Sample Category Title

Notes/Observations

• U.S.-China trade talks are imperiled by a couple of presidential tweets as Trump threatened to increase punitive tariffs on US$200B of imports from 10% to 25% as soon as Friday; safe haven flows dominate session Major European PMI services data mixed in session but remaining in expansion territory (Beats: Germany, Euro Zone, Misses: Spain, Italy; In-line: France
• Brexit compromise seems to be taking shape when cross-party talks resume on Tuesday
• Strong case for an early RBA rate cut with decision on Tuesday

Asia:

• China PBoC cut the Reserve Requirement Ratio (RRR) for Small and Medium sized banks by up to 350bps to 8.00%; effective May 15th. Funds released from lower RRR for small and medium sized banks would be used for lending to small and private firms. CNY280B of long term funds to be released from the RRR cuts
• China Vice Premier Liu He was said to likely delay trip to US by 3 days and shorten trip to only 1 day for trade talks this week (in response to Trump's tweets on raising tariffs). Earlier reports circulated that China Vice Premier was considering canceling trade talks this week after Trump threats to enact tariffs as soon as Friday, May 10th
• North Korea shot several short range missiles which traveled 70-200km, leader Kim told troops to keep on high alert posture. South Korean statement afterwards noted that these actions went against the principles of the Sept 19th inter-Korean agreement; urges the North to stop these actions which were raising military tensions

Europe/Mideast:

• PM May said to be optimistic on reaching a deal with Labour on Brexit; to offer 3 major concessions (offer a temporary Customs Union with EU until the next general election; would align with EU on single market rules on many goods and offer guaranteed workers' rights)
• EU Commission could forecast an Italian 2019 budget deficit to GDP ratio of 2.6% and prompt budget adjustment recommendation

Americas:

• President Trump tweet indicated that tariffs on $200B in Chinese goods were planned to increase to 25% from 10% starting Friday and adding that he planned 25% tariffs "shortly" on a further $325B in Chinese goods
• President Trump tweeted on North Korea and Russia relations; North Korea's Kim "knows that I am with him & does not want to break his promise to me. Deal will happen!"
• US Sec of State Pompeo stated that US still had every intention to negotiate with North Korea over its nuclear program despite its weapons tests over the weekend

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -1.54% at 384.34, DAX -2.13% at 12,148.00, CAC-40 -2.21% at 5,426.01, IBEX-35 -1.75% at 9,245.00, FTSE MIB -2.38% at 21,249.50, SMI -1.65% at 9,581.60, S&P 500 Futures -1.86%]
• Market Focal Points/Key Themes: European Indices trade sharply lower across the board as trade tensions weighs as US President Trump threatened to raise tariffs on Chinese goods on Friday. Asian Indices fell sharply on the threat with the Shanghai composite falling over 5% while the Hang Seng fell almost 3%. In Europe, the major indices trade around 2% lower, wile US futures are also pointing to a sharply lower open. On the corporate front, shares of Landis+Gyr bucks the trend trading over 5% higher after strong guidance and outlook; withis PledPharma and Tubacex also higher on earnings. Stabilus underperforms on a decline in profits and Revenue and cut outlook; Bakkafrost, Ercros and CarZeiss Meditec are among the other decliners in earnings. In other news Telenor shares gain on confirmation that its in discussions to merge its Asian operations while Arcelor Mittal also declines as the company is to cut its annualized European primary steel production by ~3MT. Looking ahead notable earners include Sysco, Tyson Foods and Bausch Health among others.

Equities

• Consumer staples: Carl Zeiss Meditec [AFX.DE] -1.5% (earnings), Bakkafrost [BAKKO.NO] -6.5% (earnings)
• Healthcare: Lundbeck A/S [LUN.DK] -1.5% (acquisition)
• Materials: ArcelorMittal [MT.NL] -4.5% (to cut production due to weaker demand)
• Industrials: Volkswagen [VOW3.DE] -3.5% (U.S.-China trade tensions; Indian Top Court decision), Stabilus [STM.DE] -7% (earnings; profit warning), Siemens [SIE.DE] -1.5% (unit spin-off), ThyssenKrupp [TKA.DE] -4% (EU likely to block merger)
• Technology: Dialog Semiconductor [DLG.DE] -3.5%, AMS [AMS.CH] -5% (tariffs dispute), ASML [ASML.NL] -2.5% (US court decision), Landis + Gyr [LAND.CH] +6% (earnings)
• Telecom: Telenor [TEL.NO] +3.5% (discussions on unit merger)

Speakers

• Italy Dep PM Di Maio (5-Star) reiterated that current govt not at risk unless League party opens up a crisis at the next Cabinet meeting
• China Foreign Ministry spokesperson Geng Shuang expressed hope that the US could meet China halfway on trade talks; Chinese team was preparing to travel to US this week but decline to say if Vice Premier Liu would be a part of the team

Currencies/Fixed Income

• Safe haven flows dominated after President Trump weekend tweets on China trade and planned implementation of tariffs. President Trump tweets indicated that tariffs on $200B in Chinese goods were planned to increase to 25% from 10% starting Friday and adding that he planned 25% tariffs "shortly" on a further $325B in Chinese goods
• EUR/USD was lower by 0.2% for the bulk of the session to trade around 1.1190 area
• GBP/USD was off 0.4% at 1.3120 area with cross party talks resuming on Tuesday. GBP could not build upon optimism that a Brexit compromise seemed to be taking shape and have the UK move forward with a plan to get a Withdrawal Agreement passed by Parliament.
• USD/JPY was off 0.4% with Japan still on holiday. JPY currency remained a beneficiary of safe-haven flows over trade concerns.

Economic Data

• (IN) India Apr PMI Services: 51.0 v 52.0 prior (11th month of expansion); PMI Composite: 51.7 v 52.7 prior
• (RU) Russia Apr PMI Services: 52.6 v 54.6e (39th month of expansion but lowest since Jun); PMI Composite: 53.0 v 54.6 prior
• (SE) Sweden Apr PMI Services: 54.0 v 55.1 prior; PMI Composite: 53.2 v 54.4 prior
• (ES) Spain Apr Net Unemployment M/M: -91.5K v -34.0K prior
• (HU) Hungary Mar Retail Sales Y/Y: 5.9% v 6.5%e
• (ZA) South Africa Apr PMI (whole economy): 50.3 v 48.8 prior )moved back into expansion)
• (ES) Spain Apr Services PMI: 53.1 v 55.1e (66th month of expansion); Composite PMI: 52.9 v 54.5e
• (IT) Italy Apr Services PMI: 50.4 v 51.8e (3rd straight expansion); Composite PMI: 49.5 v 50.6e
• (FR) France Apr Final Services PMI: 50.5 v 50.5e (confirmed move back into expansion); Composite PMI: 50.1 v 50.0e
• (DE) Germany Apr Final Services PMI: 55.7 v 55.6e (confirmed 70th month of expansion); Composite PMI: 52.2 v 52.1e
• (EU) Euro Zone Apr Final Services PMI: 52.8 v 52.5e (confirmed 70th month of expansion); Composite PMI: 51.5 v 51.3e
• (CH) Swiss Weekly Total Sight Deposits (CHF): 577.7B v 576.7B prior; Domestic Sight Deposits: 480.8B v 479.8B prior
• (TW) Taiwan Apr Foreign Reserves: $464.8B v $464.1B prior
• (EU) Euro Zone May Sentix Investor Confidence: 5.3 v 1.2e
• (NG) Nigeria Apr PMI: 55.5 v 53.6 prior
• (EU) Euro Zone Mar Retail Sales M/M: 0.0% v -0.1%e; Y/Y: 1.9% v 1.8%e

Fixed Income Issuance

• (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 6-month Bills; Avg Yield: 1.11% v 1.05% prior; Bid-to-cover: 4.58 v 3.08 prior

Looking Ahead

• (UR) Ukraine Central Bank Apr Minutes - (RU) Russia Feb Sovereign Wealth Funds: Wellbeing Fund: No est v $59.1B prior
• 05:30 (NL) Netherlands Debt Agency (DSTA) to sell bills
• 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
• 06:00 (IL) Israel to sell bonds - 06:00 (R0)) Romania to sell Bonds
• 06:45 (US) Daily Libor Fixing
• 07:00 (LT) Lithuania to sell Bonds
• 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
• 07:25 (BR) Brazil Central Bank Weekly Economists Survey
• 07:30 (TR) Turkey Central Bank Apr Real Effective Exchange Rate (REER): No est v 75.15 prior
• 08:00 (UK) Baltic Bulk Index
• 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming issuance
• 08:30 (CL) Chile Central Bank Traders Survey
• 08:30 (CL) Chile Mar Economic Activity Index (Monthly GDP) M/M: +0.4%e v -0.2% prior; Y/Y: 1.9%e v 1.4% prior; Economic Activity (Ex-mining) Y/Y: No est v 2.4% prior
• 09:00 (FR) France Debt Agency (AFT) to sell combined €3.6-4.8B in 3-month, 4-month, 6-month and 12-month Bills
• 09:00 (BR) Brazil Apr PMI Services: No est v 52.7 prior; PMI Composite: No est v 53.1 prior
• 09:00 (MX) Mexico Apr Consumer Confidence Index: 113.2e v 112.7 prior
• 09:30 (US) Fed's Harker (hawk, non-voter) on the Economic Outlook
• 11:00 (CO) Colombia Mar Exports: $3.2Be v $3.2B prior
• 11:00 (BE) ECB's Praet (Belgium, chief economist)
• 11:30 (US) Treasury to sell 3-Month and 6-Month Bills
• 13:45 (CA) Bank of Canada (BOC) Gov Poloz
• 14:00 (C0) Colombia Central bank Minutes
• 15:00 (AR) Argentina Mar Industrial Production Y/Y: No est v -8.5% prior; Construction Activity Y/Y: No est v -5.3% prior
• 16:00 (US) Weekly Crop Progress

The precious metal gained 0.66% on Friday after initially falling below the 1273 level of support. The rebound in gold came as the ISM's non-manufacturing PMI fell to a year and a half low. The non-manufacturing index fell to 55.5 in April as it extended declines from 56.1 in March. Over the weekend, President Trump renewed his threat about raising tariffs on China. The comments come as US and China trade talks head into a crucial week.

Can Gold Sustain the Bullish Momentum?

The strong surge in gold prices saw the precious metal firmly establishing support near the 1273 region. Price is now trading close to the main resistance level of 1285. On the daily chart, we see that gold prices remain firm, off the 200-day moving average. Overall, gold prices could maintain a sideways range, unless we see a breakout above 1285.

Oil prices slipped to a four-week low, testing 61.48 before pulling back modestly on the day on Friday. The declines in oil prices continue amid concerns of oversupply. US crude oil inventories have posted a bigger than expected draw which offset the supply shortages in pipelines from Russia.

Oil Likely to Rebound from 60.33

After breaking past the support level at 62.85, oil prices fell before pulling back from the lows. On today's open, oil prices gapped lower to test the 60.33 support. A rebound from this support level will keep oil prices trading flat within 62.85 and 60.33 levels in the near term.

The flash inflation estimates from the eurozone for the month of April beat estimates. Data from Eurostat showed that headline inflation rose 1.7% on the year in April. This beat estimates of a 1.6% increase. April's inflation also came out stronger than 1.4% print from March. Core inflation rose 1.2%, beating estimates and advancing from 0.8% from the month before.

EURUSD Could Continue Trading Flat

The common currency caught a bid as price initially slipped lower to test the support level at 1.1140. Price was quickly rejected at this level as it led to a strong rebound. The euro gained over 0.19% on the day on Friday. However, the sideways range could continue. The resistance at 1.1226 could still keep a lid on the gains. Unless the common currency breaks out from this range, we expect to see the price action in euro staying muted.

Cable pulls back from new one-month high at 1.3179 (posted after 1.17% rally on Friday) as traders booked profits and dollar strengthens fresh on safe-haven demand.

Consolidation holds within daily cloud for now (rising 55SMA offered support at 1.3102), with overall structure being bullish.

Key supports at 1.3077 (daily cloud base) and 1.3060 (Fibo 38.2% of 1.2865/1.3179) need to hold and keep bullish bias for renewed attack at pivotal barriers at 1.3184/96 (Fibo 61.8% of 1.3381/1.2856 / 3 Apr monthly high) violation of which would boost bullish signal on Friday’s penetration and close within thick weekly cloud.

Risk of deeper pullback can be expected on sustained break below daily cloud base / Fibo support.

Res: 1.3157, 1.3179, 1.3184, 1.3196
Sup: 1.3102, 1.3077, 1.3060, 1.3045

EUR/USD is facing a strong resistance cluster on Monday. Namely, at the 1.12000 level there are three technical levels that keep the rate down. Namely, the weekly pivot point, 100-hour simple moving average and the 38.20% Fibonacci retracement level were located near 1.1200.

Meanwhile, the rate was being kept up by the support of the 55 and 200-hour simple moving averages near 1.1180. Due to that reason it was expected that the currency exchange rate will trade sideways.

Moreover, it should consolidate in the aftermath of Friday's surge. On the other hand, the support might fail at any moment, as on Thursday, the strength of two simple moving averages was eventually overcome and the rate dropped

On Friday, the GBP/USD managed to break the ascending pattern that guided it in two ways just in a couple of hours. Namely, after declining just below the 1.3000 level, the rate began a surge, which reached 1.3170.

The rate is once more being pushed around by Brexit announcements. Namely, the UK's ruling parties were negotiating on a deal among themselves on how to arrange Brexit.

Although, the rate was declining on Monday, as the deal was destroyed by information leaks.

In general, the rate should decline down to the support of the weekly PP at 1.3089, which is expected to be strengthened by the 55 and 100-hour simple moving averages.

Gold prices is struggling below the 1285 mark, which is the 23.6% Fibonacci retracement level of the downleg from 1346.60 to 1266.29, a strong resistance during the past few weeks.

From the technical point of view, in the 4-hour chart the stochastic oscillator is turning lower in the overbought territory, creating a bearish crossover between the %K and %D lines, while the RSI is sloping down in the positive area, suggesting a possible negative movement.

If the market reverses even lower, immediate support could come between the 40- and the 20-simple moving averages (SMAs) currently at 1279 and 1276 respectively. Another downside move may retest the 1266.29 – 1265 support zone before the price touches the lower boundary of the descending channel around the 1260 barrier.

Otherwise, the yellow metal could retest the 23.6% Fibonacci (1285) before resting near the 1289 resistance. A jump above the latter would end the consolidation phase within the 1266.29 – 1289 region and violate the descending channel to the upside, opening the way towards the 38.2% Fibonacci of 1297.

In brief, the price has been developing within a downward range over the last six weeks, while in the medium-term the price remains negative as well.

The common European currency has appreciated about 1.62% in value against the Australian Dollar. The currency pair breached a resistance cluster formed by the combination of the weekly and the monthly PPs at 1.6029 during the morning hours of Monday's trading session.

Given that the exchange rate is trading near the upper band of a descending channel pattern at 1.6041, a breakout could be expected within this session.

If this breakout occurs, the EUR/AUD currency pair will continue its bullish sentiment during this week's trading sessions.

However, if the descending channel holds, a decline towards the 50-hour simple moving average could follow.

The single European currency versus the Canadian Dollar has been bouncing between the upper and lower bands of a triangle pattern.

The exchange rate is currently trading near the upper boundary of the triangle pattern and could be set for a breakout.

If this breakout occurs, the EUR/CAD currency pair will aim for a swing high at 1.5144 during the following trading sessions.

However, if the resistance level, formed by the upper band of the triangle pattern holds, a decline towards a support line set by the weekly pivot point at 1.5026 could follow in the short-term.