set to rise for a sixth straight day following Trump’s move after Mexico agreed to take a tougher stance on immigration

The index touched the highest since May 7 this morning, a 6.6% rebound from the near-term low on June 3. The index is testing the 78.6% Fibonacci retracement of the April-June drop at 26,226

The US economy added just 75,000 jobs in May, the least in three months and well below survey expectations of a 185,000 increase. Expectations for Fed rate cuts sooner rather than later rose.

DE30EUR Daily Chart

The Germany30 index rose to the highest in nearly two weeks in early trading this morning, taking its cue from the move in US indices

The index is rising toward the 61.8% Fibonacci retracement of the May-June drop at 12,131

The Euro-zone Sentix investor confidence index is expected to tumble to 1.4 in June from 5.3 in May, according to the latest survey of economists.

CN50USD Daily Chart

The CN50 index snapped a three-day losing streak on Friday, buoyed by the gains on Wall Street. Weekend protests in Hong Kong may negatively impact the opening today

The index is holding above the 100-day moving average at 12,657, as it has done on a closing basis since January 23

China trade numbers for May are due today with exports seen falling 3.8% y/y, the second monthly contraction in a row, while imports are expected to fall 3.8% y/y.

EURUSD sets up to strengthen further bull pressure following its higher close the past week. Support comes in at the 1.1300 where a violation will turn risk to the 1.1250 level. A break below here will target the 1.1200 level. Further down, support sits at the 1.1150. Conversely, on the upside, resistance resides at 1.1350 level with a break through there opening the door for further upside towards the 1.1400 level. Further up, resistance comes in at the 1.1450 level where a violation will expose the 1.1500 level. All in all, EURUSD sets up to strengthen further bull pressure on corrective recovery.

EURGBP bullish with further price extension expected in the new week. On the downside, support stands at the 0.8850 level where a violation will turn focus to the 0.8800 level. A break below here will aim at the 0.8750 level. Conversely, resistance lies at the 0.8950 level. A violation if seen will turn risk towards the 0.9000 level. Further up, resistance comes in at 0.9050 level followed by the 0.9100 level. All in all, EURGBP remains biased to the upside on more recovery gain.

Energy prices remained weak. We expect the bearish trend to carry on although OPEC+ would likely announce to extend output cut at the June 25 meeting. According to the CFTC Commitments of Traders report for the week ended June 4, NET LENGTH for crude oil futures slumped -38 770 contracts to 400 168 for the week. Speculative long positions plunged -25 486 contracts while shorts rose -13 284. Retreat of bulls and progression of bears suggests a gloomy outlook for crude oil prices. For refined oil products, NET LENGTH for gasoline declined -2 160 contracts to 76 904, while NET SHORT for heating oil added +329 contracts to 20 716 for the week. NET SHORT for natural gas futures rose 18 554 contracts to 104 505 contracts for the week.

Decline in Treasury yields raised bets on higher gold price. NET LENGTH for gold futures surged +69 427 to 156 115 last week. Speculative long positions soared +46 014 contracts, while shorts slumped -23 413. For silver futures, speculative long positions gained +2 990 contracts while shorts plunged -10 976. These resulted in an decline in  NET SHORT to 8 443 contracts. For PGMs, NET LENGTH of Nymex platinum futures dropped -822 contracts to 7 069 while that for palladium increased +161 contracts to 9 183.

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On the sidelines of the G20 finance minister meeting in Fukuoka, Japan, US Treasury Secretary Steven Mnuchin US-China trade negotiation is at a crossroad like that ahead of the December G20 meeting in Buenos Aires. He said Trump needs to "see action" to make sure Chinese President Xi is heading "in the right direction" regarding the trade deal. Mnuchin added that Trump will make a decision after the Trump-Xi meeting in Osaka on June 28-29 G20 leader summit.

He also emphasized that "if China wants to move forward with the deal, we're prepared to move forward on the terms we've done. If China doesn't want to move forward, then President Trump is perfectly happy to move forward with tariffs to rebalance the relationship". And, if no agreement is made "the end result will be that my expectation is that many companies will move their production out of China to other locations".

On Huawei's banning, he said "what the president is saying is, if we move forward on trade, that perhaps he'll be willing to do certain things on Huawei if he gets comfort from China on that and certain guarantees". However, he emphasized "these are national security issues".

Also, Mnuchin said he "had constructive meeting with PBOC Governor Yi Gang, during which we had a candid discussion on trade issues."

https://twitter.com/stevenmnuchin1/status/1137586549535727617

G20 Finance Ministers the Central bank Governors said in the post-meeting communiqe that global growth "appears to be stabilizing" and is "generally projected to pick up moderately later this year and into 2020. However, risks to global growth remain "tilted to the downside".

And they warned, "most importantly, trade and geopolitical tensions have intensified." The group pledged to "continue to address these risks, and stand ready to take further action." However, the originally proposed language of "recognize the pressing need to resolve trade tensions" was dropped.

Nevertheless, the group still "reemphasize that international trade and investment are important engines of growth, productivity, innovation, job creation and development". And they will "continue to take joint action to strengthen international cooperation and frameworks."

Full communique here.

First, a review of last week’s events:

EUR/USD. It seems that Mario Draghi has already lost the ability to influence the market, which is waiting for the arrival of the new head of the ECB to replace him. At least, the rather soft rhetoric of Draghi and his reasoning about a possible quantitative easing, sounded last Thursday, was perceived quite calmly by investors. The euro was not weakened by the statement that it was not worth expecting a rate increase until the middle of next year either. As a result, surprisingly, the press conference of the ECB leadership played into the hands of the European currency, and the pair went up to the level above 1.1300. There followed a smooth rollback to the level of 1.1250 and ... a new breakthrough to the north at the time of publication of data on the labor market in the US on Friday, June 07.

Experts were prepared for the fact that the NFP indicator (the number of new jobs created outside the agricultural sector) could “shrink” by about 30%, but almost no one expected a reduction of 3 times (from 224K to 75K). As a result, the pair soared to the level of 1.1345, and the weekly swing was 180 points. As for the end of the five-day week, at the end of the trading session, 1 euro was worth $1.1333;

GBP/USD. They say that no news is good news. Following the resignation of Prime Minister Theresa May, there were no significant events in the British Isles, which allowed the pound to strengthen its position during all week, step by step. President Trump's visit to Queen Elizabeth II hit the front pages of the secular, but not the economic chronicle. And Mrs. May's efforts, who directed the remnants of her influence in order to prevent the "hard" Brexit, could only slightly support the uptrend of the British currency. The same applies to weak statistics on employment in the United States. As a result, the pair returned to the highs of a week ago, putting the final chord practically where the analysts who were waiting for correction indicated, at the level of 1.2733;

USD/JPY. Recall that the votes of the experts last week were divided as follows: 50% sided with the bears, 25% sided with the bulls, and 25% stood in the middle confused. We can say that it is this discrepancy that is reflected on the pair chart.

Quotes of the yen against the dollar are strongly correlated with the US Treasury bonds. The fall of the latter stopped on Monday, June 3, stopping the pair from falling below the mark of 107.80. Then the dollar began to regain its position, and by the time of the NFP data publication reached the height of 108.65, after which the pair sharply went down, felt the bottom at the level of 107.88, and finished the week at 108.18;

Cryptocurrencies. Bitcoin has been declared “halal” in Egypt, in accordance with the Sharia law. The new decree lifts the ban on cryptocurrency, in force since 2018, and this is probably the best news of the week. In general, the background was mostly neutral. In the absence of the news, as many analysts assumed, despite attempts to turn the pair up, a correction continued: the bulls were taking profits, and this sale stopped the influx of new investors. If on Friday, May 31, the BTC/USD pair was at the level of $9,100, on Thursday, June 6, it fixed a locallow, dropping to $7,450 and losing 18% in six days.

The Ethereum chart (ETH/USD) almost completely repeated the dynamics of the elder brother, Bitcoin. But the Ripple and the Litecoin turned out to be much more capable of “regeneration”. Thus, the XRP/USD pair almost returned to the values of the end of the previous week, and LTC/USD even slightly exceeded them.

As for the forecast for the coming week, summarizing the opinions of a number of analysts, as well as forecasts made on the basis of a variety of methods of technical and graphical analysis, we can say the following:

EUR/USD. Speech by Mario Draghi on June 6 pushed the euro up. On Wednesday, June 12, we are expecting his next speech, from which investors still hope to get clearer guidelines on the ECB’s monetary policy for the foreseeable future. Another source of operational information for the market is President Trump's Twitter, in which he often shares information and plans regarding his trade wars, primarily with China.

As for the exact figures, the upcoming week will be devoted to inflation. On Wednesday, the CPI index values will be published by the National Bureau of Statistics of China, on Wednesday and Friday, consumer price indices in the USA will become known, and on Thursday, June 13, the German ones.

In the meantime, expert opinions are divided as follows. 60%, supported by graphical analysis on D1 and 20% of oscillators that give signals the pair being overbought, expect that it will try to break through the support of 1.1215 and retest the lows in the 1.1100 zone. The alternative point of view is held by 40% of experts and the vast majority of oscillators and trend indicators. In case they are right, the pair will be able to consolidate above the level of 1.1400, aiming at the resistance of 1.1525;

GBP/USD. At the beginning of the coming week, candidates for the post of the UK Conservative Party leader will likely be known. It will also become more or less clear, how many votes they can get by moving to the post of Prime Minister, and to what extent the likelihood of a “hard” Brexit and exit from the EU without an agreement is likely.

Currently, 55% of the experts, supported by graphical analysis on H4, continue to side with the bulls and 45% side with the bears. The trend indicators have exactly the same ratio: 55% are for the growth of the pair and 45% stand for its fall. Oscillators have a slightly different picture. There, despite the overwhelming advantage of the “green”, 10% of the indicators on H4 and D1 give signals the pair is overbought, which can indicate either a fairly strong correction or a beginning of a downward trend.

Some impact on the behavior of the pair may be exercised by the data on the labor market in the UK, which will be published on Tuesday, June 11. But, with a high degree of probability, it can be assumed that this influence will be mild and short-lived;

USD/JPY. It is also unlikely that the GDP data in Japan, which will be released on Monday, June 10, will have an impact on the market. The main drivers are still the yield of US government bonds, oil prices and the course of the US-China negotiations. In such a situation of uncertainty, 40% of analysts have turned their eyes to the north, 40% to the south and 20% to the east. The main support levels are 107.75 and 107.00, resistance levels are 109.15, 109.65, 110.35 and 110.65;

Cryptocurrencies. Will the current Bitcoin correction be actually only temporary? Or is this the beginning of a new downtrend? Disputes about how applicable methods of analyzing the movement of fiat currencies to digital currencies, flare up with a new force.

Proponents of the theory of growth, of course, are Bitcoin holders, who are trying in every way to warm up the market with all sorts of news. For example, the founder of the company Dadiani Syndicate has reported that she received an order from one of the clients to acquire 25% of all currently issued bitcoins (which is about 4.5 million coins worth about $36 billion). Another piece of news is that only from the beginning of June, the largest BTC wallets have attracted $2.72 billion. But if this is so, why, despite the influx of these billions, the BTC/USD rate fell by 18% in six days?

Although, in fairness, it should be noted that at the end of the working week, on June 7, both Bitcoin and the major Altcoins attempted to recover, and the BTC/USD pair returned to the $7,800-8,000 zone, which can be considered Pivot Point for the last three weeks.
As for analysts, at the moment 50% of them believe that the pair should go down to the horizon $7,000, 30% - for returning to the zone above $9,000, and the remaining 20% are for lateral movement in the channel $7,500-8,450.

EUR/USD rose to as high as 1.1347 last week as rebound from 1.1107 accelerated. Initial bias stays on the upside this week for 1.1448 key resistance. Decisive break there will carry larger bullish implications. On the downside, break of 1.1251 minor support, however, will turn bias back to the downside for retesting 1.1107 low.

In the bigger picture, current development argues that a medium term bottom could be in place at 1.1107, on bullish convergence condition in daily MACD. Decisive break of 1.1448 resistance would confirm this case. And stronger rebound would be seen to 38.2% retracement of 1.2555 to 1.1107 at 1.1660. At this point, it's early to judge whether rise from 1.1107 is a corrective move or the start of an medium term up trend. We'd look at the structure of the rebound to decide later. But in any case, for now, risk will remain on the upside as long as 1.1107 low holds.

In the long term picture, the rejection from 38.2% retracement of 1.6039 to 1.0339 at 1.2516 argues that long term down trend from 1.6039 (2008 high) might not be over yet. EUR/USD is also held below decade long trend line resistance, 55 month and 55 week EMA. Break of 1.0339 will resume the down trend to 100% projection of 1.3993 to 1.0339 from 1.2555 at 0.9501